Goldman Sachs (GS) is launching a $5.5 billion fund to take advantage of the growing secondary market in private equity stakes. As we reported in February, this has typically been a sleepy area of the market. But with so many investors facing financial troubles, there’s a strong desire to cash out for anything and avoid future capital calls.
Many universities, for example, continue to be overexposed to illiquid PE investments, as their stock investments dwindle, their past commitments continue to grow and their payouts necessarily come from the more liquid side of the portfolio. At this point, dumping their PE assets at a huge discount may be their best option.
Such stakes are currently trading at a “discount” of 50%-70%.