• Bid prices and depth of liquidity worldwide continued to improve in the 3rd quarter of 2020 for secondary interests in private equity funds as their 1st and 2nd quarter net asset values were disclosed.

• However, prices have been more resilient year to date in the private wealth channel as institutional investors continue to be highly selective given the uncertain business environment caused by COVID-19 and the US Presidential election.

• In the private wealth channel, secondary bid indications were approximately 72.50 on average (% of NAV) or 12% lower as of August 31, 2020 compared to 81.20 on average as of December 31, 2019 for sub $5 million transaction sizes of interests in private equity fund of funds.

• In the institutional channel, secondary bid indications were approximately 75.25 (% of NAV) or 15% lower as of August 31, 2020 compared to 86.25 as of December 31, 2019 for $10-25 million transaction sizes of interests in private equity funds.

• We believe there are two secondary price trends that are particularly noteworthy in the 3rd quarter of 2020. First, is that prices have decoupled between publicly-traded alternative asset funds, which have declined approximately 27% on average year to date, compared to secondary interests in private equity funds, which have declined approximately 15% in the institutional channel (and 12% in the private wealth channel).
  
  Second, is that secondary price spreads are historically tight at only 275 basis points between private wealth secondary bids at 72.50 for interests in fund of funds compared to institutional secondary bids at 75.25 for interests in funds. Historically, NYPPEX estimates the secondary bid price spread between private wealth and institutional transaction sizes and fund structures has been approximately 665 basis points.
  
  Our take away is that private wealth secondary buyers are currently more confident about the future relative performance of private equity funds vs. stocks in general, than are secondary institutional investors. Given the record amount of capital raised for secondary private equity funds year to date in 2020, we project this price spread will normalize in 2021.

• Fund of funds with significant exposure to the retail, travel or leisure industries were bid at 68.75 and lower on average in the private wealth channel, while funds with similar risk exposures were bid at 67.72 and lower or received no bids in the institutional channel.

• Depth of liquidity and probability of execution remained strong at NYPPEX as we executed 25 of 27 managed auctions for a 92% success rate year to date. The 2 unsuccessful auctions were due to seller’s unreasonably high offer prices.

• Called percentages have varied significantly from 15% to 90% year to date for secondary interests in funds in both the institutional and private wealth channels. However, unlike prior years, few tail end private equity funds transacted thus far in 2020.

• General partners’ tax compliance remained highly disciplined as the NYPPEX Qualified Matching Service (the “NYPPEX QMS”) under IRS Regulation 1.7704 was utilized on approximately 67% of our managed auctions year to date in 2020.

• The time period from launch to settlement date for non-QMS secondary private transfers at NYPPEX remained steady in 2020 at approximately 44 days, despite COVID-19 work from home policies that impacted sellers, buyers and underlying private equity funds.

• For limited partners seeking to evaluate portfolios of private equity funds, NYPPEX provides the opportunity for superior analytic insights, transaction speed and price execution through its NYPPEX QMS Platform™ and proactive marketing approach by its specialized professionals.

• Qualified private wealth and institutional clients interested in a confidential discussion with one of our Managing Directors are welcome to contact NYPPEX at ir@nyppex.com or by phone below.

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+1 914 305 2800	+41 43 508 7280	+65 3158 1383

About NYPPEX Private Markets

• NYPPEX is one of the world’s leading Qualified Matching Services (“QMS”) and secondary private equity transfer administrators worldwide. Our specialized professionals and the NYPPEX QMS Platform™ provide clients the opportunity for superior transaction speed and price execution, at low cost

• We have provided access to deep liquidity from established client relationships located in over 26 countries. Our clients include alternative investment firms, private companies, pension funds, financial institutions, endowments, foundations, family offices and their respective advisors worldwide.

• Since 2004, the NYPPEX QMS™ has been formerly recognized by the U.S. Internal Revenue Service (through private letter ruling PLR-111165-04) as a Qualified Matching Service for private partnerships under Internal Revenue Code §1.7704. Securities privately offered through NYPPEX, LLC in jurisdictions were permitted. NYPPEX is regulated in the U.S. by the SEC and FINRA. Member SIPC. www.nyppex.com.

Copyright © 2020 NYPPEX Holdings, LLC. All rights reserved.

This commentary is for informational purposes only and only for the addressee specified, which we understand to be a Qualified Purchaser and holder of private equity fund assets. It does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security which may only be done through an issuer’s offering documents and in jurisdictions where permissible. Nothing contained in this email or subsequent document constitutes investment advice or offers any opinion with respect to the suitability of any security. The views expressed on this email and subsequent documents should not be taken as advice to buy, sell or hold any security. In preparing the information contained in this invitation, we have not taken into account the investment needs, objectives and financial circumstances of any particular investor. This information has no regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this information and investments discussed may not be suitable for all investors. Any views expressed on this invitation or subsequent report by NYPPEX were prepared based upon the information available to NYPPEX at the time such views were written. Changed or additional information could cause such views to change. All information is subject to possible correction. Information may quickly become unreliable for various reasons, including changes in market conditions or economic circumstances.