Ardian closes world's largest secondaries fund
French private equity firm Ardian has raised 30 billion dollars from investors for its new secondary market fund. This is not only the largest secondary fund of all time, but also sets a record as the most money ever raised for any private equity fund, according to analysis firm Preqin.
The Paris-based investment firm, which manages a total of 176 billion dollars, is now the market leader for secondaries. The ninth Ardian fund in this segment is 60% larger than its predecessor from 2019. Ardian has thus not only overtaken its secondary market competitor Lexington, but its latest fund is also bigger than the 26.8 billion euro primary buyout fund from CVC.
Half of the Ardian fund is already invested, with an average transaction size of 2 billion dollars for portfolios of private equity assets. For example, in November 2023, the Ardian fund acquired a portfolio of stakes in 20 private equity funds worth 2.1 billion dollars from the Canada Pension Plan Investment Board.
Significant for the market
For institutional investors who want to exit their private equity investments early because they need the money, secondary funds such as Ardian's play an important role as market makers. Over the past three years, private equity buy-out funds have found it difficult to find buyers for their portfolio companies who were prepared to pay prices close to the high book values from the zero interest rate era. As a result, only a few exits have materialised, and the returns to institutional investors have been extremely meagre. Secondaries funds are helping in this situation: they now account for 29% of private equity returns.
„We are seizing a historically unique buying opportunity in the secondary market,“ says Ardian Executive President Mark Benedetti. „Against the backdrop of rapidly growing private markets, investors are increasingly looking for buyers in the secondary market to actively manage their private equity portfolios.“
In addition, many investors are confronted with an over-allocation due to the change in interest rates and the volatility of the stock markets, for which they need a solution because the proportion of private equity investments exceeds the upper limits prescribed by legislators, or set by themselves.
High volumes
Market volumes in the secondary market, where individual transactions are rarely published, have risen sharply, based on data from investment bank advisors. The highest volume of completed transactions to date was recorded in the first half of 2024. Initial estimates for the whole of 2024 are around 130 billion dollars.
The new Ardian ASF IX, which began its fundraise in 2022, has attracted commitments from more than 465 investors from Europe, America, the Middle East and Asia, including large pension funds, insurers and sovereign wealth funds. Ardian recorded particularly strong growth with private wealth clients, who account for 22% of the capital raised, versus 11% in its previous fund.
