Attractive asset class
Secondaries have developed into an established and stable market segment within the private equity world in recent years. In a fundamentally illiquid asset class, they are now an important component of strategic asset allocation for many investors. Secondaries offer the possibility of actively managing liquidity, quickly profiting from high returns or strategically reorienting their portfolio.
Good reasons for secondary investments
- Chance of an attractive return with an expected rapid build-up of capital commitment
- Attractive cash flow profile with a compact capital call phase and an early, high distribution level enables a rapid achievement of a positive net cash flow.
- Reduced blind pool risk through the acquisition of an existing investment portfolio
- Selective market inefficiencies and a high number of opportunities in the small transactions segment enable attractive purchase prices and (excess) returns
Established partner for secondary transactions
Golding offers potential sellers a reliable transaction partner and institutional investors efficient access to the secondary market across a wide range of transaction types, investment strategies and regions. By leveraging our extensive investment platform and long-standing relationships with high calibre fund managers, we are able to build on a broad deal flow and information advantage to fund portfolios and underlying portfolio companies. The successful Golding secondary track record underscores our proven expertise.
Secondary investments also entail risks
- It cannot be guaranteed that any particular return or income targets are met. Past returns and forecasts are no guarantee for future success.
- Minority shareholders that are not involved in the management of the fund have no or only limited means of exerting an influence over the fund manager.
- At the level of the funds it is often permitted and common to use not insignificant levels of debt, known as leverage. Although the use of leverage can improve the returns, it also increases the potential for losses.
- The market values of the funds may be subject to considerable volatility as a result of macroeconomic factors and/or other market conditions.
- The funds are generally not regulated investment vehicles and only offer limited protection to investors.
- Investors bear the tax and regulatory risks associated with the funds and the investments they make.
- If the risks materialise, investors in the funds may incur losses up to the total loss of their invested capital.
Detailed comments on the risks of the investment programme can be found in the respective issue document.