Banks took a break from selling on the secondaries market last year. Financial institutions accounted for about 10 percent of deals in both value and volume, according to a recent report from advisory firm Greenhill Cogent.
It’s the first time financial institutions have represented less than 25 percent of total market volume in the last four years, largely because compliance with the Volcker Rule – which limits US banks’ balance sheet investment in private equity – was extended to July 2017.
But with implementation now just 17 months away, banks are expected to start offloading the private equity assets still housed on their balance sheets.
“They’ve been holding off and waiting for the period when they’re essentially forced to comply with Volcker,” the New York-based managing director of a global investment firm told Secondaries Investor editor Adam Le, adding that he has seen a surge in dealflow from banks already this year.
And with average pricing having dropped, they are likely to be selling at a greater discount to net asset value than what they could have previously achieved.
“They’ve potentially waited too long in terms of pricing,” the New York-based source said. “With how the public markets are right now, the banks may have already missed the boat.
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