RYE BROOK, N.Y., Oct. 20, 2016 /CNW/ -- NYPPEX, a leading technology-driven secondary private equity advisor, transfer administrator and data provider, has just released a Client Memorandum: Weak 3Q2016 Exits to Cause Lower Secondary Bids Ahead.
Its findings included the following:
1. The trend of weak IPO and M&A exit volume worldwide started in the 3Q2015 has continued through the 3Q2016.
2. This exit trend is causing lower distributions from private equity funds by 40-50% year over year according to investors surveyed by NYPPEX.
This exit and distribution trend is likely to result in lower secondary bid prices in 2017 on average, as projected by NYPPEX.
3. In the 3Q2016, Asia Pacific private equity funds experienced the highest volatility in secondary bids from -3.05% for interests in Distressed Debt funds to +6.73% for Natural Resource funds, driven by slower economic growth and demand from China. European private equity funds experienced increases in secondary bids despite the June Brexit vote. U.S. private equity funds experienced stable secondary bids driven by secondary investors seeking a safe haven.
Note: Secondary bid indications as estimated by NYPPEX.
4. If capital calls increase in the 1Q2017, NYPPEX projects limited partners will incur negative cash flows (capital calls vs. distributions) from more private equity funds, a similar scenario to the negative cash flow period of 2008-2012.
5. NYPPEX recommends that investors review cash reserves and access to liquidity vs. projected liabilities for calendar year end 2016 and 2017 budgets.
To request a copy of this NYPPEX Client Memorandum, please email [email protected] with your name, title and organization.
About NYPPEX Holdings
Established in 1998, NYPPEX is a leading technology-driven secondary private equity advisor, transfer administrator and data provider.
NYPPEX has provided over $8 billion in secondary private equity liquidity to investors in over 26 countries for (a) interests in private funds (e.g. buyout, venture, natural resources, real estate, hedge funds etc.), (b) unregistered securities in private (and thinly traded listed) companies and (c) their respective derivative instruments.
Clients include financial institutions, public and private pensions, government sponsored enterprises, corporations, endowments, foundations, private wealth groups, alternative investment firms, private companies and their advisors worldwide.
The NYPPEX Qualified Matching Service ("NYPPEX QMS") is recognized in a 2004 Private Letter Ruling from the U.S. Internal Revenue Service in connection with IRS Regulation 1.7704. The NYPPEX QMS enables private partnerships to permit additional secondary interest transfer volumes by meeting the requirements for a QMS safe-harbor exemption.
The NYPPEX Portfolio Pricing Service provides secondary bid indications on interests in over 12,300 private equity funds headquartered in over 110 countries. Subscription rates are $195 per fund priced quarterly. NYPPEX price data is taken into consideration by institutions to meet Topic 820 Fair Value provisions for GAAP and IFSR compliant financial statements.
NYPPEX is regulated in the U.S. by the SEC and FINRA. Member SIPC.
Headquartered in Rye Brook, New York. www.nyppex.com
For more information, please contact:
Robin Starr Bond, SVP, NYPPEX
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SOURCE NYPPEX Holdings