This year’s SI 30: Mega firms and emerging specialists

The growth of the secondaries market has been well documented. Ten years ago, deal volume in this sub-sector docked a mere $10 billion in annual trades; today it’s a $74 billion market, according to advisor Greenhill.

Our latest SI 30, published this week, documents the firms riding this wave and how much capital they have raised to invest in the strategy – a whopping $229 billion in total over the last five years. At the top of the tree is Ardian, which maintains its position as secondaries’ biggest giant, having amassed a cool $47.3 billion since 2014. The figure is a 67 percent increase on the amount it raised in last year’s ranking and is almost double that of rival Lexington Partners in second place.

The French group, which spun out of insurer AXA Group just six years ago, is now an asset management giant with products spanning buyout, real estate, infrastructure and private credit, though secondaries capital still accounts for the bulk of its AUM.

As ever, the growth in secondaries fundraising is a direct result of events in the primary market. Private equity firms are increasingly looking at ways to hold on to businesses they like rather than sell them after three to five years, with Bridgepoint, Warburg Pincus and Blackstone recent examples.

Six firms are new to this year’s ranking and all have differentiated strategies. Take Asian direct secondaries specialist NewQuest Capital Partners (25th), which has carved out a niche in the Chinese and Indian markets, sometimes closing deals that are more akin to the buyout world, expanding the definition of direct secondaries. Or Canada’s Northleaf Capital Partners, which raised $1.3 billion for secondaries last September and which plans to deploy the capital through deals including preferred equity and fund level financings.

Three dedicated real assets specialists also appear in this year’s list: Madison International Realty (15th) which provides equity capital directly to real estate owners and investors that need liquidity; infra and agri specialist Stafford Capital Partners (22nd) and Carlyle Group subsidiary Metropolitan Real Estate Equity Management (23rd). In a market that’s becoming more competitive by the day – former Landmark Partners veteran Scott Conners launched a firm this week offering retail investors exposure to primary, secondaries and co-investments – niche firms are making their mark.

LP appetite for secondaries remains strong, with almost half of limited partners surveyed for Private Equity International’s LP Perspectives Survey 2019 saying they intend to participate in the secondaries market this year. With the top 10 secondaries firms alone seeking almost $64 billion for the strategy, this is a market that’s taking an ever-increasing share of the fundraising pie.

Write to the author: adam.l@peimedia.com