It's a Buyer's Market: Q&A With a Secondaries Intermediary
After the interest in our post about Cogent Partners’ secondaries pricing report, I spoke with one of its authors, Cogent managing director Colin McGrady, about some trends he’s seeing in the market. What’s the biggest concern for secondary sellers right now? Institutional investors are really concerned that once the buyout funds start to believe the environment is good to make investments, those capital calls will come fast and furious. It won’t be a normalized capital calls pace. There will be nothing in terms of liquidity, and they’ll have a big wall of capital calls that come. So, naturally, that’s affecting saturation on the secondary market. As people budget for the next fiscal year, nobody is expecting any liquidity. They’re looking at uncalled capital and saying, “We could have a serious problem here.” The easiest way to solve that is the secondary market. But for immature interests in mega-caps, there is no market for those. The big buyers in the secondary market say, “We got our fill of those in ’07 when they were raising them. (The mega-buyout funds) didn’t turn away any capital.”
