This is Chris, on the Wire this morning.
There’s some whispering going on in the private equity secondaries market. The whispers involve pricing, which has been at rich levels through last year.
But the concern is that could be changing as the public markets take investors on a wild ride in the early weeks of 2022. Investors have been selling as they look for guidance from the Federal Reserve about increasing interest rates to balance persistent inflation.
Private equity, and more specifically the secondaries market, follows the public markets but lags by usually a quarter or two. We’ve seen public market volatility cause concerns among secondary market investors that pricing will be impacted, but it hasn’t lasted. Public markets have been on a long, general climb upwards since the global financial crisis and private equity has followed.
Still, buyers are starting to whisper about pricing on deals, which has been relatively rich over the past few years. Last year, pricing reached about 97 percent of net asset value for buyout funds, according to a full-year volume report from Jefferies published this week.
“If the volatility continues, we may see buyers grow more cautious,” a secondary adviser told me. “Where they pay 95 [percent of NAV] now, they may want to pay 90.”
While secondaries hasn’t seen direct impacts on sales processes yet (except maybe in portfolios with heavy public market exposure), agents are making sure potential LP sellers are aware of the kind of movements they could see in pricing.
What are you hearing? Hit me up with intell at firstname.lastname@example.org.
New strategy: GTCR closed its debut fund focused on smaller investments than those pursued by its flagship vehicles. The fund, GTCR Strategic Growth, closed on $2 billion — capital sourced exclusively from GTCR existing investors.
GTCR’s move follows other firms that have expanded their focus to capture opportunities in other areas of the market, such as smaller deals. Some purely buyout firms have raised growth funds, or credit funds as well. Read more here on PE Hub.
Growthy: PSG invested in DoseSpot, a SaaS platform for clinicians to write and transmit prescriptions to pharmacies. Yet another example of the intersection of software and healthcare, which is a strategy that has grown over the past few years, and accelerated in the pandemic.
The platform is said to offer patients real-time, cost information to patients before clinicians prescribe a medication by automating the prior authorization process from insurers.
“DoseSpot offers critical software to facilitate more efficient and effective connections between participants in the electronic prescription ecosystem, including prescribers, payors, pharmacists, and patients,” said PSG managing director Bill Skarinka in a statement. Read it here.
That’s it for me! Have a great rest of your day. Hit me up with tips ‘n gossip, feedback or book recommendations at email@example.com or find me on LinkedIn.