Brian BollenGlobal investment manager Schroders reports the completion of the acquisition of Adveq, a Swiss asset manager investing in private equity globally. The buy, announced on 20 April, has now received regulatory approval. Adveq has been renamed Schroder Adveq.
Schroders says the acquisition accelerates the growth of its private assets business, with more than US$7bn of client commitments. It complements existing capabilities and expertise in the real estate and infrastructure finance sectors.
Sticking with private equity and Switzerland, a just-published report from Crédit Suisse shows that secondary market private equity activity could near record levels this year. The figure could pass the record $38bn seen two years ago.
Turbulent and unpredictable
On the back of a politically turbulent and unpredictable 12 months, it is clear that the secondary market is going through its own cyclical and secular changes, if for different reasons, say the authors of the report.
It is increasingly common to hear conflicting statements from secondary buyers and sellers relating to deal volume, pricing and market trends, in line with the theme of polarisation globally and the “certainty of uncertainty”.
“While Q1 was deemed 'quiet' by some (on the back of a 20% fall in transaction volume in 2016), others state they have been exceptionally busy - this included our secondary advisory team which closed nine transactions during the first quarter.
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Mark McDonald, global head of secondary advisory at Crédit Suisse PFG; courtesy of Crédit Suisse
Keeping the market buoyant
“While there was an apparent dearth of quality limited partner (LP) portfolios earlier in the year, the variety of other transaction types - including general partner (GP-led), direct, infrastructure and more structured LP deals - kept the market buoyant.
“We have seen a further rise in deal flow in Q2, with several larger LP portfolios being launched and more sizeable GP‑led transactions of higher quality assets. Our estimate for 1H transaction volume is $13bn–$15bn, with an estimate of $35bn–$40bn for 20171.”
This could put the market back to near-record territory, say the authors. “Of course, with $3 trillion of private assets under management globally, the market has a lot of room to grow further,” they add.
Echoing Preqin findings
This echoes an earlier finding from private equity data specialist Preqin. It suggests that 2017 could be a record year for secondaries fundraising. This is despite a slowdown in the second quarter of the year.
This in turn follows on from a record high in the first quarter, when several mega funds held a final close leading to a total of $19.4bn being raised, says Preqin. This represents 71% of the total capital secured by funds closed during the whole of 2016.
There are currently 45 funds in market seeking $32.4bn, it adds. The aggregate capital targeted is down from the start of 2017. This is due to the closures of certain mega vehicles. But it is still a significant amount, observes Preqin.
