Lure of ‘Free Money’ in Secondaries Nears a Mania: Credit Weekly

Demand for secondary funds focused on private markets is soaring, in part because some investors are seizing on an accounting quirk that allows them to buy assets at a discount and then revalue them at par.

It’s “creating this sense that people are just picking up free money, and almost a mania,” Blue Owl Capital Co-Chief Executive Officer Marc Lipschultz said on a call with analysts recently. He said his firm avoids the practice, adding there is still a “great business to be had being a really thoughtful buyer of secondary interest when you have more sellers today than you’ve ...