10 Nov 2011
The average discount for secondaries as a percentage of NAV has remained constant in October, according to Tullett Prebon Alternatives. Despite improving equity market conditions, the monthly comment reports that buyers are remaining cautious and waiting to see whether the summer volatility will result in further downward pressure on prices.
It also reports an expectation of a greater supply yet to come to the market for year-end as institutions seek to clear illiquid assets off their balance sheets, which may lead to several buyers remaining on the side-lines for the next few weeks.
From a macro viewpoint, Tullett Prebon report a greater influx of selling enquiries from European counterparties and especially mid-tier banking institutions within continental Europe. Whether this will ultimately result in more secondary transactions will depend largely on current pricing and to what extent these banks need immediate liquidity.
The commentary also showed that another by-product of the European crisis has been an increased number of enquiries from hedge funds and other institutions seeking financing for individual projects that banks no longer have the appetite or capacity to provide. Tullett Prebon predict that these direct opportunities will grow significantly in 2012 if liquidity continues to remain restrained.
It also reports an expectation of a greater supply yet to come to the market for year-end as institutions seek to clear illiquid assets off their balance sheets, which may lead to several buyers remaining on the side-lines for the next few weeks.
From a macro viewpoint, Tullett Prebon report a greater influx of selling enquiries from European counterparties and especially mid-tier banking institutions within continental Europe. Whether this will ultimately result in more secondary transactions will depend largely on current pricing and to what extent these banks need immediate liquidity.
The commentary also showed that another by-product of the European crisis has been an increased number of enquiries from hedge funds and other institutions seeking financing for individual projects that banks no longer have the appetite or capacity to provide. Tullett Prebon predict that these direct opportunities will grow significantly in 2012 if liquidity continues to remain restrained.
