Secondary Market Volume Higher Than Previously Assumed


September 26, 2013

Setter Capital, an advisor to institutional investors, recently released a new study on the secondary market for PE funds. Its Secondary Market Volume Report 2013 says that after a “strong start” to the year with USD 2.1 billion in turnover as an intermediary for secondary transactions, Setter decided to conduct a survey of all the major buyers to try to ascertain, straight from the source, the most accurate volume figures and forecasts for the 2013 secondary market.


As a result, in August it surveyed 100 of the most active secondary buyers with a seven question survey covering H1 deal volume, investment focus and estimations for H2 activity. Setter says that the survey reveals that there has been a lot more secondary activity than was previously assumed.

Key Findings of the Survey

  • Total secondary market volume for the first half of 2013 was USD 15 billion. Since the figure is pro-rated, it may in fact be low as Setter did not include more than 1000 opportunistic and non-traditional buyers in this study, whose activity as a whole may be significant1.
  • Market volume of direct secondaries for the first half of 2013 was USD 3.5 billion (~23% of total volume). Direct secondaries include fund recaps, zombie funds, purchase of single minority stakes, etc.
  • Market volume of real estate secondaries for the first half of 2013 was USD 3 billion (~20% of total volume), while the secondary markets for hedge funds and infrastructure funds were excluded from the survey.
  • 59% of participants completed at least as many or more secondary transactions by volume in the first six months of this year as compared to the first six months of 2012. The larger buyers (>USD 200 million in H1 volume) revealed that much more activity has been underway than was thought.
  • Respondents projected their volume in the second half would be 30% higher than in the first half of 2013. Thus, we project that secondary market volume in the second half will be USD 18.5 billion.

In another useful Setter Capital report for investors, and for entrepreneurs, there is a good introduction to the topic and some insights on the level of liquidity for a range of LBO, Mid Market, and VC funds. The graphic below is an excerpt.

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedIn