NEW YORK, Jan. 4, 2022 /PRNewswire/ — NYPPEX, one of the world’s leading providers of secondary private equity liquidity and data, today announced its 2022 outlook for the secondary private equity markets worldwide with highlights from 2021.
Below are the 10 projections by NYPPEX for 2022.
1. Secondary Volumes to Increase Substantially. In 2022, NYPPEX projects that current deal momentum will continue and secondary transaction volume will increase significantly by 32% to approximately $122.1 billion worldwide.
In 2021, NYPPEX estimates that secondary transaction volume increased approximately 63% YOY to $92.5 billion worldwide for interests in alternative funds and securities in private companies. In 2020, COVID adversely impacted the secondary markets causing an estimated 24% decline in transaction volume to approximately $56.7 billion compared to $74.5 billion in 2019.
2. Secondary Price Discounts to Increase. In 2022, NYPPEX projects that secondary purchase discounts will increase both to net asset values (funds) and valuations of capital rounds (companies) due to investor’s renewed concerns about the impact of COVID on businesses.
3. Corporations will Continue Asset Sales. In 2022, NYPPEX projects that corporations will continue to "carve out" and divest holdings in slower growth businesses as they reposition to higher growth businesses.
4. GP-Led Secondaries to Increase, Particularly Continuation Funds. In 2022, NYPPEX projects that GP-led secondary transactions will continue to comprise 40% or more of total volume, particularly in the use of "continuation funds" which enable single assets to continue to be held and managed by GPs.
In 2021, Clayton Dubilier & Rice sponsored a noteworthy continuation fund to transfer its estimated 61% stake in Belron and received co-investments from Hellman & Friedman and Blackrock.
5. European Asset Sales to be Significant. In 2022, NYPPEX projects that sales of European assets will comprise a significant percentage of secondary transactions worldwide, driven by the ongoing adverse impact of COVID particularly on European businesses.
6. Secondary Buyers Seek More Credit & Income Funds. In 2022, NYPPEX projects that secondary buyers will increasingly seek interests in credit funds for stable income returns, due to concerns about contracting valuation multiples as inflation, interest rates and tax rates increase.
7. Valuations to Increase for Online Services Businesses in Alternative Assets. In 2022, NYPPEX projects that online service businesses in alternative assets will continue to command significant relative valuations as evidenced by the estimated $4 billion valuation for Forge Global (via SPAC), a secondary marketplace for shares in venture-backed private companies and the estimated $6 billion valuation for iCapital Network, which provides access to alternative funds for private wealth investors.
NYPPEX believes the above valuations compare favorably to the estimated $1.75 billion valuation for Lexington Partners acquired by Franklin Templeton and the estimated $1.08 billion valuation for Landmark Partners acquired by Ares in 2021.
8. SPVs to Continue for Secondary Direct Investments in VC-Backed Companies. In 2022, NYPPEX projects that special purpose vehicles (SPVs) will continue to be popular deal structures for direct investments in venture-backed private companies.
9. New Secondary Buyers Will Gain Market Share. In 2022, NYPPEX projects that new secondary buyers will continue to increase their market share of the secondary transactions.
To illustrate, in 2021, Blackrock’s inaugural secondary fund led the estimated $1.2 billion acquisition of private equity assets sold by Mubadala Capital, the asset management subsidiary of a $243 billion sovereign wealth fund in the UAE, which was in addition to Blackrock’s $400 million commitment to Mubadala’s 3rd private equity fund.
10. Former Founders Will Continue with Personal Investments. In 2022, pioneer founders of the alternative asset industry will continue to remain active. To illustrate, David Rubenstein, a co-founder of the Carlyle Group, started his own family office, Declaration Partners, which has made an estimated 23 direct investments typically in Series B through F rounds.
About NYPPEX Holdings
NYPPEX Holdings operates a global private marketplace that provides price data and the opportunity for qualified investors to access secondary liquidity in alternative investment funds and in private companies in a fair and ethical manner. Its clients include alternative investment funds, financial institutions, endowments, foundations, institutional investors, family offices, private clients and their respective advisors worldwide.
Since 2004, the NYPPEX QMS™ has been formerly recognized by the U.S. Internal Revenue Service as a Qualified Matching Service for private partnerships though a private letter ruling under Internal Revenue Code §1.7704.
Its private securities are privately offered only to qualified investors through NYPPEX, LLC and only in jurisdictions were permitted. NYPPEX is regulated in the U.S. by the SEC and FINRA. Member FINRA, SPIC.
SOURCE NYPPEX Private Markets