{"id":37887,"date":"2013-09-09T11:45:49","date_gmt":"2013-09-09T15:45:49","guid":{"rendered":"http:\/\/www.hedgeco.net\/news\/?p=37887"},"modified":"2013-09-17T10:44:03","modified_gmt":"2013-09-17T14:44:03","slug":"setter-capital-liquidity-rating","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/09\/2013\/setter-capital-liquidity-rating.html","title":{"rendered":"Setter Capital Liquidity Rating"},"content":{"rendered":"

S<\/b><\/span><\/span><\/span>etter Capital covers over 7000 institutional investors in alternative investment funds, over 900 buyers of funds, more than 2000 opportunistic sellers, and their buy and sell interest in more than 3000 fund families. In the course of monitoring this secondary market activity, Setter has developed a unique measure of the relative liquidity of fund investments, termed the <\/span><\/span><\/span>Setter Liquidity Rating\u2122<\/b><\/span><\/span><\/span>, whereby certain fund families 1 receive a rating of \u2019<\/span><\/span><\/span>Good<\/i><\/span><\/span><\/span>\u2018, <\/span><\/span><\/span>\u2019Very Good<\/i><\/span><\/span><\/span>\u2018, <\/span><\/span><\/span>\u2019Excellent<\/i><\/span><\/span><\/span>\u2019 or \u2018<\/span><\/span><\/span>Unrated<\/i><\/span><\/span><\/span>\u2019.<\/span><\/span><\/span><\/p>\n


\nThe <\/span><\/span><\/span>Setter Liquidity Rating\u2122<\/b><\/span><\/span><\/span> is largely determined by the number and strength of potential buyers (i.e. those who have shortlisted the fund, are current investors or who have recently priced the fund) for a secondary of a fund. The rating is adjusted downward in the presence of factors that negatively impact liquidity such as the manager being relatively more restrictive on transfers. The rating is also influenced to a certain extent by Setter Capital\u2019s subjective view on the composition and strength of buyer demand for a given fund family.<\/span><\/span><\/span><\/p>\n


\nWhat does a rating of Good, Very Good, Excellent or Unrated mean?<\/b><\/i><\/span><\/span><\/span>
\nGenerally, a \u2018<\/span><\/span><\/span>Good<\/i><\/span><\/span><\/span>\u2019 rating suggests that there are many potential buyers, (typically 20+) that are interested to bid on a fund within the fund family. \u2018<\/span><\/span><\/span>Very Good\u2019<\/i><\/span><\/span><\/span> and \u2018<\/span><\/span><\/span>Excellen<\/i><\/span><\/span><\/span>t\u2019 denote progressively stronger potential demand. \u2018Unrated\u2019 fund families are less targeted by buyers and\/or have fewer buyers within their existing investor base or for which there is simply not enough data points because they rarely come up for sale.<\/span><\/span><\/span><\/p>\n


\n<\/span><\/span><\/span>Possible Interpretations of a Setter Liquidity Rating\u2122<\/b><\/i><\/span><\/span><\/span>:
\nFrom a seller\u2019s perspective, a higher <\/span><\/span><\/span>Setter Liquidity Rating\u2122<\/b><\/span><\/span><\/span> suggests a number of benefits. First it means that they can create competitive tension in a sale process since there are a number of potential buyers for their fund. For this reason the Liquidity Rating correlates strongly with price, though in many cases funds that are unrated may price better than rated funds simply because the rated fund may not be as highly regarded in spite of having many buyers. The second benefit of a higher Liquidity Rating for a seller is that bids are more readily available, making a sale process easier and quicker. The seller can be more selective about counterparties, potentially choosing to work only with buyers who are existing investors or who have binding bids in hand. A final benefit of a Liquidity Rating for sellers is that the market can more readily absorb multiple sellers or larger commitments simultaneously with less downward pressure on price.
\n<\/span><\/span><\/span><\/p>\n

A Liquidity Rating could also be a useful metric for new investors in funds and secondary buyers of funds. From a new investor\u2019s perspective, a Liquidity Rating suggests that the relative liquidity of the fund will likely be higher than its unrated peers in the event they need to consider a sale in the future (provided of course that the Liquidity Rating does not decline in the future).<\/span><\/span><\/span><\/p>\n


