Secondaries buyers expect VC fire sale

Venture funds should sell for about 60 percent of their net asset value today versus about 78 percent of NAV in December, according to a poll by Setter Capital.

Secondary market buyers anticipate steep discounts on venture funds due to the economic downturn caused by the novel coronavirus.

VC funds should sell for about 60 percent of their net asset value (NAV) today versus about 78 percent of NAV less than three months ago, according to a Setter Capital poll of 39 active/regular buyers on the secondary market for alternative investment funds.

To put that into perspective, LBO funds are expected to sell for about 77 percent of NAV today versus 102 percent of NAV in December, Setter reports.

Secondary buyers don’t plan to pounce quickly. On average, they expect their secondary purchases to decline by about 30 percent over the next two months, according to the poll.

Buyers also expect secondary volume to drop by about 29 percent this year. Respondents predict overall market volume of about $60 billion in 2020 compared to a record $84 billion in 2019.

Download the full Setter report here: Setter Capital Buyer Survey – March 2020