Name: LP vs GP led deals: How are different opportunities shaping the European secondaries market?
Uploaded: 2024-04-22T07:47:00.827Z
Duration: 166.96

Kutty Dutta.mp4

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SUPERRETURN_SECONDARIES_EU_2024_INTERVIEW_KUTTY_DUTTA (1) (2).vtt

ENGLISH

{{00:00:11}}
Secondaries continues to be the all
weather private equity strategy.

{{00:00:16}}
In today's market, one of the
biggest concerns for LPs is

{{00:00:19}}
perceived lack of liquidity.

{{00:00:21}}
And now you have all of these, sort of
new structures and mechanisms to try and

{{00:00:25}}
deliver liquidity artificially to what
is fundamentally an illiquid asset class.

{{00:00:31}}
Secondaries are the
original liquidity strategy.

{{00:00:34}}
For sellers, Secondaries are an
inbuilt way of delivering portfolio

{{00:00:38}}
management And for buyers, the shorter
tenor and higher velocity of capital

{{00:00:44}}
mean that secondaries is a sort of
natural way of delivering a sort of

{{00:00:49}}
more liquid private equity exposure.

{{00:00:59}}
LP led deals, traditional deals,
are typically highly diversified a

{{00:01:04}}
sort of more broad based diversified
exposure to a swathe of private equity.

{{00:01:09}}
They allow for backfilling of
vintage, they give a sort of

{{00:01:12}}
more banded return profile.

{{00:01:15}}
Lower risk deals, lower return, but
really serve a purpose in terms of

{{00:01:19}}
diversifying your return profile.

{{00:01:22}}
GP led deals are a little bit
different, whether they're single

{{00:01:24}}
asset or multi asset deals.

{{00:01:26}}
They're very much higher conviction
built around bottom up underwriting of

{{00:01:31}}
individual assets, and really it's an
opportunity to get exposure to crown jewel

{{00:01:37}}
assets that Investors might not otherwise
be able to access through other means.

{{00:01:42}}
Very different return profiles,
and also serving a different

{{00:01:45}}
purpose within the portfolio.

{{00:01:54}}
I think over the last sort of year
and a half, I think, just given

{{00:01:57}}
all of the sort of dislocation and
volatility in the market, there's

{{00:01:59}}
been an increased bid offer spread.

{{00:02:02}}
Seller expectations and the price
that buyers are willing to pay

{{00:02:05}}
have been a little bit far apart.

{{00:02:07}}
So that's maybe constrained a
little bit the amount of deal

{{00:02:10}}
flow that's able to to get done.

{{00:02:13}}
Having said that, I think there's
tremendous demand for liquidity,

{{00:02:17}}
as I mentioned, and there's a
lot of dry powder out there.

{{00:02:19}}
So I'm very confident that in
the coming vintage, you're going

{{00:02:23}}
to see increased deal flow and
maybe record levels of deal flow.

{{00:02:26}}
I think it's really interesting for buyers
as well to maintain discipline because

{{00:02:30}}
there is a lot of deal flow out there
and now you can be a little bit more

{{00:02:34}}
proactive in portfolio construction and
really selecting the assets and exposure

{{00:02:38}}
that as a secondary buyer you really want.

Secondaries continues to be the all
weather private equity strategy.

In today's market, one of the
biggest concerns for LPs is

And now you have all of these, sort of
new structures and mechanisms to try and

deliver liquidity artificially to what
is fundamentally an illiquid asset class.

Secondaries are the
original liquidity strategy.

For sellers, Secondaries are an
inbuilt way of delivering portfolio

management And for buyers, the shorter
tenor and higher velocity of capital

mean that secondaries is a sort of
natural way of delivering a sort of

LP led deals, traditional deals,
are typically highly diversified a

sort of more broad based diversified
exposure to a swathe of private equity.

They allow for backfilling of
vintage, they give a sort of

Lower risk deals, lower return, but
really serve a purpose in terms of

GP led deals are a little bit
different, whether they're single

They're very much higher conviction
built around bottom up underwriting of

individual assets, and really it's an
opportunity to get exposure to crown jewel

assets that Investors might not otherwise
be able to access through other means.

Very different return profiles,
and also serving a different

I think over the last sort of year
and a half, I think, just given

all of the sort of dislocation and
volatility in the market, there's

Seller expectations and the price
that buyers are willing to pay

So that's maybe constrained a
little bit the amount of deal

Having said that, I think there's
tremendous demand for liquidity,

as I mentioned, and there's a
lot of dry powder out there.

So I'm very confident that in
the coming vintage, you're going

to see increased deal flow and
maybe record levels of deal flow.

I think it's really interesting for buyers
as well to maintain discipline because

there is a lot of deal flow out there
and now you can be a little bit more

proactive in portfolio construction and
really selecting the assets and exposure

that as a secondary buyer you really want.

Expert Insight

At SuperReturn Secondaries Europe 2024, we sat down with Kutty Dutta, Managing Principal, Head of Secondaries, HSBC Asset Management, to get an investor's insights on how the European secondaries market is currently growing and where can find the biggest opportunities. Learn the key differences between LP and GP led secondaries, how to figure out which strategy works for you and what challenges and trends will dominate the market in 2024 and beyond.
