Paths to Value in Private Equity

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  • 35 mins 37 secs
Private equity has seen tremendous growth and success over the last decade. As allocations continue to grow, the current climate of brisk competition and high valuations is prompting many investors to consider how they can use the full PE toolkit to achieve their goals in the asset class.

Join our webcast as we explore today’s dynamic landscape from the perspective of three different strategies: direct, co-invest and secondaries.

Key topics include:

  • How to find and build value in today’s markets.
  • De-fusing the dry powder discussion.
  • Long-term value creation.
  • Diversification and risk mitigation.

Read more from our panelists in "Private Equity Perspectives"

Learn more about private equity at BlackRock



MARK EVERITT:  My name is Mark Everitt and I’m the Head of Investment Research and Strategy for BlackRock Alternative Investors. Today, we’re going to take a deep dive into the world of private equity. It’s an area of significant interest for investors today, and it’s really, a little surprise to us of this area, is so compelling at the moment. To pick just three of the reasons for this interest, firstly, we’ve seen tremendous returns over the last decade in private equity and that has focused a lot of investor’s attention on this particular space. We’ve also seen investors in a number of surveys indicate that they plan to either increase or allocate to this particular area in the near future. Secondly, we’re seeing a tremendous change in the public-private mix of company ownership. A lot more companies are now going private or staying private for longer, and that means that if you really want to be invested in growth over the next decade ahead, you have to consider private equity as part of your equity allocation decision. Finally, there’s many different ways to actually be invested in private equity today. You can go the traditional route of being invested in fund GP-LP structures. But investors can also access co-investments that are available alongside those structures. They can manage their existing investments, get exposure to new investments through secondary market transactions and we’ve seen tremendous growth in that space. Finally, as direct private equity investors, they can take advantage of new perpetual structures that have a different risk-reward structure for them. There’s a lot for us to unpack, and with me today are three senior colleagues from the world of private equity. Firstly, at the end of the table, John [INDISCERNIBLE 00:01:40] Global Head of Client Solutions and Strategy at Private Equity Partners. Colm Lanigan, who’s a founding partner with long-term private capital. And Konnin Tam, who’s the head of Secondaries of Liquidity Solutions, Private Equity Partners. In today’s discussion, we’re going to focused with these three gentlemen on how they see the private equity opportunity in their space, and is it reliant on benign economic environment such as the ones we had in the prior decade. Then, we’re going to look at how they see risk in the space and how they’re managing it. Finally, we’re going to look at innovation in their particular space, and how that’s affecting investment opportunities. Let’s start by digging into private equity opportunity. We’re going to start with you John, and what I’d like to explore with you is really the last decade, we’ve really seen this very benign support of environment for equity in investing. Here at BlackRock, we actually think that could continue for some time ahead, although, we do see considerable risks. As you look at your space, what opportunities are you seeing in private equity and are they contingent upon the environment?

JOHN:  Yeah, Mark, that’s a really important question. I think there’s a couple aspects to that question. First and foremost, I think we believe it’s always important that you’re aware of the market environment that you’re in, the economic backdrop and where you are in the cycle. But with private equity in particular, it’s also about the micro. It’s about the company specifics, and a private equity manager is generating value in a variety of ways. It’s how they acquire and buy the company that they’re investing in, how that’s structured, how they source it. Probably most importantly, it’s what are they doing with that business? How are they increasing the cash flow of that company? How are they growing it and expanding it? And then ultimately, private investors, private equity investors are also in the position of -- they can decide the timing and method of exits. So, there’s a variety of tools that can be use regardless of market cycle, and it’s really about what you’re doing with that particular company you’re investing in. Private equity also has the luxury of being patient capital, and many firms actually thrived on disruption and thrived on volatility in the market, or they’re able to find value that’s not recognized by the broader market. I think two other points to recognize, one is that private equity as an umbrella, covers broad spectrum of investment strategies from seed stage venture capital, through growth equity buyout and distressed. So, wherever you are in that cycle, if you’re able to build a fairly well diversified portfolio, you have an opportunity to take advantage of different investment opportunities. The last thing is you look underneath and you look at specific transactions, I think in today’s market, which is a full priced market, we’ve seen some very interesting opportunities that involve taking a company and transforming it, whether it’s a corporate carve-out opportunity where you can find an [INDISCERNIBLE 00:04:43]  subsidiary of a large corporate enterprise, and transform it and improve margins. Whether it’s family-owned businesses that may not be optimized in a way that they’re run, and an opportunity to grow that company, or perhaps a consolidation play. Roll-up opportunities where you’re backing a leader in an industry, and then lowering your effective purchase price by acquiring other small competitors and expanding your margins.

