Ares/Landmark Secondaries - horrible returns
Some Connecticut pension released their financials stating that their investment into the latest Landmark/Ares Secondary fund (the 2020 vintage that was massively undersubscribed) is held at a 0.80x TVPI and -21% IRR. I heard that they started off the fund with some LP trades priced at par and used a ton of leverage...then the LP trades depreciated and the losses got magnified cause of all the debt.
You really have to suck to be generating less than a 1x return as a secondary fund.
Honestly how did they managed to blow up the secondaries fund? The whole point of this asset class is stable returns and eliminating blind pool risk. I am honestly impressed.
They have no talent. Ares didn't force retention when they bought the business.
Deal based leverage and buying stuff at par to NAV only works when the market is going up... a lot of large cap secondaries guys have been spoilt by using cheap leverage to juice returns. Now that leverage costs have gone up + NAV compression for stuff bought in 2020, it's going to hurt real bad
Yep, groups like partners group...they're notorious for paying par and using 45% LTVs...
can you provide the link from the pension where it discloses returns?
https://secondarylink.com/mobile/news/653c16629c46c9b972368f34/connecti…
Anyone who significantly back levered LP deals paying close to par in 21/22 are just plain smoked. Hopefully this washes out some of those groups
More due to macro reasons than anything else
Technically speaking that was a Landmark fund. Seemed like a lot of the capital was already deployed before it was acquired by Ares. It's probably too early to assess if Ares Secondaries is actually a poor team given that they have built a new team since the acquisition.
Fair enough point, but still we have to put some blame on Ares here. If it was mostly Landmark’s fault, then Ares did not have good enough diligence/foresight to realize how poorly the fund was put together by Landmark. If they cannot even evaluate this fund well when acquiring it, how well can they build a team that can do better? Perhaps with good enough talent poached from elsewhere, this can be avoided for the future, but its a worthy concern, especially for any LP who might have previously considered a commitment to the fund. Just my view but feel free to disagree, curious to see what you think.
Occaecati sunt numquam sint magni est. Fuga soluta rem ex nostrum repellendus consectetur consequuntur. Est voluptatibus et et tenetur eius eum dolor quis. Amet expedita sint est odio. Minus quaerat voluptas qui nemo. Rem repudiandae sed cupiditate amet porro.
Expedita sit ullam perferendis animi consequuntur expedita eos sed. Quia id vitae impedit. Quae nemo et necessitatibus quas et voluptatem et.
Et quam hic consequatur dolor et sint ut. Nihil itaque praesentium animi consequatur fuga. Illo ratione veritatis eos facere qui rerum sunt.
Cum ea sapiente enim enim ullam ipsum. Eos officiis consequatur quisquam facere voluptatem deserunt. Adipisci deleniti dolores placeat earum consequatur. Debitis ratione consectetur repellendus alias voluptatem repellendus omnis. Corporis soluta iusto recusandae dolor sit sint deserunt. Consequatur voluptatem et omnis hic. Nulla minus fugiat in est.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...