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2023 Secondary Market Overview

Category: Secondary Market Research Year: 2023
28 February 2023
The global secondary market performed better than expected in 2022, despite highly challenging macroeconomic and geopolitical conditions.

Our annual report on the global secondaries market provides insight on market dynamics, trends and factors that are shaping the asset class as well as our views on the outlook for 2023. The report is based on proprietary data gathered from a survey sent to more than 100 of the largest and most active secondary participants globally.

A meaningful quantum of deal flow in the first half of 2022 was carried over from Q4 2021 as deals took longer to close. The second half, however, proved to be more productive than most market participants anticipated, representing approximately 50% of the full year’s activity.

Average transaction size reached $82 million in 2022, up from $74 million in the prior year, while the average number of transactions completed by secondary buyers also increased, demonstrating an increase in the breadth and depth of the market.

We believe new market constituents and innovation will continue to drive the market forward. In the short to medium term, we expect to see increased appetite for structured secondary liquidity and family offices playing a more active role in the ecosystem, among other trends.

Gerald Cooper

Partner & Head of North American Secondaries

“Secondary buyers reacted with a mix of opportunism, conservatism and skepticism throughout the year and several key themes highlighted an overall resilient and well-functioning market.”

Key findings include:

Robust market volumes

Market volumes hit $106 billion, posting the second highest volume ever, despite a depressed deal environment. There were fewer jumbo-sized transactions, but the market was buoyed by small and mid-sized deals.

Greater appetite for LP-led transactions

Secondary buyers shifted their attention to LP transactions where they were more likely to pick up assets at a discount to NAV and could add more diversified exposure to their investment programs.

Significant pricing disparity

Secondary prices for GP-led positions held up relatively well with 80% of the transactions pricing at 90% of NAV or better. Pricing for LP-led transactions fell more precipitously with only 38% of transactions pricing at 90% of NAV or better.

Quality trumps diversification in GP-leds

Single asset transactions totaled $21 billion, outpacing multi-asset GP-led deals, as investors chose to participate in transactions involving only the very best assets.

Deferred payment structures became key

More transactions include deferred payment plans in 2022 and the length of the deferral periods were also significantly extended, helping to bridge the gap on pricing.

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