So, with all of that as a backdrop, I think we’re comfortable saying that private equity investors have an opportunity to generate attractive returns in different ways. Frankly, regardless of the cycle.

MARK EVERITT:  That’s an interesting point. What’s your perspective on this question Colm?

COLM LANIGAN:  Well I think John said there’s many ways to make money and capture the alpha of private equity. I think the direct space which we play, I think that it’s really coming from a convergence of a few factors. Those factors would be just fixing the structure and evolving the structure a little bit to provide a little more flexibility, a little bit greater alignment and a little more transparency with your partners, the investors. When you do that, it opens up opportunity sets that I think were not necessarily available to the traditional LBO Model. So, there are scale opportunities. So, looking at companies of scale and quality, and looking at different ways of value creation, I think there’s enough data now over the history of private equity and that’s evolved to ascend to a level of maturity where we are now able to really sort of dig into where the sources of alpha have come from, and the persistence of earnings and the methods of value creation. So, that’s the area that we think the opportunities have us in.

MARK EVERITT:  So, value creation really, a constant for both of you as you think about the opportunity set ahead. Konnin in the secondaries world, what are you seeing opportunity-wise?

KONNIN TAM:  Mark, I think it’s a great question. I think it’s important to actually context set the definition of secondaries because I think people read the newspaper and you hear about secondary buyouts, which is actually different than the secondaries you are referring to. By and large when we talk about a secondary buyout, it is often referring to the changing hands of a company or asset or between private equity owners. So, that’s a secondary buyout. Secondaries or secondary private equity really talks more about portfolios of private equity interest. So, by this, it is for example, a fund interest that an investor has in a fund. If you they liquidity earlier than the natural life of a fund interest which is usually 10 or 16 years, the secondary market evolved really for those investors to be able to sell those fund interest or portfolio of assets to another buyer. So, I think in the context of this conversation, it’s important to definitionally know what are secondaries, it is the trading of portfolios of interest. I think when we look at what is the private equity opportunity now in secondaries, it’s enormous, it’s been fast growing, it’s been very innovative. So, I see it really as a natural derivative of the growth of the private equity market. Because as we’ve seen over that past three plus decades, private equity grows and mature, it’s natural to think, “Well people were finding, they need interim liquidity and that’s how the secondary market has developed.” We saw transaction volume grow from just $2 billion in 2002, to last year’s over $72 billion of deals got done. Even just in 2016, we saw that the full year of transaction volume be done just in the first half of 2019. So, lots of evolution just in terms of transaction volume. Types of deals have a change a lot as well. I describe the most generic way of secondaries where you trade a fund interest, that’s evolved where we track over 20 different types of secondary transactions. So, there’s a lot going on in the space, where do we see things going? Continued growth. There’s a lot of structural drivers behind it, and continue innovation, really, because that’s how people want and need liquidity to be within space. I think one of your other questions was also, what is the environment for secondaries? Do we need a generally benign environment to invest well in secondaries? I think the short answer is no. I think for well-informed approaches to secondaries, there are opportunities everywhere. We believe that inefficiencies persist in secondaries, and what do I mean by that? Secondaries thrive on lack of updated information, lagged information, uneven availability of information, and we think that well just persist, whether it’s a benign environment or volatile environment. I would even go so far as to say secondaries are actually really great and not so vol at a benign environment as well. But we can talk a lot more about that.

MARK EVERITT:  Now that’s great. Thank you for that. I’d like to just take the first question and kind of turn on its head and ask it the other way. So, we’ve talk there about the opportunity and we said it’s independent of the environment, and that’s encouraging to hear. But John in particular alluded to this and you said that there’s a fully priced environment out there and obviously all three of you are very cognizant of that?

