The Ledger
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Dawn: NAV loans used for LP distributions are unpopular and overpriced
“NAV loans that are raised against a portfolio to send capital back to LPs, very unpopular. Very high priced. Many LPs don't like them. They can raise capital cheaper themselves. So those are not popular.”
Dawn: GP-sponsored tender offers generate better secondary pricing for LPs
“The new investors typically make a commitment to the new vintage funds, and the GP is deeply involved in the diligence on the existing portfolio, which typically generates a better price for the LPs. Those transactions tend to be a win-win.”
Dawn: Capital-free secondary advisory units struggle inside large banks
“Also, I think that these are pure advisory businesses that require no capital. And the challenging to run in big integrated banks that do require a lot of capital.”
Dawn: '40 Act funds comprise ~10% of current secondary market buyers
“What we're finding is maybe 10% of our buyers right now, maybe slightly more, but what we are seeing is that when both GP and LP side, when buyers are presenting their offers, often one of the buying vehicles will be their 40 Act fund”
Buyout secondaries trade in the nineties while venture trades at 60-80 cents
“Good quality buyouts, probably in the nineties. Venture and growth, very much name specific. So some managers still very difficult to access. So you pay an access premium, but probably more like 60 to 80 cents on the dollar because there's a little bit of skep…”
Dawn: Traditional buyout managers are launching single-asset continuation secondary funds
“What we're seeing right now, I would say a fairly new development is traditional buyout managers actually looking to set up their own secondary funds, just focused on investing in single asset continuation funds.”