Erica Seidel
Principal
Blackstone Strategic Partners

What’s been the most unexpected development you’ve seen in the secondaries market?

I never could have predicted how mainstream secondaries would become when I started my career with Strategic Partners 10 years ago. What began as a niche solution – and, in many cases, [a solution] for forced sellers – has become a regular portfolio allocation exercise and front of mind for GPs and LPs alike.

Which area of the secondaries market are you most excited about and why?

I am particularly excited about the buying opportunity this current market cycle will create. Market turbulence should drive strong dealflow, and I think we are well positioned to provide holistic LP portfolio solutions given our scale, platform and multi-asset capabilities.

What can the secondaries industry do to better attract and retain diverse professionals?

Recruiting has everything to do with awareness. We are starting early [by] educating students at the beginning of their college careers about the secondaries space. We’ve come a long way since I started in secondaries, but there is always more work to be done.
My view on the retention challenge boils down to community building and connectivity.

While there are a number of larger firms with diverse teams today, many others are small and scaling. Affinity networks that span across firms and strategies, like Women in Secondaries, are key to creating an inclusive market.

If you had $100 million to invest in secondaries strategies, what types of strategies would you back and why?

I think this period of market volatility will create opportunities for holistic LP portfolio solutions. LP-led secondaries tend to be resilient in recessionary environments, so that is where I would be focused from a capital allocation standpoint. I would also remain opportunistic and supplement that allocation with high-conviction, concentrated GP-leds with the right risk-adjusted returns.

What piece of advice would you give to someone considering a career in secondaries?

There is no other area of investing that offers the breadth of exposure that secondaries does. Secondaries investing spans every industry, geography, asset class and part of the capital structure. It is the perfect career for a lifelong learner, and I can honestly say that, 10 years in, I continue to learn something new every day.

 

Giorgio Riva
Partner
Whitehorse Liquidity Partners

What’s been the most unexpected development you’ve seen in the secondaries market?

The ascent of the GP-led transaction from about 25 percent of the market in 2017 to nearly 50 percent in 2021. I recall the early days in 2011-12 when GP-led transactions were very few and far between. To see the number and quality of GPs that have embraced this market over the last 18 months is very unexpected.

Which area of the secondaries market are you most excited about and why?

The concept of secondaries has always been to inject liquidity into an otherwise illiquid asset class, but the last five years has seen an incredible expansion of this definition. While 2021 was a banner year, I believe we’re at the bottom of the first inning of this market undergoing immense growth.

What can the secondaries industry do to better attract and retain diverse professionals?

We are focused on building from the ground up: widening the funnel of candidates, deepening our networks and creating a compelling environment for attracting diverse talent. This does not happen overnight. It takes time and commitment. The good news is that there has been increasing diversity within the industry over the last several years, but there is certainly more to do.

If you had $100 million to invest in secondaries strategies, what types of strategies would you back and why?

Similar to other markets, the secondaries market has a risk-return spectrum. You have lower-risk strategies, such as structured solutions; medium-risk, such as plain vanilla LP secondaries; and higher-risk, such as GP-led transactions. As a believer in the overall growth and opportunity in the secondaries market, I would take a diversified approach along the risk-return spectrum.

What piece of advice would you give to anyone considering a career in secondaries?

The secondaries market is incredibly dynamic and ever-changing. It makes it very exciting – however, it takes the right mindset to thrive. Embrace change, make it your constant, and approach it with a positive attitude.

 

Marianne Parker
Vice-president of secondary and portfolio finance
AlpInvest

What’s been the most unexpected development you’ve seen in the secondaries market?

How quickly the market has grown in such a short period of time. When I started in secondaries, we were spending a lot of time educating GPs on the market and the different solutions on offer. Now, GPs know this space very well, and top-performing GPs use the secondaries market frequently as a portfolio management tool to manage liquidity.

Which area of the secondaries market are you most excited about and why?