But as you think of risks in your particular space today and Colm, I may start with you this time. Could you give us a sense of what are the risks that you see out there and how in particular you’re managing them?

COLM LANIGAN:  The risks are the same as they have always been. They’re just heightened after 12 years of expansion. Margins improve. The valuations have increased. Multiples have increased. Exits have been much easier. So, I think it’s really a matter of coming back to the fundamentals and focusing on the underwrite, and I think that that requires a real knowledge of the space you’re in, focusing on transactions where you have a competitive advantage. There’s become a velocity to processes and transactions in sales that has led to I think greater and greater informational disparity. And so those who come into those processes more prepared, know the asset, know the industry, and know what their plan is well in advance, are best positioned and just that leads to a better quality underwrite. And I think the other element of it is we’ve had pretty easy leverage for a number of years. And so, many sponsors start with, “How do I maximize leverage? And then how do I figure out how much equity is needed?” And I think that’s going to reverse a little bit to figuring out how the capital structure really fits the strategy of the business and can go through cycles. And so, I think we take all of those together, really is again about coming back to the fundamentals, solid companies, ones that have shown persistence of earnings over time, a value creation plan that is less focused and less dependent on execution risk, and then being a little bit more certain about where your execution and your value creation is going to come from.

MARK EVERITT:  Yeah. It’s interesting you mentioned the underwrite. I mean, it’s almost a combination of art and science, right? As you think about the downside as much as you think about the base case and the upside returns.

COLM LANIGAN:  It’s about the distribution of returns. It’s not just the base case, and it’s about making sure you can capture the right tail on those returns while trying to avoid the left tail, obviously. But distribution of returns is becoming much more important than just underwriting a base case with a lot of optimism in it.

MARK EVERITT:  Right. Thank you for that. Konnin, I might let you interject here. From your world, are the risks any different with respect to underwriting and tell us your perspective.

KONNIN TAM:  Yeah. Again, from a secondaries perspective, it’s interesting because it is a derivative of what Colm just mentioned around direct private equity, but it’s also a lagged expression of that through the secondary markets. So, I would say some of the concerns are the same, but some of them are also a little bit different as well. I will say, very often, I think probably across all of us, the questions of our concerns that we heard most from investors revolved in some combination around, “Isn’t there too much money? So, is there too much dry powder? Isn’t there a lot of competition? And then, of course, valuation as well. And I think, specifically in the secondary space, those actually aren’t my top perceived risks or concerns that we see out there, why? It’s because the statistics around the secondary dry powder is actually quite low. We think there is actually a year or less of dry powder around secondaries. Secondly, around competition, yeah, I would challenge all of us to say, “Which attractive market doesn’t have competition?” And so, it translates to specific assets up to portfolios of assets as well. There will always be competition. It’s just, “Are you an informed buyer? And are you navigating the complexities of a process very well?” On valuation, I think I’m reminded of just -- it is very hard to tell at any one time. One of the key tenants I think to private equity investing is to be consistent and programmatic and steady, and sometimes, I think it is actually an asset class. It’s very hard to market at time. I’m reminded a bit back in 2012, very famous private equity investors were saying, “I should sell everything that’s not nailed down” and, guess what? We’re here in late 2019 and someone would have missed out on seven very good years of growth if you’ve heard -- if you listened and acted upon that. And so, yeah, I do think that all this is hard to tell and you need to be consistent. I think the focus on quality is very important. So, where do I see risks? I think I see risks in really two words. One is lumpiness is where I see risk, and I see risk in investors that are too accelerated or too slow in their evolution and pacing, and I think this can translate in the number of ways around risk that can aggregate within a portfolio. The other risks we could see is, frankly chasing complexity and chasing value, and particularly in secondaries, it is something that we think a lot about. And so, I think it is a topic that we are very, very mindful of just to make sure we’re consistent.

We source and look at things very, very broadly, but also be highly selectively ultimately in what we look at and ultimately buy what we think is the right value and the quality at the right time and at the right price.

MARK EVERITT:  Yeah. So, when you talked about that, so I was going to ask you unpack a little bit more. Are you seeing a lot of investors out there paying too high a price for assets because they feel the pressure to actually deliver and how are you dealing with that? Because that’s a difficult thing to manage when you’re on the other side.

