Over the past two decades, the secondary investment thesis has evolved from a purely opportunistic strategy – bringing liquidity to fund investors seeking to exit illiquid commitments – to a more constructive strategy, in which both general partners and limited partners can leverage secondaries to better manage their portfolios and generate strong returns.
Northleaf's secondaries investment strategy seeks to provide investors with attractive risk-adjusted returns by gaining access to high-quality assets, often at a discount to intrinsic value.
Investment Approach
We construct differentiated private equity secondaries portfolios with a focus on:
Partnering with leading mid-market general partners
Acquiring high-quality, mature assets with embedded value and a clear path to exit
Leveraging our team’s expertise across the range of secondary investment types
LP-Led Secondaries
Investments in which existing limited partners in a private equity fund sell their fund interests to secondary investors
GP-Led Secondaries
Investments organized by general partners to sell specific assets from a fund into new entities backed by secondary investors
Secondaries provide investors with the potential to:
Accelerate the pace of investment and return of capital
Immediately diversify portfolios
Mitigate the “j-curve”
Enhance returns through re-pricing existing portfolio company investments
Deepen access and informational advantages when coupled with a primary fund investment strategy and co-investments
Our team focuses on negotiated acquisitions of mature fund and portfolio company interests. We look to work with existing investors seeking liquidity and GPs seeking capital for existing investments, in transactions where Northleaf has a competitive angle.
Project Borealis: Seven fund interests (47 underlying companies)
Date: 2024 Geography: Europe
Northleaf Angle: Northleaf's existing investments and broader private equity platform provided strong information access to a unique mid-market portfolio.
Secondary
Project Borealis
Active | Europe
Project Cipriani B: Two fund interests and a primary fund commitment
Date: 2024 Geography: Europe
Northleaf Angle: Northleaf received full access to information given the underlying general partner’s desire to build a broader relationship.
Secondary
Project Cipriani B
Active | Europe
Project Concordia: Two-asset continuation vehicle in two high growth leaders in their respective niche markets
Date: 2024 Geography: Europe
Northleaf Angle: Northleaf established a strong relationship with the general partner, investing in its most recent fund and completing two prior co-investments alongside the manager.
Secondary
Project Concordia
Active | Europe
Project Denali: 23 fund interests (95 underlying companies)
Date: 2024 Geography: North America
Northleaf Angle: Northleaf's platform provided differentiated access to high quality and hard-to-access middle-market managers.
The importance of secondaries as a tool to bridge old-to-new investment horizons is likely to increase due to today’s market volatility, and there should be a sustainable premium return for those who can provide liquidity.
