What is a secondary investment?

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Secondaries in private equity explored by Oliver Gardey, Head of Private Equity Fund Investments, ICG

What is the secondary investment?

It’s very simple. A secondary investment is buying someone else’s private equity investment.

Typically these private equity investments happen in the form of making investment in a private equity fund and a secondary is nothing different than buying out that investor who is in their private equity fund buying out their interest.

Why invest in secondaries?

Secondary investments are very interesting and popular. You’re buying investments in a portfolio which is already five to eight years old. So therefore, you have all the information, look at financial performance and most interestingly you are four to five years typically closer to exit.

What a secondary typically does

  1. It gives you private equity company returns
  2. Much less risk because you know what you’re buying and lastly,
  3. Getting much higher liquidity because you are entering the investment four to five years closer to exit

Go deeper

Watch the full #explainedin60seconds series – private equity explained by those who understand it best.