April 28, 2022

60% of GP-leds price at par or better, buyers expect a decline of 10% or more in valuations in the coming quarter

ST. PETERSBURG, Fla. - Raymond James | Cebile Capital has released its H1 2022 Secondaries Outlook Report, which summarizes key trends witnessed in 2021 and early 2022, as well as the outlook for the rest of the year. Active secondaries investors globally were surveyed to gain insight into their investment activity.

The report finds that a record $130bn in secondary deals were completed in 2021, exceeding previous expectations of $100-$105m from the prior secondaries market survey. Market expectations for 2022 are for similar transaction volumes, with estimates ranging from $110-$150bn. Similarly, the overall trend of an increasing proportion of GP-led deals has continued, though 2021’s proportion of 50% was somewhat less than that of 2020 (60%).

The secondaries market continues to exhibit a boom period, showing record rates of buyer activity and deal flow. This activity has been coupled with fundraising reaching above pre-pandemic levels; with almost $40 billion raised in 2021 across 45 funds. However, these levels remain below the record-breaking 2020 volume with approximately $80bn raised across 37 funds in that year.

Continuation vehicles continue to dominate and Single-Asset transactions gain traction

While the secondaries market has its roots in LP portfolio deals, 2021 saw a positive increase in the volume of Single-Asset transactions, which included strong performing assets where the investors saw meaningful upside. The increased use of this deal technology was best exemplified by multiple >$1bn transactions in 2021. While return expectations for these assets have not changed, many managers expect to focus more on LP portfolio opportunities in 2022 to support portfolio diversification. Approximately two-thirds of survey respondents are either capacity constrained or are only looking to add exposure to Single-Asset transactions opportunistically.

Secondary deal pricing remains strong but expected downside ahead

Over the past year, over 80% of continuation fund vehicles have priced at a small discount (less than 10%) to a premium, with over 60% pricing at par or better. This pricing reflects a meaningful improvement over 2020 pricing, when many secondary deals were completed at double-digit discounts. The pricing improvement here was a result of improved financial conditions in 2021, as well as an easing of concerns concerning the impact of the pandemic. Broad return expectations for various deal types generally remained in line with historical norms.

While pricing tightened in 2021, buyers’ attitudes have become more pessimistic about valuations. The shift in buyers’ view comes from the dual headwinds of a rising rate environment and recent geopolitical tensions (such as the war in Ukraine). Approximately 90% of respondents expect a quarter on quarter drop, with approximately 20% expecting a decline of over 10%. Survey participants also noted a small shift towards a greater focus on developed markets with 10% expecting to reduce exposure to developing markets.

Market attitude towards deal features consistent

Market attitudes towards several deal features remained consistent throughout 2021. Roughly two-thirds of participants participated in deals with super-carry (top carry hurdle of >20%); of whom one-third saw it in at least 25% of their deals. Similarly, unfunded deal capital remained commonplace with approximately 85% of deals including at least 10% of the deal as follow-on capital. Conversely, staples remain broadly unpopular with some 45% of respondents not accepting this feature in their deals and only circa 20% being open to providing a staple when there is a pre-existing relationship.

1 As of April 2022, amount advised and raised and number of secondary transactions and fundraises complete prior to Raymond James’ acquisition of Cebile Capital on 1 September 2021.
Sources: Based on feedback received the most active secondary market participants on the Private Capital Advisory H1 2022 Outlook Secondary Survey.

About Raymond James | Cebile Capital

Raymond James | Cebile Capital is a global secondaries advisor and placement agent. Raymond James | Cebile Capital advises GPs and limited partners in complex transactions and has completed over 120 secondaries transaction for institutional investors and General Partners worldwide. Professionals in the GP-led Secondaries Advisory segment of its business serve as strategic advisors to GPs looking to provide liquidity solutions to their LPs; and have advised on various types of GP-led deal types, including: continuation vehicles, stapled follow-ons and/or primaries, recapitalizations, tender offers, top-ups and hybrid solutions. Raymond James | Cebile Capital has office locations in the U.S. and Europe.

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About Raymond James Financial, Inc.

Raymond James Financial, Inc. (NYSE: RJF) is a leading diversified financial services company providing private client group, capital markets, asset management, banking and other services to individuals, corporations and municipalities. The company has approximately 8,700 financial advisors. Total client assets are $1.25 trillion. Public since 1983, the firm is listed on the New York Stock Exchange under the symbol RJF. Additional information is available at