Private Equity Becoming More Liquid

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    A sizable share of private equity investors believe the asset class has become more liquid, but few believe the advances are sufficient to meet current needs, says an SEI survey. ‘Solving the Private Equity Liquidity Challenge: a Work in Progress’ shows nearly half (47 per cent) of general partners (GPs), 36 per cent of limited partners (LPs), and 33 per cent of consultants agreed that the private equity market is “more liquid than it used to be and will continue to become more so.” Still, only 22 per cent of GPs, 19 per cent of LPs, and 17 per cent of consultants said the industry’s liquidity needs are currently being met. It says the growing secondary market for private equity investments has played a major role in the easing of liquidity constraints. Once associated with the sale of troubled assets at deep discounts, the secondary market has become mainstream, with 2014 global transaction volume expected to surpass $30 billion. Fifty-eight per cent of LPs and investors in the survey said they have bought or sold assets on the secondary market and a majority of all respondents said participating in the secondary market is “no longer taboo” for investment professionals.