April 8, 2024
By: Christian Simmons and Wandy Hoh
Executive summary
- Infrastructure secondaries may be attractive for new private infrastructure allocations or as a complement to existing infrastructure allocations as they have the potential to provide more rapid exposure to a diversified portfolio of assets relative to primary funds.
- Stylistically, secondary investments tend to provide an earlier return of capital and have the potential to acquire stakes at discounts to intrinsic value, which may drive strong internal rates of return (IRRs) and mitigate the J-curve typical of private fund investments.
- Persistent market volatility and the denominator effect have created a significant mismatch between the demand for liquidity and the amount of capital available to supply it. This has resulted in relatively lower pricing for secondary buyers as compared with prior periods.
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