KONNIN TAM:  I think so. I think what we see is the danger around lumpiness comes from the urge to deploy capital really, really quickly in the direct private equity world and even in secondaries to raise the next pull of capital. We do think that is a danger, right? Where you’re just investing and putting money out just for that sake without being steady and pacing out so that you can actually go and buy what is the best deal out there. I do think that is one issue that we broadly experience specifically within, whether it’s an asset, it’s a portfolio, or in a secondary transaction process. I do think that is one of the things that we are concerned about.

MARK EVERITT:  That’s great. So, John, turning to you to bring this all to fruition. I mean, as you see risks in your space, what are the watch words in your area and what are you thinking about?

JOHN:  Yeah, absolutely. Well, my colleagues have covered a number of important points. We commit capital to a third-party private equity funds and also direct co-invest with those firms, and then from that standpoint, what I would add is there’s an old adage that I think is appropriate today, which is speed kills. And in today’s market, one of the greater risks that I think you’re hearing around the table here is undisciplined capital. When you start to see rushed processes, rushed auctions, investors feeling that they have to cut corners on their due diligence to meet a deadline, that’s when mistakes are made. And so, you really have to look, as you’ve mentioned, what is the motivation of that investor? Do they feel pressure to put capital out? But also, with a rising market, we have a rising number of new entrants into the marketplace today, maybe some of whom haven’t lived through a cycle yet today. So, they are untested. So, as we look at both general partners and as we’re looking at direct transactions, on the GP side, we’re asking ourselves, “Have they been tested? How are they’re thinking about what they want to do with these companies? What is their edge on sourcing and executing on the investments?” But in direct co-investments it’s really, “Can you get into a process earlier to help the co-underwrite? Can you help to better manage your risk?” And we believe the undisciplined capital today, we won’t know for several years, but I think that’s where you’re going to see some of the mistakes on these rushed processes. Another joke maybe that we have around the table is that the old upside case is the new base case. So, as you look at the underwriting of some of the transactions we see today, the base case may still imply an attractive rate of return. But when you peel back that underwriting, it’s green lights through town. Everything has to go right. The market needs to continue growing for five years. The company that you’re investing is going to grow beyond market rates. It will expand margins during the course of that, and do a handful of acquisitions all baked into the base case. And I think what we’d argued is, “To be prudently, someone may want to actually peel back some of those assumptions” and when you peel those back, actually, the risk adjusted returns may not be as exciting. So, those are some of the debates that we’re having around the investment committee today.

MARK EVERITT:  That’s good to hear. I mean, for all three of you, discipline is obviously just a key watch word to successful investing in the environment we’re in today. I like to move the conversation on now and move away from talking about opportunity and talking about risks and actually talk about innovation as you’re seeing it in part of the private equity space. I mean, across the world in general, we’re just seeing just tremendous change and here at BlackRock, it’s one of our beliefs that the successful investment firms of the future will innovate and won’t look like the successful investment firms of the past, and we’re very focus on using technology and data to advance our investment efforts. But as you said in your seat, Konnin, can you talk a little bit about innovation as you see it in the world of secondaries and how that translates into investors and the proposition for investors?

KONNIN TAM:  Sure, as I’ve talked about growth within secondaries, I’ve also mentioned there’s been just enormous innovation through transaction types that we’ve looked at.

