Private Equity - Secondaries

In 1998, Partners Group transacted the biggest secondary transaction ever seen in the market with approximately USD 250 million transaction value. Since then the company has invested more than USD 10 billion in secondaries in the private markets industry and is today one of the largest secondary investors worldwide. Secondary investments at Partners Group involve acquiring single or portfolios of assets on the secondary market. Partners Group executes secondary investments across all asset classes and offers investors liquidity or an exit possibility in a market which is highly liquidity-constrained. Investors benefit from high deal flows mainly sourced in proprietary situations and the negotiation and timely execution skills of Partners Group’s investment professionals and its internal legal and transaction team.

In depth understanding of individual assets. Partners Group is a successful value-based secondary investor who understands the individual portfolio asset and the business model at a fundamental level due to investments in more than 5'000 private assets in markets in which no public information is available. Partners Group tracks the performance of each individual asset.

Value creation. Moreover, Partners Group is actively involved in the value creation of assets bought on the secondary market. Partners Group thus acquires high quality assets with significant value potential and/or undervalued assets at their point of inflection, searches for non-competitive acquisitions and offers speed, responsiveness and flexibility in negotiations. 

Examples – private equity secondary investments

Project alpha, a purchase of a portfolio of high quality assets from a distressed seller.

Portfolio. Partners Group completed a secondary investment, purchasing a portfolio of high quality assets from a distressed vendor seeking immediate liquidity and relief from unfunded commitments. Partners Group's in-depth knowledge of the industry and the valuation expertise offered by its 5’000 portfolio investments (“Value Navigator”) enabled the rapid completion of the acquisition. Partners Group was able to negotiate this transaction on an exclusive basis and to pick the most attractive assets out of the seller’s portfolio.

Knowing the asset. The assets are all in relatively stable sectors, with the entire portfolio offering a high degree of both sector and regional diversification. The attractiveness of the portfolio is predominantly driven by three companies, which are all moderately leveraged (below 5x on average) and operating in stable sectors. These include a global leader in the worldwide healthcare market with an international presence in well over 20 countries, a leading European waste management business with a stable and non-cyclical business model as well as a leader in niche industrial goods, with the largest market share in its own sector.

Return. The portfolio was acquired at a steep discount of approximately 50% to its fair value resulting in return expectations of a multiple of 2.0x and an IRR of over 20%.

Stephan Schäli Head Private Equity

Philipp Schnyder Co-Head Private Equity Secondaries
Erik Gunnervall Investment Solutions Europe

Adam Howarth Private Equity Secondaries