Expect Lower Returns Ahead for
Highly Leveraged Secondary Private Equity Funds
Some deleveraging already started in anticipation of higher interest rates
NYPPEX, one of the world’s leading providers of secondary market liquidity and data for interests in alternative funds, recently announced in its 1Q2022 Secondary Market Commentary, expectations for lower returns in highly leveraged secondary private equity funds beginning in the 2Q2022.
We believe lower returns will result in secondary funds (a) deleveraging (which started in the 4Q2021) or (b) maintaining leverage at higher interest expense. Either way, NYPPEX expects lower returns ahead for highly leveraged secondary private equity funds.
As a result, NYPPEX bid-offer price spreads widened in the 1Q2022 for interests in secondary private equity funds, depending on leverage.
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 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.
Disclosure: This information is market commentary by NYPPEX and is not a solicitation of private securities transactions which may only be done through private offering documents and in jurisdictions where permitted. Investors should not rely on the information in this commentary as the basis for making investment decisions. This commentary is provided for informational purposes only. You are strongly encouraged to consult with your own independent advisors regarding any issues discussed in this commentary.
Private placements are illiquid, speculative and investors may lose their entire investment.