Reading through WSO it sounds like no one in the secondaries field is good, besides BX SP. Ardian only succeeded with leveraging at NAV, Whitehorse is overdoing it by going whole hog on pref equity, Lexington has bad returns, Ares/Landmark is a mess, TPG is imploding, etc. etc. So who in secondaries game (esp bigger players) is actually good, other than BX SP?
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BX and HarbourVest
Ardian is also solid but as you mentioned, they use leverage
Any thoughts on HL's secondary team
In every thread every commenter says they are the absolute worst people in the entire secondaries market. They are that bad, I'd rank them with Commonfund, Newleaf, Jasper Ridge etc.
HL as in Hamilton Lane?
BX and HarbourVest also use leverage on their LP portfolio deals, same as everyone else
There seems to be one or two posters who enjoy talking negatively on almost all Secondary players, as you've noticed. So take those comments with a grain of salt, maybe they work at BX SP!
It’s literally the same 2-3 posters who constantly gossip about secondaries even on weekends lol.
In general though the amount of shit talking and gossiping in secondaries seems unmatched.
Small world
I never saw a thing about secondaries on WSO before I started working in secondaries a bit ago so I’m loving the recent active threads.
Hi man,
I have an upcoming Secondaries PE Associate role, firm similar to Whitehorse Liquidity (more tail-end secondary transactions focused), what interview questions/case study will it likely consume?
Please could anyone send me any case study materials/study materials, prep material or interview Q&A's for an PESecondary Investment Associate role at a firm similar to Whitehorse, predominantly tail-end acquisitions, and also let me know what likely I will be doing day to day and also what interview questions will I be asked? What will the 2 hour case study I have will cover?
Please send me a DM and send over anything of the above that could help me as I would really appreciate it, I can also provide my email on DM also.
Many thanks,
The bigger multi strategy groups do typically rely heavily on leverage and over pay to deploy such large funds. They also typically have outside ownership which absorbs most of the mgmt fees and carry pool, whereas most smaller firms and most traditional PE firms are mostly employee owned. The best of the bigger funds are definitely Neuberger Berman, ICG and LGT. Whitehorse is good but the pref equity and highly structured transactions do make it feel more credit like. HarbourVest's performance isn't consistent, but it's usually pretty good they're one of the better large FoF run groups, you still have the outside ownership issue.
The best groups are the smaller ones, typically that have been around for a while W Capital, Sweetwater, Industry Ventures, Private Advisors etc.
I don't know why everyone on WSO thinks bigger = better.
I think part of it is just WSO circle jerking to MF/big platforms, but the other consideration is that secondaries is inherently very focused on scale. There’s a lot less “outperforming” and most players coalesce their returns towards a middle-of-road return. Unlike traditional PE, there’s much less clean return profile splits between quartiles. Secondaries also just have lower multiples. Small funds might do well, but if your goal is to make it big in secondaries, you need to have a big platform.
I'd much rather be at a smaller independent secondaries shop charging premium terms where carry is only distributed to the actual secondaries team. You will make way more money than you would grinding at Hamilton Lane, Ardian, Blackstone SX etc and you actually get some WLB. Such a weird circle jerk.
Another thing is there’s a decent amount of variability in strategy between secondaries funds. People will often compare two secondaries funds and say one has garbage returns compared to the other when they have completely different strategies / mandates. Of course with the larger funds they’re employing roughly the same strategy but I think the smaller you get there’s more nuance which makes it harder to benchmark in secondaries.
Since when is Sweetwater good? W capital's returns suck.
Big fan of private advisors (apogem) as they do LMM really well and have good relationships through their fofs.
Industry ventures def is not small scale.
Pretty sure this is 1 of the 2 or 3 shitposters mentioned above
How is Lex? They closed a $23 billion fund recently
What size of fund are you interested in? Tbh I feel like the bigger you go the more boring deals get
I think the goal for me is to learn as much as I can. Gotta balance exposure to quality deals at scale with important LPs with interesting work that a lot can be learned from, so there's some benefit from both going to a big player vs. smaller player
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Wait really, partners group came out of doing secondaries? That’s wild
No, they were a traditional FoF. They still have that business it gives them killer insights since they have detailed information from other GP's that they can leverage
Secondaries sounds like the place to be. Lots of people seem more interested in this space
We’ve got the monthly blast of secondaries forums asking for interview help going on rn…
Man I swear every time I see it, it’s five old secondaries posts popping up back-to-back with one guy copy-pasting the exact same comment asking for help. SMH.
Is it possible to break into secondaries investing from secondaries advisory (GP-led) background?
Yes, definitely
Should be pretty doable IMO, since you directly interface often with these funds and their work, especially if you are at one of the respected names in the industry (EVR/PJT/LAZ). Obviously you would probably have a stronger profile for a GP-led/hybrid fund vs an LP-led fund.
How do you compare players like BX SP, AlpInvest (Carlyle), Coller, HarbourVest?
Anyone ever heard of LSV advisors? They do special sits secondaries which I didn’t realise was a thing.
