We address three commonly asked questions about expectations for the secondary market in the current environment.
Capitalizing on the Growing GP-Led Secondary Market
Past performance is not necessarily indicative of future results. No assurance can be given that any investment will achieve its given objectives or avoid losses. Unless apparent from context, all statements herein represent GCM Grosvenor’s opinion.
Select risks include: risks related to the lack of a liquid, transparent market for secondary investments, performance risk, and risks related to sourcing investments.
There has recently been a sharp rise in the number of GP-led private equity secondary market transactions as investors and sponsors alike recognize the benefits of the approach. Here we explore the reasons for the increase and highlight some of the advantages presented to secondary investors who pursue GP-led deals. In doing so, we present the key elements for investors to consider to best capitalize on GP-led secondaries.
This excerpt is taken from a paper in the GCM Grosvenor In-Depth series.
The GP-led market has seen tremendous growth in the past five years. Sponsors are increasingly using continuation funds as a mechanism to hold on to their trophy assets while also providing a liquidity option to investors. Given the attractive value proposition, several sponsors have utilized continuation funds as the primary exit path for their portfolio companies. We anticipate this trend will continue and we see buy-side capital as being the main constraint in the market today. As secondary players continue to raise record-level capital, we see a path to the GP-led volume growing another two- or three-fold over the next five years.
We explore the growth and evolution of the secondary market, compare complex non-traditional transactions with traditional secondaries, and discuss the importance of a robust platform of manager relationships to access GP-led deals. Refreshed with 2020 data.
The global COVID-19 pandemic has significantly affected the economy, financial markets and individuals around the world. During and following such market downturns, an increased number of LPs and GPs face pressure to raise liquidity at the same time that traditional avenues tend to freeze up. Here, we review what’s happening in the secondary marketplace in response to the crisis and highlight the compelling secondary opportunities.
All data as of December 31, 2021 unless otherwise noted
For illustrative and discussion purposes only. The information contained herein is based on information received from third parties. GCM Grosvenor has not independently verified third-party information and makes no representation or warranty as to its accuracy or completeness. The information and opinions expresses are as of the date set forth therein and may not be updated to reflect new information.