FRENCH private equity (PE) group Ardian has raised a record US$30 billion in the largest-ever secondary market fundraising globally. This is its ninth such fundraising since 1999, and is 57.9 per cent more than the US$19 billion it last raised in 2020, it said on Thursday (Jan 16).
Secondary PE deals are those in which existing investors sell their stakes to new investors. They also refer to sales of a company stake to a new fund arranged by a PE firm.
Global activity in such deals in what was previously a niche market has surged in the past few years, as higher interest rates and a slowdown in dealmaking are squeezing the US$4 trillion buyout industry.
Ardian said the financing was oversubscribed, highlighting “the continued and growing appetite for secondaries investments… as market volatility and the need for liquidity drove deal volumes to record highs in 2024”.
It estimated the volume of secondary PE deals would reach a peak of about US$150 billion last year, which is 10 to 20 per cent higher than 2023.
Ardian’s latest sale drew more than 465 investors from 44 countries across Europe, the Americas, the Middle East and Asia. They included major pension funds, insurers, sovereign wealth funds and high-net-worth individuals.
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Private wealth clients comprised 22 per cent of the investors, compared with 11 per cent in Ardian’s eighth fundraising in 2020.
The latest sale boosts the firm’s secondaries and primaries assets under management to US$97 billion.
The ninth fund was already 50 per cent deployed, diversified across sectors such as finance, healthcare, and telecommunications, media and technology (TMT), Ardian’s head of Singapore and South Korea and senior managing director Won Ha told The Business Times.
The deployment is also focused on developed markets such as the US, Europe and parts of Asia.
“As a secondary player, we like more stable returns with a predictable cash yield. As a result, we have more exposure to developed countries,” he said.
He added that the fund aims to generate a net yield of around the “high-teens” percentage level.
Turning to the broader outlook for PE secondaries this year, Ha sees a similar pace of growth as 2024, as Ardian does not expect the US Federal Reserve to cut interest rates significantly.
“Deals are coming from every region, we see good deal flow from the US, Europe and Asia; more and more investors are using secondaries as a proactive tool to manage their portfolios.”
As for sectors, TMT – specifically tech – might enjoy a good tailwind from the incoming Donald Trump presidency, he added.
US tech stocks rose shortly after Trump won the presidential election, given his close ties with tech moguls such as Elon Musk and Peter Thiel. Investors were also hoping that Trump would ease regulatory pressures on the sector.
Zooming into the Singapore market, Ha said the private equity market benefited in 2023 and 2024 as investors deployed more capital to South-east Asia amid an economic slowdown in China.
“Hopefully, that trend will continue…Singapore PE might enjoy good fundraising momentum this year,” he predicted.
The surge in single-family offices (SFOs) in Singapore is another positive factor, he said, adding they have shown a bigger appetite for PE.
On Tuesday, Second Minister for Finance Chee Hong Tat said the number of SFOs in the city-state topped 2,000 last year, representing a jump of at least 42.9 per cent from 2023.
On the flip side, Ha cautioned that headwinds could stem from China, if its growth remained lacklustre.
“For most of the countries in South-east Asia, China is important – they either sell to it, or rely on it as part of their supply chain or distribution channel. Everything is related, so if this challenging time continues, it might not be good news.”
