Asia asset owners eye value strategies in PE secondaries

Value strategies are the focus for private equity secondaries investors as 2024 unfolds, industry experts told AsianInvestor.
Asia asset owners eye value strategies in PE secondaries

Macro factors like global interest rates are more predictable in 2024, compared to a year ago. However, there is an acknowledgment that interest rates are unlikely to return to the lows experienced a few years back, while liquidity remains a challenge. 

As the year unfolds, value strategies via the private equity (PE) secondary market may be a bigger focus than growth strategies. 

“PE secondaries in Asia have traditionally been more growth- and VC-oriented,” noted Kerrine Koh, managing director and head of Southeast Asia at Hamilton Lane.

“We are recently seeing market participants focus more on buyouts, to pursue companies with stronger profitability, cashflow profile, and exit visibility.”


Buyout and venture capital (VC) are the two largest PE sub-asset classes. They have been charting wildly different courses over the past 18 months.

Kerrine Koh
Hamilton Lane

A buyout is a financial transaction in which a company or a controlling share of its stock is acquired, typically by a private equity firm, to take it private, restructure it, and eventually sell it for a profit.


The numbers, by McKinsey, tell the story.

Buyout globally notched its highest fundraising year ever in 2023, and its performance improved, with funds posting a 5% net internal rate of return through September 30.

Although buyout deal volumes declined by 19%, 2023 was still the third-most-active year on record.

On the other hand, VC fundraising declined by nearly 60%, equaling its lowest total since 2015, and deal volume fell by 36% to the lowest level since 2019.

VC funds returned –3% through September and have now posted negative returns for seven consecutive quarters.

Opportunistic buying and distressed selling are the two sides of these PE secondaries transactions that Effie Vasilopoulos, partner and leader of the APAC investment funds group at Sidley Austin, is seeing, she told AsianInvestor.

“Much of the market impetus relates to opportunistic buyers that are professional secondary firms scouring the market for bargains,” she said. 

The opposite side of this relates to distressed sellers — for example, related to the China property sector, Effie shared.

Effie Vasilopoulos
Sidley Austin

GP-led secondary deals are also becoming increasingly common in the PE space, offering a flexible option for GPs to manage their funds and provide liquidity to investors while maintaining control over the portfolio's management and strategy.

This is where Dominic Goh from HarbourVest Partners Singapore sees the most interest.

 “With the current environment proving tough for fundraising and exits, general partners remain under pressure to return capital from older vintages.  As such, this is where the secondary market, in particular GP-led deals, could see growth in Asia,” Goh noted.


Asia-based investors were less impacted by the denominator effect as many investors in the region are underinvested in private equity, and therefore have more headroom in their strategic asset allocation (SAA) for private markets, as market conditions stabilise.

The denominator effect occurs when the overall value of an investor's portfolio decreases, which can lead to a perceived decrease in the allocation to specific asset classes, such as private equity.

“We continue to see a preference for developed markets exposure like North America and Europe from this group of investors, the ones that have headroom in their SAA,” shared Goh.  

Hamilton Lane’s Koh has been seeing more traction in US middle market companies within buyouts.

“Middle market transactions have historically performed better than their large or mega counterparts. At the same time, such ‘local champions’ are seen to be more buffered from geopolitical headwinds”, she said.

"Structured portfolio transactions are also on the rise," said Effie. This involves the sale of several assets in a portfolio, or the partial sale of a stake in such assets.

“The assets are typically of high quality and the catalyst for the transaction is the desire to create additional liquidity for use in connection with other business opportunities,” added Effie. 


The secondary market is in a good position to benefit from the current economic situation by offering investors more ways to get cash for their investments in private funds. This is the reason that besides PE, greater interest in secondaries is emerging in other sub-asset classes, such as infrastructure and private credit.

“For new allocators to the private market asset class, a higher allocation to PE Secondaries to balance the relative illiquidity of their primaries portfolio” is recommended by Koh.

HarbourVest’s Goh sees more “bespoke and scaled solutions being taken up by asset owners to meet their liquidity needs.”

“With general partners, these would include continuation vehicles, spinouts, and joint ventures. With limited partners, these would include using preferred equity and structured liquidity solutions in addition to traditional purchases of their fund interests,” he added.

Continuation vehicles extend fund life for existing investments, while spinouts form new firms from existing teams, and joint ventures pool resources for specific opportunities.

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