So, I think that’s the first avenue or type of innovation that we see, is in transaction types. So, as we’ve looked at the growth within the space, I’ve talked about before, it started off from just trading a fund interest within the space and it’s really evolved into more than 20 types of secondary transactions that are out there, really necessitated by the continued complexity that we see in the global private equity market, and so that’s one type of innovation that we see. So, examples of that include what we call structured secondaries or synthetic secondaries, where you can replicate a secondary transaction without actually economic interest trading hands. Another area that we’ve seen strong growth and we will continue to see strong growth, is in the area of GP-led or manager-led secondaries. That’s an area of market innovation where it went from nothing back in 2011, to right now about a third or more of the market, and we think at some point it maybe a balanced market between these manager-led secondaries and the traditional secondary market as well. The other area of innovation that we see is really in data and analytics. I always like to say, “Private equity is data-rich an analytics-poor.” I think my colleagues can speak a lot more to that in their own experiences. But in the secondary space, imagine, buying a fund portfolio, imagine that it’s a ten-fund portfolio of a lot of different types of strategies, managed by different managers. Let’s just say each one of those funds have ten companies in it, you’re looking at evaluating100 companies with information that is given to you in the form of PDFs and you have maybe weeks to evaluate it, sometimes as short as two weeks to evaluate this bid, lots of data embedded in there. But the analytics, and the ability to actually execute and evaluate that efficiently in an informed way is still quite elementary. And so, in secondaries, I do think just data and analytics, there’s a lot of room for innovation going forward, and when you think about, it’s actually quite exciting.

MARK EVERITT:  Thank you, John, what are your thoughts here?

JOHN:  Well, similar to Konnin, I think, as we observed the market, we’re seeing innovation both in the structure of the private equity market, and the participants in it, as well as the tools that clients have available to them to modernized their private equity portfolio. I think in the structure of the market, we absolutely have seen the rise of new participants, greater participation by sovereign wealth funds, by family offices, asset managers, and now, also more emerging managers as the industry matures, and indeed, fundless sponsors that are working in a transaction by transaction basis. And in addition to that, longer term perpetual structures, which Colm is involved with. So, it’s fascinating for us to look at the ecosystem of their private markets and how that evolves, and I think that management teams, corporates, entrepreneurs have more options available to them to think about how they want to get private equity financing for various activities, and I think that lends itself to a wider range of opportunities of how investors want to construct their portfolios across that are participating with a broader array of participants in the market. Next to that, we’re also seeing that clients and investors are taking advantage of new innovated tools and how they want to optimize their private equity portfolios. As Konnin alluded to, there’s a huge focus on transparency and data and analytics in the private markets, and I think that investors are demanding more of their private equity portfolios as they’re going from alternative to core. And really thinking about, “How am I not just managing my returns in private equity?” but, “How am I managing my risks?” and so we expect to continue to see innovation and investment in building out of data and analytics in private equity. In addition to that, we’re seeing that larger participants in the private equity market, larger limited partners are thinking about ways of how to extend the expertise that their in-house teams have. And so, we’re seeing the rise of joint ventures, the rise of separate accounts as large investors think about how to partner in ways, to either enhance sourcing, enhance underwriting or indeed, analytics and just administration and reporting of an ever-increasing private equity allocation that they have in their portfolio.

A trend that we have started and we expect to continue to see -- it’ll be fascinating to see how Konnin and others in the secondary market playing this, but we also see the rise of transition management in private equity, and clients becoming more sophisticated thinking about how they want to optimized their portfolios from a risk adjusted return standpoint. So that will be very interesting to watch.

MARK EVERITT:  Thank you. Innovation for you Colm is at the core of long-term private capital, so what are your all thoughts here?

COLM LANIGAN:  Well, I think you’ve heard the data as a common theme and I think you’ve heard structure. We sit sort of at the middle of that. We think that and what we’ve seen is this monolithic approach to private equity which has been successful for many, many years has now finally started to evolve, and we’re trying to be at the forefront of that. I think the idea of taking away some of structural inhibitions of alignment which exist have actually helped open up the space, so that’s number one. So, these permanent type vehicles take away from the incentive for the pro-cyclicality that Konnin talked about where people are sort of lumpy and trying to put capital work as fast as it comes back. I think when you take away that incentive and that misalignment, I think it leads to the patient capital that we’re all been talking about, so that’s important. I think a couple of other areas that we see from our base, private equity used to be a very, and still is in many cases, a very local business, there is European private equity, and there is US private equity and there is Asian private equity, and people really saw the businesses in each one of those buckets as different businesses. I think as you’ve seen the industry scale, and you see the businesses themselves scale, you’re now seeing the need for a GP that has the ability to bring global capabilities and global scale, and that was one of the reasons why I joined this seat is because a lot of the companies that we’re dealing with are really looking for assistance and how to globalized their business, how to use the data and analytics, how to use the longer horizon that’s available to them, to take advantage of all of the growth that’s happening in Asia, take their businesses on a global basis, and that’s a key area focus for us. And I think that will be for more and more GPs as they go forward, and LPs are clearly focused on it. One other area which I think we’re seeing is the rise of sustainability as a real factor in particularly LP’s views of the world, because they all tend to have very long liability basis. They have long outlooks on how they think about their portfolio construction. And private equity is traditionally been a shorter timeline, and so it was less of an issue for how they thought about the businesses, how they thought about their value creation et cetera. And so, I think what you’re seeing is that that sustainability push is becoming more and more acritical imperative as you do your underwrite. No longer can you say that a five-year horizon, I don’t have to worry about some of the sustainability issues. Everybody is now building that into their core of their business and their underwrite and with a longer horizon and duration for investments, it’s becoming even more important. So, I think you’re going to see that movement become very, very mainstream in some of the things that are happening in private equity.

