The evolving secondary market for private equity

As a result of the global financial crisis, interest in secondary market private equity has increased over the past 12 months. Following the sharp downturn in listed equity markets, many investors with targeted asset allocation levels found their policy threshold limits under threat. Other investors not necessarily following strict asset allocation targets were also under pressure to exit private equity (PE) investments due to deleveraging, and attempts to avoid future capital calls and minimise expected losses. The growing and evolving secondary market provides a channel for primary investors to exit illiquid investments such as PE.