Secondaries: The year of the seller?

Talking to secondary market professionals about the dynamic in 2013, the term “window of opportunity” gets thrown around a good bit. Many have been sitting around this year waiting for sellers to open that ‘window’ by coming to the market.  

Deal activity on the secondary market in the first half of 2013 was more than 50 percent down on the equivalent period in 2012, according to the latest pricing report from Cogent Partners. In 2012, the market saw about $13 billion of activity; this year, around $7 billion of deals were done.

However, Cogent believes total secondary deal activity for the year will be somewhere between $18 billion to $20 billion. Placement agency and secondary advisor Triago takes a similar view, pegging likely deal volume for 2013 at around $20 billion. 

For this to happen, activity will have to pick up substantially in the second half. And this would have to be driven not just by the many small and specialised transactions that have dominated the market so far this year, but by large portfolio deals as well. 

As things stand today, it does appear that deals are starting to trickle back into the market. The hope among secondary buyers is that this trickle will become a flood in the latter half of 2013. 

“I just don’t think the supply was enough in the first half,” says Hugh Perloff, managing director with Portfolio Advisors. “And the supply that was there wasn’t really supply, it was people putting out feelers – if people met their expectations, they sold. Now we’re seeing more stuff coming into the market. I’m of the opinion that the second half will be much more active than the first half, which is traditionally the way the market has run. I’d like to believe we’ll see some pretty robust activity.”