The market for secondary offerings of private equity investments is currently undergoing two changes:
- Whereas previously this space was reserved for discounted purchases of portfolios from investors that had grown tired of poor performance, now these purchases are being made at a premium. The article cites multiple examples where the price paid was at or above face value, with the most extreme purchase coming in at 135% of face value.
- Buyers are increasingly using leverage to make these purchases in an effort to boost returns as the sum paid increases. Leveraging a portfolio of leveraged investments increases the risk profile substantially.