Lazard 2023 Secondary Market Report

Reports and studies — Financial Advisory

February 01, 2024

Increased Momentum in Secondary Deal Flow and Volumes in H2 2023, with Robust Activity Continuing into 2024

The secondary market ended on a strong note in 2023, delivering a third consecutive year of estimated volumes in excess of $100 billion and notching the market’s second highest annual tally in 2023. Across both the GP-led and LP-led markets, a continued lack of liquidity from traditional sources drove investors to seek more innovative methods of generating proceeds through the secondary market. The market experienced a relatively slow first half of 2023 and then a very strong second half as investors and sellers appeared to perceive opportunity and bid-ask spreads narrowed.

Our Key Findings:

  • GP-led transactions represented ~44% of the secondary market volume in 2023, with continuation funds dominating the GP-led market at ~78% of total volume
    • Single-Asset Continuation Funds remained the most prevalent transaction type, representing ~39% of total GP-led market, but Multi-Asset Continuation Funds followed closely behind at 38% as diversified portfolios are gaining favor
    • GP-led pricing fell in 2023 versus 2022, however, a large majority of transactions (~70% of total) are still being priced at or above 90% of NAV
  • LP-led volumes landed at close to ~$61B in 2023 and we have witnessed higher deployment rates in the latter half of the year; we expect this momentum to continue into 2024 stemming from improved pricing and increased stability in the broader macro-environment
    • We note a fourfold increase of sellers pursuing an LP-led secondary transaction to generate liquidity relative to 2022, as nearer-term monetization events remain limited
    • Broadly speaking within LP-led transactions, we observed 50%+ of LP-led portfolio pricing continued to remain around 80-95%+ of NAV, with particularly strong pricing across buyout, credit and infrastructure strategies in developed markets

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