Private Market Secondaries - recent news

A version of this was recently posted on our LinkedIn channels.

Manulife Investment Management (Manulife IM) recently announced its recent milestone with the final closing of the Manulife Strategic Secondaries Fund L.P., surpassing $600 million in its GP-led secondary program. 

Led by global co-heads Jeff Hammer and Paul Sanabria, the fund focuses on high-quality companies supported by top-tier GPs. It prioritizes continuation vehicles and alignment with reputable sponsors to deliver superior returns. 

In other news, the growth in private credit is propelling growth in the secondary market with anticipation of the latter's continued expansion. In the past decade, the Private Credit market has expanded from $435 billion in 2013 to nearly $1.7 trillion by June 2023, prompting an increased interest for secondaries.

Although the exact size of the PC secondaries market remains uncertain, its estimated yearly deal flow volume is estimated to reach almost $30 billion.

This trend of expansion in the space is said to be fueled by the escalating demand for liquidity in the expanding private markets. Pantheon, which saw a growth in deal flow from $3-4 billion to over $24 billion within a few years, foresees a substantial upsurge of the space, with opportunities sprouting for investors akin to those in private equity.

Recent news and Transaction activity of interest

• Increasing interest rates have stimulated activity in real estate secondary transactions, offering reduced risk and appealing entry points for both sellers and buyers. As the market develops, secondaries provide access to premium assets at discounted rates, promising potential for robust returns, particularly during valuation lows. 

• Over the past five years, there has been a significant surge in adviser-led secondary transactions, leading to heightened regulatory attention. In response, the SEC implemented new rules in 2023 to address conflicts of interest and transparency issues in these transactions. Critical areas of concern include risks, asset valuation, compensation, and LPAC consent. Advisers must prioritize disclosure, informed consent, and thorough monitoring to effectively manage regulatory risks.

• ICG, a global alternative asset manager, has successfully closed fundraising for its debut LP-led secondaries fund, ICG LP Secondaries I (“LPS I”), exceeding its $1 billion hard cap with total commitments reaching $1.6 billion. Led by Oliver Gardey, Ryan Levitt, and Vivien Blossier, the LP Secondaries team, based in London and New York, provides liquidity solutions to investors in third-party private equity funds globally.

• In response to the difficulties confronting young venture capital firms, Santa Barbara Venture Partners has adopted an innovative tactic: selling shares of its portfolio companies through secondary sales. This method has enabled SBVP to provide returns to its limited partners, demonstrating its capacity to generate profits even without conventional exit routes. Through this strategy, SBVP has bolstered its fundraising efforts for its second fund and attracted heightened investor attention.