Brun Lubert acquires private equity secondaries in global real estate and private equity markets. We support real estate promoters and investors, general partners and limited partners (PE), offering customized liquidity solutions.
Private equity secondaries are pre-existing interests or assets from primary private equity funds and investors. Benefits from secondaries investments include the shorter duration, faster return of capital, access to discounts, and transparency in the underlying asset portfolio. Due to the complexity of transactions, pricing includes an investor premium. Most transactions (single and multiple asset-based) require extensive due diligence, including feasibility reports, valuations, and earnings analysis.
The global private equity secondaries market, anticipated to reach approx. USD 118bn in 2023, faced macro headwinds in 2023. The market experienced a 22 per cent decline compared to 2022, caused by a mismatch between pricing expectations of acquirers and sellers. Deal volume remained however at strong levels, and the bid-ask spread reduced in the second quarter of 2023, when the recurrence of public markets helped to create a more favourable valuation environment compared to 2022, when a decline in public equities paired with high private market valuations. The year 2023 ended with 58 per cent of transactions priced at or above NAV, and with the average bid in the LP-led market at 84 per cent. Discounts are expected to be at around 15 per cent of NAV for LP portfolio offerings in 2024.
It is anticipated that 2024 will show more secondary deal flow, and the entrance of more players to the market (in 2023, about 70 per cent of the year’s secondaries capital was raised by 4 mega-funds, which all closed above the USD 5bn market). Demand for liquidity is increasing as private equity exits are hitting record lows. Financial markets remain challenging, and pressure on promoters and GPs will continue while LPs seek ways to sell stakes before the end of a fund’s lifecycle. Another factor driving the market is the active fundraising for secondaries funds, which fundraising reached USD 681bn for 39 funds for the first 9 months of 2023. The US remains the largest market for GP-led transactions, with 64 per cent vs. 32 per cent for Europe, and 4 per cent for the rest of the world, including Asia. The latter continues to have a smaller presence in the secondaries market, in part due to the macroeconomic and political uncertainty in China.
