Secondary Intermediary
Private Equity Secondary Transactions, Private Equity Secondary Market
Secondary Intermediary
Private Equity Secondary Transactions, Private Equity Secondary Market
We believe secondary sellers can extract the highest value for their fund interests if they can access the right buyers across the board.
Buyers universe
Much of what attracts sellers to Roux Capital is our good coverage of the buyers universe. We have served the buyers community for a long time and have learned a lot about them.
We have identified most buyers' strategy, appetite, pricing, and execution capacity. We have developed a comprehensive mapping of the secondary buyers landscape. We have learned to target buyers efficiently. We can find out which funds sell best and at what price in a timely and reliable manner. As a consequence, sellers in our transactions have experienced better exit conditions.
No pricing models, only execution
We have established ourselves as an execution-driven boutique focused on price extraction and execution certainty. No sophisticated pricing models, no statistics. Just buyers’ binding offers, which must be well targeted, prompt, valid, up-to-date, ready to be compared, prioritised and executed.
We unbundle a portfolio of fund interests at the individual fund level, identify the key value drivers, and assess each individual fund’s appeal to the market. We target the best buyers for each fund.
Value creation and execution certainty can be improved by adapting negotiation style to each specific situation.
Negotiation style
We provide sell-side liquidity services for Limited Partners seeking to dispose of their interests in a fund, a portfolio of funds, or a portfolio of direct investments.
We can organise large, open and competitive auctions when sellers simply require price maximisation. We have developed the necessary reporting tools to help our clients monitor and influence the transaction process. We can also run limited auctions or narrowly focused private negotiations for sellers sensitive to discretion and efficiency.
Our transactions can be global or bear more specifically on European assets.
Mission scope
- Undertake portfolio review
- Articulate indicative valuations
- Assess seller's liquidity options
- Select potential buyers
- Obtain GP's pre-approvals
- Organise NDA signatures and populate data room
- Facilitate buyers' preliminary due diligence
- Define format of non-binding expressions of interest and submit invitations to tender
- Organise buyers' extensive due diligence
- Solicit and select binding offers
- Close Purchase & Sale Agreements
- Ensure exercise of transfer rights by GPs and LPs
- Obtain GP consent and Assignment of Interest Agreements
- Follow payment of transaction consideration
About one third of all investors seek to participate in secondary transactions. Our purpose is to take advantage of this situation on behalf of sellers.
Apparent illiquidity, effective liquidity
Private Equity offers a valuable combination of limited liability and financial performance, but it comes in the form of illiquid Limited Partnership interests:
- the term of the partnership is set for the long term
- interest transfer is subject to the GP’s approval
- financial disclosure is succinct and confidential.
However, sellers can access a large pool of secondary buyers provided by existing well capitalised secondary funds and an influx of buyers from the primary market with secondary allocations.
Overall, about one third of all investors seek to participate in secondary transactions. The usual benefits associated with purchasing secondary fund stakes all appear increasingly attractive to most investors. They allow them to:
- capture certainty on underlying asset quality
- exit rapidly and improve return on capital
- complement existing portfolio and increase focus on certain segments over time.
Strategic concerns
In certain transactions, pricing issues may be superseded by other strategic concerns:
- timing and secrecy
- incapacity to disclose a loss
- participation in future portfolio appreciation
- management company stability
- fund extension or recapitalization.
Fund restructuring
Some situations may require a redefinition of governance rules and management contract economics. Some may require a complete reshuffle. Restructuring solutions usually take the form of fund transfer, extension or recapitalization, top-up fund, annex fund, bridge fund, and/or General Partner spin-off.
Mixing primary and secondary capital allows fund managers to leverage their existing investments: they bundle existing assets together with fresh capital from secondary investors.