Can someone help me understand what it is that secondary private equity firms do and how they differentiate from traditional P/E? Is it just the case that these secondary P/E firms purchase assets/companies owned by previous P/E firms?

As mentioned above, PE Secondaries focus on buying existing LP stakes in ongoing PE funds. Traditional PE firms will raise capital from LPs and this capital is committed to the fund for 10 years. If an LP who is committed to a fund decides they want out before the 10 year period, they rely on PE Secondaries to buy their existing stake to exit out of the fund. The Secondaries fund then owns the LP stake, not the assets/companies. This type of investing is very different from traditional PE. Investment funds that focus on secondaries are typically Fund of Funds groups.

Secondary Private Equity Firms

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Anonymous

Secondary PE firms essentially provide liquidity in an illiquid market by buying existing stakes. They are often able to buy close to par because there is usually some reason that the LP needs to exit.

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Hammer Candlestick Red

Analyst 1 in PE - Growth

Anonymous

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Secondary Private Equity Firms

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