The decision to try to tap the private equity secondary market to generate cash highlights a growing problem private investment firms are facing: how to return money to their backers. Sources told the Financial Times that other large venture capital firms have also been studying similar sales of parts of their private portfolios.
Globally, the amount of money raised through IPOs in the first quarter of this year fell 61 per cent to $21.5 billion against the same time period last year. The secondary market has become an increasingly popular tool to help firms return cash to their investors while public markets have been shut. It can also enable firms to hold on to private companies they own for longer periods than a typical fund structure usually allows.