Introducing South Africa’s first secondaries fund - private capital markets answer to illiquidity.
MINIMUM INVESTMENT
R1,000,000
FUND MANDATE
To purchase pre-existing investor commitments in various private equity funds and other alternative investment vehicles. The fund provides existing investors with liquidity, while opening the door for its own investors to a portfolio of strong investments at a discount, in order to capitalise on the unrealised future upside.
Solving the challenge of illiquidity in private equity
As the private equity industry continues to grow, illiquidity remains a challenge. Investors increasingly find themselves grappling with limited exit options, as typical private equity funds lock up capital for extended periods – often 5, 7, or even 10 years.
This extended holding period means investors can’t easily access their capital until the fund’s term is reached. As a result, many investors are now actively seeking ways to access their capital more flexibly, challenging the traditional private equity model and driving demand for innovative liquidity solutions.
What is a secondaries fund
A secondaries fund is a type of private equity fund that focuses on purchasing pre-existing investor commitments in private equity funds and other alternative investment vehicles.
These funds typically acquire stakes from original investors who want to sell their holdings before the fund reaches maturity, often for liquidity reasons or portfolio rebalancing.
The secondaries market provides sellers with an exit option while offering buyers the opportunity to purchase assets at a discount, potentially benefiting from the remaining upside in the investments. Secondaries funds can invest in various types of assets, including buyout funds, venture capital, and real estate.
The growth of secondaries funds globally
In response to this growing demand, secondaries funds are gaining popularity worldwide, offering a potential solution to iliquidity.
A March report from Bain & Company highlights the market’s growth as secondary funds raised 92% more capital in 2023 compared to the previous year globally. This year alone, the secondaries market saw $34.5 billion raised in the first half of 2024 according to the Secondaries Investor Fundraising Report H1 2024.
Why now is the time for South Africa’s first secondaries fund
Private equity is on the rise in South Africa. The SAVCA 2024 Private Equity Industry Survey highlights this growth, noting that 43% more was raised in private equity in 2023 compared to 2022, reaching R28.1 billion. However, this increased capital once again brings the challenge of illiquidity.
Furthermore, with Section 12J funds reaching maturity and investors not realising their exits due to the lack of liquidity events, combined with the growing global interest in secondaries funds, now is the perfect time for one in South Africa.
Administered by Grovest, the pioneers of fresh thinking and product in alternative investing.
Grovest is one of the largest small-cap administrators in South Africa,with R3.6 billion in assets under administration.
In 2017, MeTTa Capital launched South Africa’s first portfolio of market-leading Section 12J funds and raised five successful vintages with R237 million in assets under management.
