- Global secondaries deals hit $162bn
- ‘Nascent’ secondaries market in Mena
- Provides access to emerging tech
The Middle East’s sovereign wealth funds are using the surging secondaries investment market to take strategic stakes in emerging technologies, experts have told AGBI.
A secondaries investment is the acquisition of interests in already formed private market funds or a portfolio of direct investments from existing investors.
Global secondaries transactions rose almost 50 percent last year to a record $162 billion, according to research by Jefferies Financial Group, a New York investment bank.
“In the Middle East, what we’ve seen is a lot of investors, usually backed by governments, deploying a lot into secondaries,” said Alex Chauvin, a partner in the private equity practice at law firm White & Case.
Chauvin said several Gulf sovereign wealth funds were active in the secondaries market, often with a focus on technology and venture companies.
Secondary activity typically spikes during liquidity crunches or macroeconomic crises – the previous record was set during the Covid-19 pandemic – but the more recent surge predates the heightened trade tensions since April 2, according to Chauvin.
The Middle East’s “sovereign investors have been keen to deploy more capital in specific jurisdictions, and secondaries offer a way to get more access to technology in the US”, she added.
While much of the Middle East’s participation in the secondaries market revolves around large funds investing abroad, a regional market is also starting to emerge.
“The secondaries market in Mena is still nascent, but it’s growing in tandem with global secondary investment,” Basil Moftah, founder of Key Capital, is quoted as saying on venture capital platform Magnitt.
Sometimes investors take the view that waiting upwards of a decade for a full exit does not align with their timelines or risk profiles. Tapping the secondaries market offers them a way out.
“From where we sit in Saudi Arabia, secondaries are poised to grow – not just because liquidity is tightening, but because this market is maturing,” said Fahad Al Essa, CEO of Riyadh health startup Kilow.
