Unicorn pricing strengthens in the secondary market

Secondary market pricing for shares in unicorn companies strengthened substantially in 2017, with discounts falling by more than half.

Bids varied widely among companies, but in aggregate, discounts to a company’s most recent private-market round fell to 15 percent in the fourth quarter from 35 percent at the start of the year, said NYPPEX in its year-end secondary-market report.

The strengthening suggests investors are more optimistic about public-market and M&A exit opportunities for the companies.

The brighter outlook also pushed secondary-market transaction volume for private-company shares to a record in 2017, with trading value up 10.7 percent to $23.8 billion, NYPPEX said.

Secondary market trading for LP interests also hit a record of $41.4 billion, up 9.8 percent for the year. Bids for venture-capital funds increased the most, with the median up 8.2 percent to 85.06 percent of net asset value.

Buyout funds maintained the highest median bid at 98.3 percent of NAV, NYPPEX said.

Median bids for U.S. funds increased the most, followed by European funds.

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Photo of unicorn courtesy of MadKruben/iStock/Getty Images.