\nFrom a buyer\u2019s perspective, a <\/span><\/span><\/span>Setter Liquidity Rating\u2122<\/b><\/span><\/span><\/span> suggests the market is more competitive and efficient, putting downward pressure on returns but perhaps suggesting also a less risky investment from a resale\/liquidation perspective.
\n<\/span><\/span><\/span><\/p>\n

Caveat<\/b><\/span><\/span><\/span>
\nThe <\/span><\/span><\/span>Setter Liquidity Rating\u2122<\/b><\/span><\/span><\/span> is to be used as a point of reference only and should not be relied upon to make an investment decision. An investor should independently determine the potential liquidity of a fund.
\n<\/span><\/span><\/span><\/p>\n

Where can you find the Setter Liquidity Rating?<\/b><\/span><\/span><\/span>
\nThe <\/span><\/span><\/span>Setter Liquidity Rating\u2122<\/b><\/span><\/span><\/span> can be found at <\/span><\/span><\/span>www.secondarylink.com\/funds<\/span><\/span><\/a><\/span><\/span> where you can search over 4000 fund families and their associated rating. <\/span><\/span><\/span><\/p>\n

The following are some examples:
\n<\/b><\/i><\/span><\/span><\/span><\/p>\n

Mega LBO Funds Liquidity Rating<\/b><\/span><\/span><\/span><\/span><\/p>\n

Apollo Excellent
\nBain Capital Excellent
\nBlackstone Excellent
\nCarlyle Partners Excellent
\nClayton Dubilier & Rice Excellent
\nKKR Excellent
\nMadison Dearborn Excellent
\nProvidence Equity Excellent
\nSilver Lake Partners Excellent
\nThomas H Lee Excellent
\nTPG Excellent<\/span><\/span><\/span><\/p>\n

Midmarket\/Growth Funds Liquidity Rating<\/b><\/span><\/span><\/span><\/span><\/p>\n

ABRY Excellent<\/span><\/span><\/span><\/p>\n

Advent Global Excellent<\/span><\/span><\/span><\/p>\n

Berkshire Partners Excellent<\/span><\/span><\/span><\/p>\n

Green Equity Investors Excellent<\/span><\/span><\/span><\/p>\n

Hellman & Friedman Excellent<\/span><\/span><\/span><\/p>\n

Kelso & Company Excellent<\/span><\/span><\/span><\/p>\n

New Mountain Capital Excellent<\/span><\/span><\/span><\/p>\n

Riverside Capital (RCAF) Excellent<\/span><\/span><\/span><\/p>\n

Summit Partners Excellent<\/span><\/span><\/span><\/p>\n

Warburg Pincus Excellent<\/p>\n

Welsh Carson (WCAS) Excellent
\n<\/span><\/span><\/span><\/p>\n

Distress-Credit Funds Liquidity Rating<\/b><\/span><\/span><\/span><\/span>
\nAres Corporate Very Good
\nCerberus Institutional Very Good
\nFortress Credit Good
\nHIG Bayside Very Good
\nLone Star Very Good<\/span><\/span><\/span><\/p>\n

OCM Opportunities Excellent
\nSun Capital Excellent
\n<\/span><\/span><\/span><\/p>\n

Venture Funds Liquidity Rating
\n<\/b><\/span><\/span><\/span><\/span>Accel Partners Very Good<\/span><\/span><\/span><\/p>\n

Benchmark Very Good<\/span><\/span><\/span><\/p>\n

Index Ventures Good<\/span><\/span><\/span><\/p>\n

Matrix Partners Good<\/span><\/span><\/span><\/p>\n

Menlo Ventures Good<\/span><\/span><\/span><\/p>\n

New Enterprise Associates Very Good<\/span><\/span><\/span><\/p>\n

Oak Investment Ptrs. Good<\/span><\/span><\/span><\/p>\n

European LBO Funds Liquidity Rating<\/b><\/span><\/span><\/span><\/span>
\nApax Europe Excellent
\nBain Capital Europe Excellent
\nBridgepoint Europe Excellent
\nCarlyle Europe Partners Excellent
\nCharterhouse Capital Excellent
\nCinven Excellent
\nCVC Europe Excellent
\nEQT Excellent
\nKKR Europe Excellent
\nPermira Excellent
\n<\/span><\/span><\/span>
\nAsia Pacific Funds Liquidity Rating<\/b><\/span><\/span><\/span><\/span><\/p>\n

