Could Secondaries Wipe Out the Primary Fundraising Market?
Could the active secondary market ruin the primary fundraising market for next year? It's a long shot, but so was missing capital calls, we thought. The question was posed by Mac Hofeditz of Probitas Partners at the recent Buyouts West conference, based on a thesis that secondaries are too cheap to pass up. Why would you pay full price for a piece of Carlyle Partners V when you can get exposure to the same managers in Carlyle Partners IV at a deep discount? Think about it. Just two years ago, secondary buyers were paying premiums for access to top-tier firms like they were memberships to exclusive clubs, said John Poerink of LJH Linley Capital. Now, it's open enrollment season, and at bargain prices. For example, The Financial Times and Bloomberg this morning reported discounts as high as 50% and 65% on funds from
