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The COVID-19 pandemic has brought about far-reaching changes worldwide. The secondary market with fund units has not been spared. At MUPET 2020, Sunaina Sinha Haldea (Cebile Capital) and Tarek Mardini (P+P Pöllath + Partners) discussed the concrete effects of the COVID-19 pandemic on secondary market transactions with fund units and shared their observations on new market trends.
The global lock downs in the first half of 2020 were accompanied by losses in portfolio companies, the postponement of fundraisings and more difficult exit opportunities for a large number of general partners. At the same time, however, the current situation also presents outstanding opportunities, such as the acquisition of additional portfolio companies.
On the buyer side, large quantities of “dry powder” are available on the secondary market. These still have to be invested in 2020, as investment periods are short or management fees are only paid on capital already invested.
Finally, the experts also take a look at which options for payment of the purchase price are proving to be useful right now and which regulations are increasingly found in GP-led secondary contracts.