MARK EVERITT:  That’s really encouraging to hear. Thanks for sharing that. I think as we come to the end of this discussion today, we might just finish off with one question and that is a little bit less kind of investment-oriented, and a little bit personal-oriented and I’d like to invite each of you to share with people either one moment, significant moment in your investment career and what it meant to you, and/or a forecast that you might have for the decade ahead, and John, might ask you to start that sharing experience with us.

JOHN:  Sure Mark. Well, we all work in a people business, and that’s what makes it fun and exciting and I feel very fortunate and blessed that I had an opportunity to live and work overseas, and being local in a new country and a new content and having opportunity to do better understand local cultures and the differences across different markets, has helped me also not only as an individual and my context to the world, on a personal note, but also just as an investment professional and understanding how to better interact, negotiate partner with people of different backgrounds and different parts of the world. So that’s been really exciting. In terms of our prediction, if we believe that allocations to private markets are increasing, if we believe that private equity is going from satellite to core as a result in all of our investment portfolios, then perhaps it’s time to stop calling private equity alternative, and really look at private equity as equities.

And so, perhaps a hypothesis for all of us think about, is that over the next decade as we look forward, the leaders in private equity will actually be the leaders in equities.

MARK EVERITT:  I like that. It’s good to hear. Colin, what are your thoughts?

COLM LANIGAN:  Well, from the historical personal side, I’ve been on the finance side of this business, I’ve been a partner in GP, I ran a portfolio. But I think the key event that was transformative is in 2006, I went out as one of the fundless sponsors that John talked about, and I bought a business and I stepped in as CEO and I ran that business. And I ran it through the crisis, GFC which is a period I wouldn’t wish on anybody else to go through again. But I think that really drove home a lot of the things that are so critical to, hopefully the future success on what we’re doing and that is -- the focus on execution, the focus on people as John pointed out, but really the ones who are driving the change in the businesses you’re trying to do, and making sure that you have that alignment, and the messaging is clear and understanding what is really happening on the ground. That was absolutely critical. And at the same time, we would not have lived through that if it was a tech or manufacturing business, would not have lived through that crisis if we didn’t have the right capital structure in place, and we didn’t respond fast and quick when things turned in ‘08-‘09. And so, I think those were really critical lessons that I’ve never forgotten about to how underwrite and how to think about value creation in businesses. And as for a projection, I think, John is right. I think the one thing I would say is the disruption is not going to stop, it’s going to continue and it’s going to accelerate, and that’s kind of require this innovation and this adjustment. But I do think that the movement away from the public markets to the private markets is one of those disruptions and that will continue.


