LONDON Private equity firm Ardian said on Wednesday it had spent $4.3 billion on acquiring stakes in buyout funds since September last year, defying suggestions there is a shortage of sellers in the secondary market.
Expectations that banks would need to offload their stakes in private equity because of stricter capital rules following the financial crisis, as well as a rise in demand for liquidity among other investors in the buyout industry, has encouraged a rush of firms to launch secondary vehicles.
That increase in supply has weighed on prices, however, as fewer than anticipated potential sellers look to sell their investments in private equity funds.
Ardian said it had not seen a decline in the number of sellers and expected the potential stock of private equity for sale in the next five years will exceed the money ready to invest in the secondary sector.
"We are seeing a greater diversification of sellers in the market," Vincent Gombault, head of fund of funds and private debt at Ardian, said.
"Financial Institutions still hold large portfolios and continue to represent a very large source of deal flow. However, we are seeing an uptick from pension funds, endowments and insurance companies as they seek to rebalance their portfolio while increasing their allocation to private equity."
Paris-based Ardian, which recently completed its spin out from insurer AXA (AXAF.PA), manages $36 billion in assets.
(Editing by David Holmes)