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  • Writer's pictureTania Tugonon

Secondary Funds - $47 billion raised YTD

September 23, 2023


Secondary Investment Funds - The Latest

Secondary Investment Market Commentary

The Nasdaq market site is in Times Square, New York City. Surging interest rates and last year’s weak public equity market performance have made institutions think twice before taking on more private holdings © Reuters


When you think of the Private Secondary Market today, what words, thoughts, or things come to mind?


Opaque. Illiquid. The desire for liquidity. Lack of clarity and market understanding. Price and valuation confusion. Critical Market segment for investors. Late-stage, Pre-IPO secondaries. Continuation Vehicles. NAV financings. Capital Call facilities. GP Facilities.

The private secondary market is highly complex. For buyers and sellers participating in the Secondary market, Liquidity and access to Liquidity is a primary driver for some of the above fund finance instruments.


The growth in the private capital markets is expected to drive expansion of Secondary investment platforms, capabilities, and opportunities. The reality is that investors have complex needs. Funds need to manage fund liquidity and often grow fund investment platforms. Fund managers are constantly seeking to enhance returns. Fund needs may require capital for acquisitions or working capital, or to extend the Fund life. Sometimes capital is needed to buy out GP or LP interests. Market volatility with interest rate movements, public equity market pullbacks, and denominator effect issues have led to a ramp in activity. And that has led to new investment strategy opportunities in this segment.


Funds specializing in secondary market transactions are experiencing no difficulty in raising capital. So far this year, secondary funds have raised nearly $47 billion, surpassing the total for all of 2022. This accounts for more than a tenth of the total private equity capital raised. It's possible that this year may surpass the 2020 record of $79 billion in secondary market activity.


You can find the full Secondaries Investor 50 2023 list by Private Equity International below.


 

In the News

The FAA is considering expediting the launch license process, possibly as soon as next month, following the explosion of SpaceX's Starship Super Heavy rocket approximately four minutes into its flight on April 20th.


This innovative addition enables merchants in the United States to utilize their Android devices as point-of-sale (POS) terminals for payment processing.




Sun Capital is currently conducting a process to prolong its ownership of the infrastructure support company Cotton Holdings, which it acquired in 2020. A continuation fund has been reported, but we have not confirmed it.




 

Investor Spotlight


Founded in 2011, G Squared is a global venture capital fund manager, employing a unique investment approach aimed at providing opportunities for investors to participate in the growth of cutting-edge technology companies worldwide. They act as a bridge for their portfolio companies, offering transitional capital support, and capitalize on structural inefficiencies to meticulously assemble portfolios that grant exclusive access to value generation within private markets.


G Squared has made investments in well-known companies like 23andMe, Coursera, Instacart, Lyft, Pinterest, and Spotify. They have also supported the emerging disruptors of the next generation, including Auto1 Group, Blend, Bolt, Brex, Capsule, Flexport, Impossible Foods, Toast, and Turo.


 

Next Global Destination

Dubai: A City in the United Arab Emirates


We are intrigued to learn more about Dubai. In researching the global city, we have learned that Dubai’s metropolis today encompasses more than 200 nationalities within its borders. As early as the 1950s, Dubai was known more as a modest yet thriving regional trading and fishing hub, even though its population was under 50,000 residents. Presently, the city's population exceeds 3.6 million, rendering it a remarkably varied and growing urban center.


Today, approximately $350 billion of trade flows through Dubai every year. The Dubai International Finance Centre is reported to have a combined GDP of $7.7 trillion.


We have not even begun to fully understand what has led to Dubai’s growth and recognition as a top global destination. We do follow capital, and understand that the UAE is actively working towards enhancing its alternative investment sector and has successfully attracted several prominent global entities to establish regional headquarters in local financial centers.


In an article by The National News, in April 2023 the Dubai International Financial Centre (DIFC) announced the signing of a preliminary agreement with the Alternative Investment Management Association (AIMA). The AIMA represents a vast network of over 2,100 corporate members and manages a substantial $2.5 trillion in hedge fund and private credit assets. The cross-border collaboration is intended to drive capital flows, investment, and innovation. There is much potential ahead.


 

Notable Companies We Follow


Ascend Elements

💰$460M, Series D

✳️Private

📍Westborough, Massachusetts



Ascend Elements produces eco-friendly battery components by utilizing elements sourced from discarded lithium-ion batteries.


Hugging Face

💰$235M, Series D

✳️Private

📍Brooklyn, New York




Hugging Face enables users to construct, train, and deploy artificial models by leveraging the open-source reference in the field of machine learning.


Gympass

💰$85M, Series F

✳️Private

📍New York, New York




Gympass offers employees easy access to gyms, studios, classes, training sessions, and wellness applications.


 

We aim to share market insights and ideas, and some fun interests via this newsletter.


We want to build community so please touch base.




 

Disclosure

Rainmaker Securities, LLC (“RMS”) is a FINRA-registered broker-dealer and SIPC member. Find this broker-dealer and its agents on BrokerCheck. Our relationship summary can be found on the RMS website. RMS is engaged by its clients to make referrals to buyers or sellers of private securities (“Securities”). If such client closes a Securities transaction with a buyer or seller so referred, RMS is entitled to a success fee from the client. Such success fee may be in the form of cash or in warrants to purchase securities of the client or client’s affiliate. RMS or RMS representatives may hold equity in its issuer clients or in the issuers of securities purchased or sold by the parties to a transaction. This communication is confidential and is addressed only to its intended recipient. This communication does not represent an offer or solicitation to buy or sell Securities. Such an offer must be made via definitive legal documentation by the seller of securities. Investments in the Securities are speculative and involve a high degree of risk. An investor in the Securities should have little to no need for liquidity in the foreseeable future and have sufficient finances to withstand the loss of the entire investment. RMS does not recommend the purchase or sale of Securities. Potential buyers or sellers of the Securities should seek professional counsel prior to entering into any transaction.

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