Within GP-led secondaries, the single-asset model now stands as a functionally distinct segment, and single-asset transactions are the fastest-growing area within secondaries. GP-led single-asset secondaries can offer attractive benefits in all market conditions because of the flexibility for GPs to hold their most promising assets longer and the possibility of added exit options.
Unlike traditional LP-led transactions, where secondaries investments involve exposure to multiple assets at the portfolio level, single-asset secondaries may help mitigate unwanted broader portfolio risk. Often, single-asset deals can unlock potential value that would otherwise be sacrificed due to a lack of additional funding or a premature exit driven by forces extraneous to that particular asset.
Relative to other segments of the secondaries market, single-asset deals stand out for their return potential. According to recent research, nearly 62% of secondaries investors are targeting net internal rates of return of 20% or more in single-asset secondaries.2 In comparison, return thresholds for the multi-asset GP- and LP-led segments are much lower, with only 40% and 16% of investors targeting returns as high as 20% or more, respectively.