Institutional Investor recently wrote that the market for trading private equity stakes has largely dried up. Investors are waiting to learn the extent of damage done to holdings in the coronavirus turmoil, according to asset management firm Commonfund.
From the report: “The lull in secondary trading may extend past June as private equity firms slowly mark down their portfolios, said Cari Lodge, head of secondaries at Commonfund.
The fast and hard fallout from the coronavirus pandemic in public markets last month is taking time to trickle through to valuations in the private markets, which typically are marked quarterly. Some investors may suddenly find they’re over-allocated to private capital because the value of their public assets plunged in the sell-off during the first quarter. But unloading their stakes won’t be an easy task.
Bid-ask spreads in the secondary market are now wide, making it hard to get deals done, according to Lodge. Pricing last year had remained elevated as investors were then transacting in the record-length bull market, she explained, adding that deal flow will be held back until investors have clarity surrounding this year’s private equity marks.”
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