NYPPEX: Secondary Bid-Offer Disconnect in VC-Backed Company Shares

RYE BROOK, NY, August 2, 2016 (Newswire.com) - ​NYPPEX, a technology-driven financial services company that provides secondary private equity market liquidity, just released its revised 2016 Midyear Secondary Private Equity Market Trends and Valuation Report that discusses secondary direct investments in venture-backed private companies.

Its findings included the following:

1. Secondary transaction volume increased 12% for secondary direct investments in venture backed private companies in the 1H2016, driven by shareholders’ concerns about declining valuations and fewer exits. We believe there was significant secondary direct supply offered in the 1H2016 that did not get executed.    

2. Secondary bid prices were often significantly lower than offer prices for secondary shares in venture-backed Unicorn companies (i.e. valuations in excess of $1 billion) despite offer prices that reflected 20-40% write downs since December 31, 2015.

3. For the 2H2016, NYPPEX estimates that secondary bid prices will decline 4-6% in general and 10-18% for Common shares (which are widely held by employees) in many Unicorns compared to June 30, 2016, driven by investors’ concerns about current valuations (vs. public stocks), exits and geopolitical risk.  Mutual funds, hedge funds and family offices that aggressively invested in Unicorns may report large losses from secondary sales in 2017.

To request a copy of the NYPPEX 2016 midyear report, please email data@nyppex.com with your name, title and organization. Note: All information as estimated by NYPPEX.

About NYPPEX Holdings

NYPPEX Holdings is a technology-driven financial services holding company that provides secondary private equity market transfer administration, trading, advisory and portfolio valuation services for alternative assets worldwide. NYPPEX has provided over $8 billion in secondary private equity liquidity to investors in 26 countries for (a) interests in private funds (e.g. buyout, venture, natural resources, real estate, hedge funds etc.), (b) unregistered securities  in  private  (and  listed)  companies  and  (c)  their  respective  derivative instruments.

Its services are provided to alternative investment firms, private companies, governments, financial institutions, custodians, corporations, private wealth management groups and their advisors worldwide. www.nyppex.com

For more information, please contact inquiries@nyppex.com or:
Robin Starr Bond, SVP, NYPPEX
+1.914.305.2808
rbond@nyppex.com

Source: NYPPEX Holdings