Is it time yet to snap up a bargain stake in a venture fund on the secondary market? Apparently not, according to new research from secondary market maker NYPPEX.
The firm estimates that venture funds with 2005-2007 vintages worldwide may have overstated net asset values by approximately 40.1% on average as of the end of June. The analysis is based on a comparison of the change in net asset values of venture funds of that vintage with valuations, based on EBITDA multiples, of publicly traded information technology companies.
The result? Likely it will mean further declines in secondary prices, according to NYPPEX. The firm predicts that median secondary bids for interests in venture funds may decline as much as 23% in 2010 from levels reached at the end of the third quarter.
The news was sunnier on the buyouts front. Buyout funds of the same vintage were less overpriced – overstating net asset values by about $2.5% on average – according to NYPPEX, based on comparisons to select publicly traded industrial companies. The firm predicts the median secondary bid for interests in buyout funds worldwide may increase 25% in 2010 over Q3 levels.