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Harken Q3 2014 Private Equity Secondaries Market Update

Boston, MA—Harken Capital is pleased to present its Q3 2014 Private Equity Secondaries Market Update.

The summary of secondary bids presents a picture that the secondary market continues to become more competitive, especially during periods of high volume activity.  Large, non-traditional secondary buyers continue to enter the market, buying fund position with an eye toward enhancing overall returns and shortening the J-curve in their investment portfolios.  Often being outbid by strategic buyers for small portfolio sales and one-off sales, secondary funds have shifted their focus on structured solutions and fund recapitalizations.

Chart:  Q3 2014 Bid Spreads by Fund Type(1)

Q3 14 Pricing

Below are some additional observations of Harken Capital’s analysis of the secondary private equity market through Q3 2014:

–  Record high transaction volume through Q3, numerous large portfolio sales closed in 2014 with more expected to close by year-end
–  Capital overhang is estimated at $35bn, could grow to $50bn over the next two years if capital is not deployed
–  Secondary funds are currently seeking another $15bn, resulting in further buying pressure
–  Increased seller activity for Energy and Real Estate funds coupled with buyer sophistication has led to record level pricing
–  Pricing for Mega Buyout has remained competitive, many funds pricing above par value
–  Secondary fund buyers are increasingly using leverage at the transaction level and structuring to meet seller’s expectations

With Harken’s dual platform as a placement agent and secondary advisor, we are well positioned in the market to advise on various situations involving secondaries.

 About Harken Capital

Harken Capital Securities, LLC (“Harken”, member FINRA, SIPC) provides fund placement services to buyout, growth, energy, healthcare, and other industry-focused venture capital and private equity firms. We provide both primary fundraising and secondary transaction services to institutional clients. Harken was co-founded by Don Nelson and Fred Malloy.

Our team has over 35 years of experience building private equity firms, raising capital for emerging managers, making fund commitments and raising capital as placement agents. Harken team members have raised over $3.9 billion in commitments from leading investors around the globe, and advised on over $2.6 billion of secondary transactions. Our founders have each had a key role building a top-performing investment firm. This heritage as private equity investment professionals provides us with an investor-focused perspective that sets Harken apart from traditional placement and secondary advisory firms.

For more information on our secondary services, contact Nick Hatch at 415-774-6467 or nick@harkencapital.com. For more information on other Harken Capital services, contact Don Nelson at 617-899-2048 or don@harkencapital.com.

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