KONNIN TAM:  Through the lens of my investment experience, I would center around 2009 being an incredibly interesting and informative time in my professional career. Because in the after math of the financial crisis, and again through a secondaries market lens, I think it was a highly informative and educational time to say, “Everyone is expecting what is going to break the market so to speak, and where’s the stress going to come from?” I think my main lesson from that time period is, it’ll be very hard to predict what it is, but then also to be steady within that timeframe, I think is going to be really critical. Because I remember sitting in an investment committee in 2009 and 2010 and really struggling with these opportunities where we were trying to get things down to such fine precision around the opportunity. And in hindsight, those were just great opportunities because there were just so many different things I played there. So, within our market, I’m reminded there’s multiple levels of creating value. Yes, you should try and buy things at a discount, but also the adjust forward growth of the asset is important. Who you’re buying with is important as well. Who is the private equity manager that you’re partnering with in this case. And so, 2009 to me was highly informative around -- things are never as bad as if feels like in the moment nor are things ever as good as they feel in the moment, and probably that’s something very good for me and for us to keep in mind over the next five to ten years as well. Within my space, within the secondary space, where do we see things from here? Well I’ll be a little bold and I say, “Yeah, you’ve heard me talk about before the secondary market last year transacted on 72 billion and that was up from 2 billion 15 years ago.” I think it’ll be 100 to 150-billion-dollar market annually in the near future. I don’t think we’re that far away from it. If you look at outstanding unrealized net asset value in private equity, if you just assume roughly 2% of that trades in the secondary market any one year, and it’s a lower number, if you account for private markets assets, it is not hard to imagine the secondary market is going to be a 100-150 billion dollar plus transaction market. And the types of transaction? I’ve said we track 20 types of deals. Hopefully we will do this again in a few years and I’ll be talking about 50 or 60 different types of secondary transactions. I actually don’t think that is all the prediction within the secondary space.

MARK EVERITT:  John, Colm and Konnin, thank you for joining us today. To all of you who listened in, thank you for spending this time with BlackRock and for your ongoing partnership. We hope to speak with you very soon. Please visit for more information.


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In the European Economic Area, it is issued by BlackRock (Netherlands) B.V.: Amstelplein 1, 1096 HA,Amsterdam, Tel: 020 – 549 5200, Trade Register No. 17068311. This material is for distribution to Professional Clients (as defined by MiFID Rules) and Qualified Investors and should not be relied upon by any other persons. 

In the United Kingdom and outside the European Economic Area, it is issued by BlackRock Investment Management (UK) Limited, (authorised and regulated by the Financial Conduct Authority (‘FCA’). Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Registered in England and Wales No. 2020394. Tel: 020 7743 3000. This material is for distribution to Professional Clients (as defined by the FCA or MiFID Rules) and Qualified Investors and should not be relied upon by any other persons.

For qualified investors in Switzerland, this material shall be exclusively made available to, and directed at, qualified investors as defined in the Swiss Collective Investment Schemes Act of 23 June 2006, as amended.

In South Africa, please be advised that BlackRock Investment Management (UK) Limited is an authorised Financial Services provider with the South African Financial Services Board, FSP No. 43288.

In Hong Kong, this material is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong. This material is for distribution to "Professional Investors" (as defined in the Securities and Futures Ordinance (Cap.571 of the laws of Hong Kong) and any rules made under that ordinance.) and should not be relied upon by any other persons or redistributed to retail clients in Hong Kong. 

In Singapore, this is issued by BlackRock (Singapore) Limited (Co. registration no. 200010143N) for use with institutional investors as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore.

In Korea, this information is issued by BlackRock Investment (Korea) Limited. This material is for distribution to the Qualified Professional Investors (as defined in the Financial Investment Services and Capital Market Act and its sub-regulations) and for information or educational purposes only, and does not constitute investment advice or an offer or solicitation to purchase or sells in any securities or any investment strategies.

In Taiwan, Independently operated by BlackRock Investment Management (Taiwan) Limited. Address: 28F., No. 100, Songren Rd., Xinyi Dist., Taipei City 110, Taiwan. Tel: (02)23261600.

In China, this material may not be distributed to individuals resident in the People's Republic of China ("PRC", for such purposes, excluding Hong Kong, Macau and Taiwan) or entities registered in the PRC unless such parties have received all the required PRC government approvals to participate in any investment or receive any investment advisory or investment management services.

Issued in Australia and New Zealand by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975 AFSL 230 523 (BIMAL) for the exclusive use of the recipient who warrants by receipt of this material that they are a wholesale client and not a retail client as those terms are defined under the Australian Corporations Act 2001 (Cth) and the New Zealand Financial Advisers Act 2008 respectively. BIMAL is the issuer of financial products and acts as an investment manager in Australia. BIMAL does not offer financial products to persons in New Zealand who are retail investors (as that term is defined in the Financial Markets Conduct Act 2013 (FMCA)). This material does not constitute or relate to such an offer. To the extent that this material does constitute or relate to such an offer of financial products, the offer is only made to, and capable of acceptance by, persons in New Zealand who are wholesale investors (as that term is defined in the FMCA). This material has not been prepared specifically for Australian or New Zealand investors and may contain references to dollar amounts which are not Australian or New Zealand dollars and financial information which are not prepared in accordance with Australian or New Zealand law or practices. 

