A Palico survey of limited partners who’ve successfully purchased stakes in private equity funds on the secondary market over the last six months shows particularly strong pricing. The typical transaction is valued at 99.7 percent of the most recently reported net asset value. Moreover, 12 of the 25 funds for which Palico has winning bid data are valued at premiums, with the average sale price 6.8 percent above NAV. For funds sold at par or less, the average transaction is valued at 93 percent of NAV.
|Average Age of Funds Sold on the Secondary Market is Nine Years|
For the completed secondary transactions tracked by Palico, the average fund age is nine years. The oldest funds, Warburg Pincus VIII and Polaris Venture Partners IV, finished fundraising in 2001, while the newest funds, Apollo Investment Fund VIII and Gavea Investimentos V, closed fundraising in 2014.
|Bringing Secondaries Into the Digital Marketplace|
Apart from specialists who have the requisite resources and connections, secondary selling and buying is difficult to do efficiently without the benefits of an organized digital marketplace like Palico’s. On Palico, information from sellers is anonymously transmitted to motivated buyers who have expressed an interest in the fund or funds in question via wishlists. After receiving bids, sellers only reveal their identity to potential buyers if they wish to do so. In the hunt for investable private equity funds, Palico’s marketplace provides hard-to-find dealflow for secondary buyers.
|Palico Makes the Commitment Process Cost Efficient|
Palico is a disruptor in the classic sense: It’s altering fundraising and secondary sales with a digital approach that makes private equity more accessible and affordable. It’s opening up commitment processes to big and small – whether investor, manager, gatekeeper, placement agent or secondary advisor. Out of the hundreds of meetings taken annually by investors, managers and advisors, the vast majority are dead ends. By bringing investable fundraisings, secondaries and co-investments to desktops and smart devices, Palico cuts down on inefficiency, leaving limited partners, general partners and their advisors more time to discover, analyze and invest in the best opportunities.
"With Palico, we stay on top of investment opportunities across the globe and across specialties."
Gonzalo Eguiagaray, Arcano Group