No, but looking at their website, its like 75% of the staff are controller, accountant, compliance or counsel. What is going on with that
Pretty sure they are mostly former HF guys. Have had exposure to some of their former employees at new firms and they are sharp guys. Typically anything that is harry and not down the fairway, they are a good first bet to show it to. Like deep value, structure and as you said special sits... also look at energy which not many other secondaries players will do.
interesting, thanks
They’ve done a few oil and gas deals that from the outside look like no brainer home runs.
Low tier buyer of hedge fund side pockets and energy assets. Don't let the special sits branding fool you - they buy dogshit and pay their analysts bottom of market
I am in PCA and there are a few lesser known groups that are absolutely killing it lately that you might want to look into:
-Kline Hill: Focus mainly on small LP stakes but they are raising a GP-led fund to do LMM deals. This is more of a beta/index approach but they're very responsive and quite sharp. I think they're probably going to overtake Willowridge soon and become the number 1 name for "smaller" deals.
-Sturbridge: They only buy funds of funds but their returns are really good. May not be that interesting work-wise but I hear they are pretty chill.
-Felicitas: Can be a bit sharp elbows when running deals but I think they're really bright and know how to structure pretty complex deals. Word is that they're raising a shit ton of money right now.
In PCA as well and second Kline Hill - have become one of our first calls on most LMM LP deals and beginning to get a little more active on the GP-led side, albeit the bar remains high there as they continue to build out that function. Believe they're targeting $1bn+ for their latest fund so might begin to play up in the market a little bit. Super easy to deal with and very commercial.
I speak with their competitors a lot (e.g,. Willowridge, Headlands) and word is that KH don't actually do any real DD - that's how they're able to do 100-200 deals a year lol. They're very easy to deal with and quick to go binding but I do always wonder if they're just buying the market at a discount and hoping for the best. Like them though.
Is Felicitas’ full company name called Felicitas Global Partners?
can you message me?
How is Banner Ridge viewed?
I've spoken to probably all the different secondary funds in my career and I'd probably rank Banner Ridge as the "smartest" out there but also one of the most aggressive in their approach. Look at their returns - they're phenomenal. But you don't geberate 35% net IRRs without pissing some people off along the way.
There are some groups that I truly hate dealing with and they aren't one of them but they certainly are more shrewd and aggressive than most.
Is Ares/Landmark actually that bad?
Yes. 0.8x tvpi and all the leadership left. Terrible acquisition by Ares.
Andrew Caspersen at PJT used to be really good
LOL dude, come on.
.
What’s the place to be to learn the most/prepare the best for a long term career in secondaries? Bigger funds = better brand name but more boring deals, but smaller funds = more niche name/network but more interesting deal work to learn from and more on the front lines of innovative deal making.
You really just wanna be at any of the funds that like to lead deals IMO. There’s only 20-30 of them so they are all seeing the same deals. Of course there’s tiers to which are better or worse and differences in when they like to lead or play a syndicate role. But if you’re at any of the funds that are leading deals more often than writing syndicate checks, your experience should be pretty good. In contrast, a fund that plays more of a syndicate role in deals will just follow the leader and conduct diligence at a higher level. Typically, syndicates don’t even start their diligence until a lead is identified and at that point the lead has already been doing 4 weeks worth of work.
Also, bigger fund does not equal more boring deals. I think that’s a generalization because the bigger funds do a lot of large LP portfolios which some people may view as more boring than say a continuation fund. But all those big funds are also doing interesting GP-leds (except Ardian).
Any thoughts on Hollyport? Very solid returns and fundraising track record.
Strong and reputable secondaries name in London/US. Have spoken to them before, very sharp guys who do great DD work. LP interests they transact in have a growth/venture bent historically. Have scaled up very quickly over the years - they used to pretty much only do LP interest deals in funds that are tail-end or in their extension periods. Mainly to clean out LPs who want the LP interest trimmed for portfolio management purposes. With bigger fund sizes, there's a lot more competition and they're doing more GP-leds as the market has grown, but its tail-end focus should still provide it with good deal flow as exits are further delayed and funds get extended. They're one of the top choices of LPs who want secondaries exposure and want a smaller fund size
How do you see the returns of a fund?
Preqin / PitchBook. Reliability varies but it’s getting more reliable as more GPs upload their own returns. Typically the ones with strong returns upload it themselves, otherwise their LPs will. Most reliable source is seeing a GP’s deck but those platforms are perfect for a sniff test.
Most reliable would be LPs that are under FOIA, like public pensions. They have to publish detailed returns of fund investments regularly
What’s the latest read on BlackRock? Recognize they had the exodus to S3 but they seemed to have staffed up since and last I had heard the fundraise sounded like it was on track. Have also seen them on a couple recent deals.
They have no edge.
Anything more useful? Virtually no secondaries investor has an “edge” these days.
I hear Sameer Shamsi is a top notch firm to lose money and get -99% net IRRs
I don't get the hate. He is a nice guy.
If you want to shit on returns then take a look at Whitehorse. I would love to talk to some LPs that invested in these shit funds and ask them how they like their 4% IRR and 1.1x TVPI.
That doesn't even make sense, he's a broker.
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