For Other Countries in APAC, this material is issued for Institutional Investors only (or professional/sophisticated/qualified investors, as such term may apply in local jurisdictions) and does not constitute investment advice or an offer or solicitation to purchase or sell in any securities, BlackRock funds or any investment strategy nor shall any securities be offered or sold to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction.

In Latin America, for Institutional Investors and Financial Intermediaries Only (Not for public distribution). This material is for educational purposes only and does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any shares of any fund (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction. It is possible that some or all of the funds mentioned in this document have not been registered with the securities regulator of Argentina, Brazil, Chile, Colombia, Mexico, Panama, Peru, Uruguay or any other securities regulator in any Latin American country and thus might not be publicly offered within any such country. The securities regulators of such countries have not confirmed the accuracy of any information contained herein. No information discussed herein can be provided to the general public in Latin America. 

In Argentina, only for use with Qualified Investors under the definition as set by the Comisión Nacional de Valores (CNV). 

In Chile, the offer of each security not registered with the Comisión para el Mercado Financiero (“CMF”) is subject to General Rule No. 336 issued by the SVS (now the CMF). The subject matter of this offer may include securities not registered with the CMF; therefore, such securities are not subject to the supervision of the CMF. Since the securities are not registered in Chile, there is no obligation of the issuer to make publicly available information about the securities in Chile. The securities shall not be subject to public offering in Chile unless registered with the relevant registry of the CMF. 

In Colombia, the offer of each Fund is addressed to less than one hundred specifically identified investors, and such Fund may not be promoted or marketed in Colombia or to Colombian residents unless such promotion and marketing is made in compliance with Decree 2555 of 2010 and other applicable rules and regulations related to the promotion of foreign financial and/or securities related products or services in Colombia.  

In Mexico, for institutional investors and financial intermediaries only. Investing involves risk, including possible loss of principal. This material is provided for educational and informational purposes only and does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any shares of any fund or security. It is your responsibility to inform yourself of, and to observe, all applicable laws and regulations of Mexico. If any funds, securities or investment strategies are mentioned or inferred in this material, such funds, securities or strategies have not been registered with the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores, the “CNBV”) and thus, may not be publicly offered in Mexico. The CNBV has not confirmed the accuracy of any information contained herein. The provision of investment management and investment advisory services is a regulated activity in Mexico, subject to strict rules, and performed under the supervision of the CNBV. BlackRock Mexico, S.A. de C.V., Asesor en Inversiones Independiente (“BLKMX”) is a Mexican subsidiary of BlackRock, Inc., registered with the CNBV as an independent investment advisor under registration number 30088-001-(14085)-20/04/17, and as such, authorized to provide Investment Advisory Services. BlackRock México Operadora, S.A. de C.V., Sociedad Operadora de Fondos de Inversión (“BlackRock MX Operadora” and together with BLKMX, “BlackRock México”) are Mexican subsidiaries of BlackRock, Inc., authorized by the CNBV. For more information on the investment services offered by BlackRock Mexico, please review our Investment Services Guide available in This material represents an assessment at a specific time and its information should not be relied upon by you as research or investment advice regarding the funds, any security or investment strategy in particular. Reliance upon information in this material is at your sole discretion. BlackRock México is not authorized to receive deposits, carry out intermediation activities, or act as a broker dealer, or bank in Mexico. For more information on BlackRock México, please visit: Further, BlackRock receives revenue in the form of advisory fees for our mutual funds and exchange traded funds and management fees for our collective investment trusts. 

In Peru, this material is for the sole use of Institutional Investors, as such term is defined by the Superintendencia de Banca, Seguros y AFP.

The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation, and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are often heightened for investments in emerging/developing markets or smaller capital markets.


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