As LPs look to sell-off certain interests in private equity funds as tougher times force them to rethink strategy, the sales of limited partnerships in private equity funds is expected to grow by 20% to a record $18bn this year, according to NYPPEX. This is in line with the overall growth being experienced by the secondaries as a whole. The secondaries market typically fairs better in difficult times and now is no exception. Many institutional investors are looking for some immediate returns to their portfolio investments in light of current market conditions.
Also, 84% of institutional investors are worried that GP strategy “drift” will effect their returns. The irony cannot be lost that often drift is a result from LPs increasing appetite for PE as an asset class. All the money LPs have given PE firms has to go somewhere.