The preferred equity space, I think, is the most interesting at the moment, particularly with the current market dislocation and pricing expectations. It’s also still a niche part of the market that is underpenetrated and still has room for plenty of innovation, which is really exciting, as it pushes us as solution providers to think creatively in every transaction.

What can the secondaries industry do to better attract and retain diverse professionals?

Personally, I think the biggest thing is to have senior role models to show others that you can have a long, successful career and also balance your personal life. I’ve been fortunate enough to have been surrounded by senior women who have inspired me along the way, and I make a conscious effort to do the same for other women who are coming up the ranks.

What piece of advice would you give to someone considering a career in secondaries?

One: think creatively. This industry has grown exponentially and is expected to continue on the same trajectory. You should never be afraid to put an idea out there – it might be the one that sticks.

Two: get to know people. That was the first piece of advice I received when I first joined this industry, and I feel like it’s helped me so much.

 

Wilfred Small
Senior managing director
Ardian

What’s been the most unexpected development you’ve seen in the secondaries market?

The sheer scale of our market today. Most people outside of our industry had not heard of secondaries a decade ago; today, most people have, and want to have a conversation about it. The [roughly $130 billion] deal volume last year reflects highly sophisticated sellers that are increasingly strategic in what they are trying to achieve, often leading to complex transactions where a secondaries purchaser is not just a buyer, but a solutions provider.

Which area of the secondaries market are you most excited about and why?

Specialisation is increasingly important in our industry. In addition to traditional sales, we specialise in strategic partnership transactions where we look to help a seller achieve some sort of strategic objective – for example, the creation of a third-party asset management business. We expect to see more and more of these sorts of deals, given the number of mature private equity programmes that now exist globally.

What can the secondaries industry do to better attract and retain diverse professionals?

We’ve been very intentional about expanding our pool of applicants and not continually dipping back into our professional networks, but instead targeting applicants with less traditional academic backgrounds. We have a world-class team, and the more we empower role models and create the right environment for people of all backgrounds to be successful, the easier it is to attract and retain talent. It is self-reinforcing.

If you had $100 million to invest in secondaries strategies, what types of strategies would you back and why?

On LP- versus GP-led transactions, I am agnostic from a philosophical standpoint, but I think it is important to remember what has made secondaries historically so compelling from a risk/return standpoint: diversification, buying at discounts and clear visibility on near-term distributions. When that can manifest itself through the GP-sourced channel, I would be opportunistic. Across any sub-strategy, I would focus on high-quality, market-leading companies and GPs, which is the best mitigation to market cycle.

What piece of advice would you give to someone considering a career in secondaries?

Go where the opportunity is, and embrace the fact that you sit in your seat as both a GP and an LP. You get a real appreciation for the inner workings and nuances of our industry.

 

Louis Choy
Principal, secondary and portfolio finance
AlpInvest

What’s been the most unexpected development you’ve seen in the secondaries market?

The innovation and sheer growth of the market. When I started, the market was predominantly LP secondaries and about $10 billion. It felt like a very niche business at the time. It was still interesting to be part of this product at the time, but it was unknown. Now it’s more than 10 times the size and has really become an all-encompassing asset class focused on liquidity.

Which area of the secondaries market are you most excited about and why?

All of it. Despite the significant growth that we’ve experienced in the secondaries market, we are still far away from the ultimate goal of having significant liquidity in the private equity asset class. We have made great strides and there continues to be development on both the investor side and GP side to make the decision to invest in private equity a much easier and liquid [one]. As an industry, we have so much in our remit, and it’s on us to create and add more tools to our toolkit.

What piece of advice would you give to someone considering a career in secondaries?

While we have experienced significant growth in the secondaries market, it continues to be a small group of people relative to the broader PE market. We have been able to create a culture that is enjoyable for all the participants, despite competition. My advice would be for people to be genuine and show a bit of their personality – don’t hide behind a facade.