Bryan Garnier announces push in European direct secondaries for private companies

PARIS, 30 April 2024: Bryan, Garnier & Co, the leading investment bank for European growth companies, is reinforcing its Private Capital capacity with a new team dedicated to providing European growth companies with a broader range of liquidity solutions for their shareholders.

VC exit activity has reached its lowest point in a decade with industry-wide cash distributions hitting a 14-year low and fundraising activity tapering off to pre-pandemic levels. Growth companies which remain private for longer must explore alternative liquidity strategies for their shareholders.

Venture Capital secondary allocations have expanded drastically over the last decade in the United States with an increasing number of investors deploying dedicated strategies on direct secondary transactions. Bryan Garnier research estimates that the total global direct secondary transaction market grew in the US from an estimated $7.3bn in 2013 to $26.5bn in 2023, while the European market has only just begun accelerating and currently stands at $7.5bn.

Today, there are more than five hundred European growth companies founded after 2010 that are valued at or above $500m. With IPO markets in a holding pattern, early shareholders’ need for liquidity in Europe is growing rapidly, and very few service providers are filling this gap. Assuming a similar growth pattern to the US over the past decade, Bryan Garnier’s research estimates the European market will expand to $27.6bn by 2033.

“Direct secondaries represent an efficient liquidity solution for shareholders and are the best method for growth companies to align their shareholding structures with their long-term strategies,” says Greg Revenu, Managing Partner of Bryan Garnier. “With private companies staying private longer, providing controlled liquidity solutions to shareholders has become an imperative. If well managed, this becomes a strategic opportunity for the companies to optimally manage their shareholder structure. Consistent with our longstanding positioning in the private capital markets, we intend to play a major role in the development of direct secondaries in Europe.”

To best address this ever-evolving need, Bryan Garnier – which boasts a leading European private capital raising practice as well as one of the most active ECM operations for European growth companies across European and US equity markets – is announcing the deployment of a dedicated direct secondary effort within its Private Capital Markets group.

David Laroque and Pierre Leroy, who founded the boutique NotSoLiquid in 2021, will head the market-leading secondary team, unlocking a powerful and complementary service offering for clients. Over the past years the Bryan Garnier team has advised on more than $400m in secondaries for shareholders and employees in notable growth and pre-IPO companies such as Revolut, Stripe, Algolia, Payfit, Ledger, Indy, Klarna, Spotify and Lyft amongst others.

“Bryan Garnier’s corporate advisory and trading platform, alongside the IRIS research department covering both private and publicly listed stocks, amplifies our investor reach and deepens our industry knowledge and capacity. This strategic synergy will empower us to provide expert guidance – all of which will push our capabilities to the next level” says David Laroque, co-head of Secondaries.

The team has been a significant provider of distinctive direct secondary European deal flow to prominent institutional investors worldwide such as Tiger Global, Permira, Hambro Perks, and Revaia. According to Pierre Leroy, co-head of Secondaries, “While the assets under management (AUM) of investors engaged in direct secondary strategies have experienced recent growth, global asset managers, institutional investors (including pension funds and crossover funds), family offices and corporates have demonstrated an increasing interest in the venture capital asset class. Participating in the direct secondary market allows them to gain exposure to established growth companies with proven track records and strong growth trajectories while providing the companies with an attractive new investor base.”

For Julien Polenne, Head of Bryan Garnier’s Private Capital Markets team, direct secondaries in Europe have reached a key turning point: “Until recently, secondary transactions in Europe were rarely contemplated without a primary component. However, the paradigm has shifted. With public markets projected to pick back up in the coming years, direct secondaries are a unique opportunity for growth companies to prepare their cap table for an optimal IPO. Reducing the post-lockup selling pressure from historical shareholders will enable public equity investors to secure cornerstone positions in growth companies ahead of a public listing.”