Secondary Pricing report H1 2019
It’s time to adopt the brace position. Tough times are on the way. There are few who doubt we are now teetering on the brink of an economic downturn after one of the longest bull-runs in history.
Just under two-thirds of LPs in Preqin’s H1 2019 Alternative Asset Investor Outlook think we have reached the peak of the market.
Despite the ebbs and flows of the world’s public equity markets, secondary pricing for private equity funds has remained remarkably stable over the past two years, with the average discount to net asset value of top bids hovering near the 10 percent mark since mid-2010.
Today there is every reason to believe that secondary pricing is more insulated than it has been in the past from public market swings. There is also plenty of reason to believe that secondary pricing versus net asset value will narrow further for all but end-of-life secondary directs.
The average discount today in the secondary market for PE funds is around 9 percent, but more than 60 percent of funds are trading at discounts of less than that, with many selling at par or even at small premiums, according to Palico estimations.