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By Shanu SHERWANI, Private Equity Advisor
Individual LPs (investors) can only exit early their private equity interests through the secondary market. In brief, secondaries allow investors to sell their positions in private equity funds and hence liquidate equity stakes in private companies. Due to the illiquid nature of private equity, the establishment of a secondary market was necessary and perhaps inevitable. Investors were required to make a seven- to ten-year or longer commitment to private equity funds. However, liquidity is often a consequence of all secondary sales but not always the main reason. In recent years, new regulatory regimes for banks and insurance companies (Basel III and Solvency II) have prompted significant secondary selling. But a more...
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