The New York-based crossover investor has hired Evercore to shop a so-called strip sale in the secondary market to liquidate a curated portfolio of mid- and late-stage VC-backed companies, according to a person with direct knowledge of the sale and two others who have been briefed on the deal.
The firm hopes to sell interests in its private holdings to return some liquidity to LPs, as first reported by the Financial Times earlier this week. The role of Evercore, a leading secondaries adviser, and the structure of the planned sale were previously unreported.
Evercore didn’t respond to a request for comment. Tiger Global declined to comment.
GP-led strip sales are relatively common in private equity but are less common in venture capital. The strategy will allow Tiger to generate liquidity for its LPs at a time when its tech holdings cannot be exited through IPOs or M&A deals. In these kinds of sales, GPs sell a portion or a percentage of underlying assets while still retaining some future upside in the remaining stakes.
A few months ago, Tiger put together a large basket of assets and tested the market by asking buyers to submit bids, the person with direct knowledge of the sale said. A lead buyer didn’t immediately emerge, likely due to a large bid-ask spread that investors are observing in the secondary VC market.
Tiger, which manages more than $50 billion, is marketing assets worth hundreds of millions of dollars. The structure and size of the transaction may still change depending on buyer interest.
The deal will likely go through several iterations and adjustments, both to the mix of assets and the price, one of the people said. The ultimate assets will likely include stakes in companies from across several funds, the person added.
Tiger has accumulated stakes in some of the biggest names in VC, leading mega-rounds for Revolut, Getir and Brex.
With IPO markets frozen and VC-backed M&A deals at the lowest point in a decade, other VC managers are also considering manufacturing liquidity for their LPs through similar strip sales, the person with direct knowledge of the sale said.
But a major roadblock to these deals is the valuation mismatch between what sellers expect and what buyers are willing to pay. Buyers in the secondary market have recently been offering to purchase stakes at 40% to 50% discounts even after VC firms marked down their assets. Tiger Global reportedly reduced the value of its private companies by 33% in 2022, The Wall Street Journal reported in March.
Providing some liquidity to LPs could help Tiger Global raise its next fund. The firm initially targeted $6 billion for that vehicle, but reduced the size to $5 billion amid the difficult fundraising environment, the Journal reported in February.
Madeline Shi contributed reporting.
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