"Difficult exit" has always been one of the important pain points in the development of private equity investment funds. At present, the exit mode, which is mainly IPO and supplemented by mergers and acquisitions, cannot meet the diversified exit needs of investment institutions. As a result, the secondary market of private equity came into being and flourished, which alleviated the problem of "difficult exit" to some extent.

What does private secondary market mean?

Private equity secondary market, also known as PE secondary market or S fund market, refers to the behavior that LP of private equity fund sells the actual investment share and unfunded investment commitment to other investors, or GP sells the management right of one, several or even all invested enterprises to other investors.

Participants in the private secondary market include not only buyers and sellers involved in the transaction, but also third-party service agencies that provide services such as transaction matching, valuation and pricing, financial adjustment and legal consultation. The core value of the private secondary market lies in improving the liquidity of private equity funds and solving the demand of private equity investors for the liquidity of their fund shares.

Other popular science:

The private equity secondary market originated from abroad, and the first secondary market fund was established by American VCFA Group on 1984. The global private secondary market began to grow continuously in 20 17 years, and 20 19 years was the peak of transactions in recent years.

Affected by the epidemic, the transaction volume decreased in 2020, but contrary to the global trend, as the only economy in the world that achieved positive economic growth in 2020, the transaction scale of private secondary market in China showed positive growth. 2020 is also a breakthrough year for China to set up independent S funds, such as the S fund with a scale of 2 billion yuan raised by Gefei assets.