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Takeaways from The Women’s Private Equity Summit

Members of the Nasdaq Fund Secondaries team attended The Women’s Private Equity Summit in San Diego, CA for a series of panels and networking with Limited Partners (LPs), General Partners (GPs) and leading advisors to the industry. Here are some key takeaways from the event.

Members of the Nasdaq Fund Secondaries team attended The Women’s Private Equity Summit in San Diego, Calif., for a series of panels and networking with Limited Partners (LPs), General Partners (GPs) and leading advisors to the industry.

Here are some of the key takeaways from the event.

Liquidity Remains a Focus in the Near-Term

An abundance of large LP-led deals in the market are priced at a discount to Net Asset Value (NAV). This is a contributing factor for GP-led deals to also price at a discount, which has led to a relatively low uptake from LPs over the last year.

Conversations highlighted a recent high-profile tender, whose deal’s relatively low level of participation (about 3%, compared to the 10%-20% range that is typically seen as positive, according to sources of Secondaries Investor) reflected its marked-down value of 81 cents.

While more traditional liquidity remains challenging, GPs are turning to alternative solutions such as NAV lending and continuation vehicles to raise capital for follow-on investments and to offer liquidity to LPs.

Not All Seller Motivations are Equal

On the other side of the market, comments from GPs highlighted three main LP profiles and implications for deal pricing:

  1. Institutional sellers have the sophistication to know what price they need to attain to affect a sale.
  2. Distressed sellers may be facing allocation or regulatory pressures and are likely to accept significant discounts to achieve liquidity.
  3. “Wait-and-see” sellers are more likely to look for creative solutions, such as an earn-out, in times of price dislocation.

Deal Volume is Expected to Hit Record Levels Again This Year, but Headwinds Remain

Overall sentiment indicates that the secondary market has the potential to grow to $1 trillion (USD) or more in annual volume within the decade. Discussion centered around two key challenges to this milestone: capitalization and resource constraints.

Capitalization continues to be the primary constraint, although the raise of mega pools and participation from new sources, such as traditional LPs, will likely increase capacity. With institutional allocators, such as CCPIB, expanding mandates to seek secondary opportunities directly instead of investing through secondary fund managers, it is likely others will follow suit.

A second growth inhibitor is the lack of resources required to scale. LPs cited a lack of time to do proper diligence or complete requisite workflows as the reason they do not participate in secondary processes. Meanwhile, advisors and intermediaries pointed to a “lack of bodies” as a reason for forgoing engagements.

Meaningful intervention from technology can address barriers to growth by increasing deal team capacity and streamlining processes for participants.

To learn more about the Women’s Private Equity Summit, visit: withintelligence.com/womensprivateequitysummit

To learn more about the Nasdaq Fund Secondaries liquidity platform, visit: nasdaq.com/solutions/fund-secondaries

 

Nasdaq Fund Secondaries

Nasdaq Fund Secondaries supports the rapidly changing Secondaries landscape, enabling private fund sponsors and investors seeking liquidity to streamline the process- from onboarding through settlement.

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