Market Commentary 2017 Q3 – Private Equity Observations

The private equity secondary market has become a very mature marketplace with billions of dollars sloshing around in it. Secondary interests in well-known firms are very efficiently priced, often at par or just below par. Furthermore, leverage is being used by secondary firms to nudge their internal pricing models to predict something better than a public equity return. While there are some niche secondary strategies that can deliver outstanding returns in this marketplace, a big Wall Street secondary fund is not likely one of them. This brings us to the new shiny object in private equity: co-investments.