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HARKEN 1H 2015 PRIVATE EQUITY SECONDARIES MARKET UPDATE

July 2015: Boston, MA—Harken Capital is pleased to present its 1H 2015 Private Equity Secondaries Market Update.

1H 2015 Bid Spreads by Fund Type

The summary of secondary bids received by Harken shows continued depressed pricing for energy and venture, and peaked pricing for buyout. The drop in oil prices coupled with reduced buyer interest pushed pricing for energy funds down during Q1, but recovered somewhat during Q2. Buyout funds remain the most competitive with a number of Sm/Mid buyout funds pricing well above NAV. Increased demand and competition for fund of funds has resulted in an uptick in pricing. Throughout 1H, many sellers took advantage of favorable market conditions by selling “tail-end” portfolios or non-core funds for portfolio management.

1H 2015 Bid Spreads by Fund Type

Note: Represents median high and low bids received by Harken Capital during 1H ’15. Other includes Natural Resources, Co-Investment, Distressed, and Fund of Funds.

Historical Bid Spreads

Secondary market pricing for funds continues to be competitive as the market has matured. 20% of all traditional LPs are active participants, often participating in auctions and other competitive situations. The buyer universe continues to expand –55% of the LP universe buying fund positions opportunistically.

Secondary Bid Spreads Overtime

Note: Represents median high and low bids received over specified time periods

Secondary Capital Raised and Transaction Volume

2015 total volume is expected to be lower than 2014. However, 2014 transaction volume increased more than 50% from 2013 and reached all-time highs, numerous large portfolio sales, overall more sellers and broader range of opportunities. Capital overhang is estimated at $65bn, could grow to $100bn over the next two years if capital is not deployed. Secondary funds are currently seeking another $25bn, resulting in further buying pressure. Traditional LPs continue to enter the secondary market for “strategic” reasons, enhancing returns and shortening j-curve effect, often outbidding secondary funds for one-off funds.

Secondary Capital Raised and Volume

Note: 2015E is expected 2015 total capital raised and volume as of July. The above charts contain information which discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.

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