Secondaries
Opportunistic access to high-quality private companies
The secondary market (“Secondaries”) refers to the buying and selling of existing investor commitments to private equity funds and other alternative investment vehicles.
The secondaries market has evolved beyond a liquidity outlet to become a core tool for portfolio construction, risk management, and strategic capital deployment. Today, they provide investors with access to high-quality private companies, diversification, J-curve mitigation, Net Asset Value (NAV) discounts, as well as the ability to customize portfolios to fit specific investor needs.
Trends Driving the Evolution of Secondaries
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Pent-up liquidity needsA combination of increasingly large amounts of private equity NAV, much of it held long-term, and an extended IPO slowdown which has led founders and early backers to seek liquidity elsewhere is driving secondary market relevance.
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Expanded opportunity setFalling public equity valuations and slower liquidity are prompting some institutions to pause private market commitments. In response, Secondary funds are well-positioned to address this capital mismatch by providing liquidity solutions to limited partners (LPs) and acquiring private market positions at attractive discounts to net asset value. In parallel, the slower fundraising cycle is creating favorable conditions for LPs to help negotiate better terms and potentially gain access to oversubscribed managers with highly sought-after “trophy assets”.
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Room to growDespite the rapid rise, secondaries still only represent a relatively small slice of the broader private capital universe. With approximately $4 trillion in private equity NAV and over $5 trillion raised between 2018 and 2024, the secondary market’s $160 billion in volume leaves ample headroom for growth.
Secondary transactions in private equity
A partner to your Secondaries portfolio
Investors able to take on illiquidity risk could be rewarded for taking a long-term view, but in an increasingly crowded investment universe, the ability to identify and access high quality managers as part of a well-diversified portfolio is becoming increasingly challenging for asset owners, particularly with respect to specialist transactions such as Secondaries and Co-Investments.
Which is why our approach is built around offering simplified access to leading managers in a manner that is scalable and tailored to each investor’s governance and resourcing capabilities.
Considerations for secondary investments
Achieving success in the secondary market requires strong relationships with asset managers and intermediaries, dedicated resources, access to the right data and robust oversight and due diligence processes.
With access to quality deal flow and trusted relationships with intermediaries across the deal flow spectrum that span more than two decades, our sophisticated investment platform offers our clients direct access to attractive secondary transactions worldwide, grounded in a blended, fund-based approach, supported by robust diligence processes.
There are different ways to implement secondaries into a private markets program. Key considerations include:
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The rationale:Is this a trophy asset with ongoing upside, or a stalled exit masked by narrative?
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GP alignment:Reinvestment levels, deferral of carry, and ongoing commitment can signal greater conviction.
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Valuation discipline:Transparent price discovery, often involving third-party advisors or multiple bidders, is essential—especially when the GP is both buyer and seller.
Secondary transactions require established and consistent processes, including commercial review, investment decision-making, robust risk management, legal review and tax due diligence.
These processes are particularly relevant as secondary deals come in a variety of different structures and mechanics. Understanding the features and knowing how to manage them from commercial, risk, legal and tax perspectives are crucial to ensuring the success of your investments.
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