Secondary market deals hit record high of $69bn in H1

Secondary market activity hit a record high of $69bn (£52.5bn) in the first half of 2024, boosted by a favourable pricing environment for US and European large-cap buyout, infrastructure and private credit funds.

A report from investment banking advisory firm Greenhill highlighted a 57 per cent year-on-year increase across secondary markets, driven by the need for liquidity from both LPs and GPs.

The supply was met with strong demand from buyers, who were keen to deploy record levels of fresh capital.

Read more: GP-led credit secondaries long way off

Buyout funds made up 65 per cent of secondary deal volumes in the first half of the year, followed by venture/growth funds (15 per cent).

Infrastructure/real assets accounted for eight per cent of deal volumes, followed by private debt at six per cent.

Fund of funds/secondaries accounted for five per cent of volumes.

Read more: Private credit secondaries set to hit $30bn this year

North American funds accounted for 67 per cent of the market followed by European funds at 25 per cent, which Greenhill said shows that buyers continued to favour US assets over European ones due to the more positive macroeconomic outlook in the former.

Looking ahead, Greenhill expects secondary volumes to reach $130bn over the whole of 2024, with US interest rate cuts and improving M&A activity set to support pricing.

“We are excited about the outlook for the remainder of 2024 as a stabilized macroeconomic environment (including a further reduction in inflation and the prospect of interest rate cuts in the US), and the continued need for liquidity from both LPs and GPs lead us to expect full-year transaction volume closer to the record of $134bn reached in 2021,” the report said.

Read more: Goldman Sachs raises record $3.4bn for real estate secondaries fund

“The most visible clouds on the horizon are the ongoing geopolitical tension and rotation from the Magnificent Seven to small- and mid-cap stocks, which may negatively impact pricing for large-cap funds with significant tech exposure.

“In the near term, growth will continue to be driven by strong momentum in LP portfolio sales and sustained levels of GP-led activity as an alternative exit route to traditional M&A and IPOs. Buyer appetite is likely to remain strong on the back of a significant amount of dry powder, which we estimate at $269bn.”