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2017 Record Year For Secondary PE Volume

NYPPEX, a platform for secondary private equity transfer administration, announced that 2017 was a record year for secondary transaction volume in their just released: 2017-2018 Secondary Private Equity Market Trends and Outlook Worldwide Report.   

The report includes the following data estimates:

  • For Secondary LP Interests in Private Equity Funds:
     
    • 2017 secondary transaction volume increased approximately 9.8% to $41.4 billion for LP interests, a new record which surpassed 2015 volume of $40.6 billion. 
       
    • Secondary median bids increased the most for Venture funds, +8.2% to 85.06 (% of NAV), while bids for Energy and Natural Resource funds declined the most, -9.8% to 84.3. Buyout funds had the highest median bids at 98.3. Buyout funds continued to command the highest secondary median bids at 98.3. 
       
    • Regionally, secondary median bids increased the most for U.S. private funds at +10.1%, followed by European private equity funds at +9.8% and +2.7% for Asian and rest of world private equity funds.
       
    • "The average age of private equity funds continued to increase in 2017. NYPPEX estimates that private equity funds aged 15 years or more increased to comprise approximately 24% of the number of all private equity funds worldwide as of December 31, 2017 as compared to 16% as of December 31, 2013," stated Laurence Allen, Managing Member, NYPPEX. 
       
    • "For 2018, NYPPEX projects another record in secondary transaction volume for LP interests in private equity funds to $45.5 billion, driven by current deal pipelines and available cash," stated Laurence Allen, Managing Member, NYPPEX.
       
  • For Secondary Shares in Private Companies: 
     
    • 2017 secondary transaction volume increased approximately 10.7% to $23.8 billion for secondary shares in private companies, also a new record which surpassed 2015 volume of $24.3 billion. 
       
    • Secondary bids for shares in venture-backed Unicorn private companies improved from a 35% average discount in the 1Q2017 (to a Unicorn company's last capital round valuation) to a 15% average discount in the 4Q2017. 
       
    • "Despite the improvement in secondary bids for shares in venture-backed Unicorn private companies throughout 2017, bids continued to vary significantly among Unicorn companies indicating investors' concerns as to exit valuations and timing," stated Laurence Allen, Managing Member, NYPPEX. 
       
    • "For 2018, NYPPEX projects another record in secondary transaction volume for secondary shares in private companies to $26.7 billion, if sellers' offer prices reflect market conditions and not aggressive projections," stated Laurence Allen, Managing Member, NYPPEX. 

In addition, the report contains NYPPEX year-end secondary median bids on the 100 largest private equity, buyout, venture, real estate and other private funds worldwide and the 20 highest valued venture-backed Unicorn private companies worldwide.