Bain Capital Asia Very Good<\/span><\/span><\/span><\/p>\n

Baring Asia Very Good<\/span><\/span><\/span><\/p>\n

Carlyle Asia Partners Very Good<\/span><\/span><\/span><\/p>\n

CDH China Fund Excellent<\/span><\/span><\/span><\/p>\n

CVC Asia Excellent<\/span><\/span><\/span><\/p>\n

Hony Capital Very Good<\/span><\/span><\/span><\/p>\n

Ironbridge Very Good<\/span><\/span><\/span><\/p>\n

KKR Asia Very Good<\/span><\/span><\/span><\/p>\n

Pacific Equity Partners Excellent<\/span><\/span><\/span><\/p>\n

TPG Asia Very Good<\/span><\/span><\/span><\/p>\n

<\/a>Infrastructure Funds Liquidity Rating<\/b><\/span><\/span><\/span><\/span>
\nAlinda Infrastructure Good
\nArcus European Infra Good
\nCube Infrastructure Good
\nDutch Infrastructure Fund Good
\nEnergy & Minerals Group Good
\nEQT Infrastructure Good
\nGS Infrastructure Partners Good
\nHighstar Capital Good
\nMEIF (Macquarie) Very Good <\/span><\/span><\/span><\/p>\n

MIP (Macquarie) Good <\/span><\/span><\/span><\/p>\n

MSIP (Morgan Stanley) Good <\/span><\/span><\/span><\/p>\n

RREEF Infrastructure Good<\/span><\/span><\/span><\/p>\n

US Power Very Good<\/span><\/span><\/span><\/p>\n

Real Estate Funds Liquidity Rating<\/b><\/span><\/span><\/span><\/span><\/p>\n

Beacon Capital Very Good<\/span><\/span><\/span><\/p>\n

Blackstone (BREP) Excellent<\/span><\/span><\/span><\/p>\n

Carlyle Realty Very Good<\/span><\/span><\/span><\/p>\n

LaSalle Asia Very Good<\/span><\/span><\/span><\/p>\n

Starwood Very Good<\/span><\/span><\/span><\/p>\n

TA Realty Associates Very Good<\/span><\/span><\/span><\/p>\n

Tishman Speyer Europe Very Good
\n<\/span><\/span><\/span><\/p>\n

Walton Street Very Good
\n<\/span><\/span><\/span><\/p>\n

Energy Funds Liquidity Rating <\/b><\/span><\/span><\/span><\/span><\/p>\n

EnCap Very Good <\/span><\/span><\/span><\/p>\n

Enervest Very Good<\/span><\/span><\/span><\/p>\n

First Reserve Excellent<\/span><\/span><\/span><\/p>\n

Kayne Anderson Very Good<\/span><\/span><\/span><\/p>\n

LS Power Excellent<\/span><\/span><\/span><\/p>\n

Natural Gas Partners Excellent<\/span><\/span><\/span><\/p>\n

Riverstone Energy Excellent<\/span><\/span><\/span><\/p>\n

1. A fund family is a series of funds managed by a single fund manager with a common strategy. For simplicity, fund families are rated rather than specific funds within a family. Setter Capital has found that on a relative basis, if a specific fund is popular or there are many existing investors then the liquidity of prior, subsequent or other funds of the same manager are correlated.<\/i><\/span><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Setter Capital covers over 7000 institutional investors in alternative investment funds, over 900 buyers of funds, more than 2000 opportunistic sellers, and their buy and sell interest in more than 3000 fund families. In the course of monitoring this secondary […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16046],"tags":[],"class_list":["post-37887","post","type-post","status-publish","format-standard","hentry","category-user-contributed-news"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/37887","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=37887"}],"version-history":[{"count":2,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/37887\/revisions"}],"predecessor-version":[{"id":38036,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/37887\/revisions\/38036"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=37887"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=37887"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=37887"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}