04 │ Transaction pricing analysis: LP-led transactions
Secondary pricing for LP fund interests increased to mid-teens on average.
Average transaction pricing
- 2023 was a mixed year for pricing, although the trend in sentiment has been clearly upwards with macroeconomic conditions and public market comparables strengthening in the second half of the year. The first half of 2023 was victim to a “wait-and-see” approach from investment committees, which limited competitive dynamics in sell-side processes.
- Average pricing in 2023 for all private equity reached a 15.7% discount to NAV with many of the best buyout funds trading well within the 10% discount range.
Average quarterly transaction pricing over time¹
- Weighted by transaction value (purchase price plus unfunded) per respondent.
Transaction pricing by fund strategy
- There is a wide dispersion of pricing based on the strategy of the underlying funds sold. Buyout strategies continue to drive the most favorable pricing in secondary transactions, averaging a 12.6% discount to NAV. However, more “niche” strategies such as infrastructure and private credit also price well as volatility in valuations and returns are lower on a relative basis for these funds. Venture and growth equity continue to price at wide discounts, as buyers underwrite GP’s marks with large margins of safety. This reflects fear of further downside given the ultimate shakeout of winners and losers that has yet to fully transpire.
Average transaction pricing by fund strategy, 2023¹
- Weighted by transaction value (purchase price plus unfunded) per respondent.
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