The Surge of Secondaries: A Market Positioned for Continued Growth
August 2025
The Surge of Secondaries: A Market Positioned for Continued Growth
August 2025
Secondaries investment hit a record of $162Bn in 2024, up 45% on the previous year, according to Jefferies research. The continuation of tight exit conditions was a key factor as LP demands for liquidity intensified and private equity firms sought alternative ways of managing long-held assets. While falling interest rates and renewed investment appetite among rival private equity firms and strategic investors may reignite the exit market, there are plenty of drivers for strong ongoing activity – and even acceleration – in the private markets secondaries space.
An Emerged Market for LPs
The expansion in secondaries has echoed the exponential growth in private markets. In the era of ultra-low interest rates, as investors hunted for yield, private markets AUM grew at a compound rate of nearly 20% a year from 2018 to total $13.1Tn as of mid-20231. That upward trajectory has continued. S&P expects private markets AUM to be $15Tn in 2025 and $18Tn by 20272.
Private Markets: Assets
Under Management
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Source: McKinsey and S&P Global
An Emerged Market for LPs
The expansion in secondaries has echoed the exponential growth in private markets. In the era of ultra-low interest rates, as investors hunted for yield, private markets AUM grew at a compound rate of nearly 20% a year from 2018 to total $13.1Tn as of mid-20231. That upward trajectory has continued. S&P expects private markets AUM to be $15Tn in 2025 and $18Tn by 20272.
Private Markets: Assets
Under Management
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Source: Source: McKinsey and S&P Global
Over the same period, secondaries investment has more than doubled from $74Bn in 20183, Jefferies data shows. LP-led secondary deals accounted for the majority of transactions in 2024, in part satisfying investors’ demands in a period of limited distributions. But just as important was the secondary market’s role in portfolio management, reflected in the relative absence of stressed and distressed sales. Average pricing for interests in buyout funds rose to 94% of NAV in 2024, in turn encouraging LPs to pursue sizeable disposals. That trend has continued this year. In January, CalPERS was reported to have concluded a multi-billion-dollar sale of private equity assets, estimated at $3-4Bn, to a consortium of investors led by Ardian, AlpInvest and Partners Group4.
GPs Explore Opportunities
in Secondaries
While LP-led transactions are likely to continue to be a hallmark of secondaries activity, the GP-led market is growing rapidly as private equity firms pursue options for long-held assets. Jefferies data shows that GP-led secondaries hit $75Bn in 2024, a three-fold increase on 2018 levels. That explosion in growth has come from the emergence of continuation vehicles (CVs), which last year accounted for 84% of GP-led activity – and 13% of all sponsor exit value5.
Annual Transaction Volume
for Secondaries ($Bn)
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Source: Jefferies
GPs Explore Opportunities
in Secondaries
While LP-led transactions are likely to continue to be a hallmark of secondaries activity, the GP-led market is growing rapidly as private equity firms pursue options for long-held assets. Jefferies data shows that GP-led secondaries hit $75Bn in 2024, a three-fold increase on 2018 levels. That explosion in growth has come from the emergence of continuation vehicles (CVs), which last year accounted for 84% of GP-led activity – and 13% of all sponsor exit value5.
Annual Transaction Volume
for Secondaries ($Bn)
Click to find out more
Source: Jefferies
Successful execution of CVs transactions requires careful consideration of conflicts of interest and GPs terms, particularly when it comes to asset valuations and fees. However, many GPs are successfully navigating these conflicts and investors are frequently negotiating for CV terms that create strong alignment with GP teams. For instance, GP management fees are frequently significantly lower than fund management fees and performance fees usually have higher hurdles and more downside protection for LPs.
Large multi-billion dollar funds have been driving the CV market. Among the largest transactions last year, KSL Capital Partners, an investor in travel and leisure businesses, secured over $3Bn for a single-asset continuation vehicle for Alterra Mountain Company, an adventure skiing and snowboarding operator6. There have also been sizeable multi-asset CVs, such as Warburg Pincus’s $2.2Bn vehicle agreed in December7. The aim of such funds is to provide time, focus and additional investment to put companies back on track or, more often, take trophy assets to the next level.
As the market for CVs develops, it is broadening. Mid-market sponsors are starting to consider CVs for their best-performing companies. In response, specialist secondaries funds – as well as newer entrants – are eyeing opportunities in medium-sized companies that private equity firms want to hold for longer. New Mountain Capital, a specialist in the U.S. mid-market, is reported to be launching a strategy to back GP-led CVs in its target sectors8.
Successful execution of CVs transactions requires careful consideration of conflicts of interest and GPs terms, particularly when it comes to asset valuations and fees. However, many GPs are successfully navigating these conflicts and investors are frequently negotiating for CV terms that create strong alignment with GP teams. For instance, GP management fees are frequently significantly lower than fund management fees and performance fees usually have higher hurdles and more downside protection for LPs.
Large multi-billion dollar funds have been driving the CV market. Among the largest transactions last year, KSL Capital Partners, an investor in travel and leisure businesses, secured over $3Bn for a single-asset continuation vehicle for Alterra Mountain Company, an adventure skiing and snowboarding operator6. There have also been sizeable multi-asset CVs, such as Warburg Pincus’s $2.2Bn vehicle agreed in December7. The aim of such funds is to provide time, focus and additional investment to put companies back on track or, more often, take trophy assets to the next level.
As the market for CVs develops, it is broadening. Mid-market sponsors are starting to consider CVs for their best-performing companies. In response, specialist secondaries funds – as well as newer entrants – are eyeing opportunities in medium-sized companies that private equity firms want to hold for longer. New Mountain Capital, a specialist in the U.S. mid-market, is reported to be launching a strategy to back GP-led CVs in its target sectors8.
Secondaries Funds Keep
Getting Bigger
The growth in the opportunity set is matched by growth in capital targeting the segment. Secondaries dry powder reached $288Bn last year9, which equates to roughly 1.8x the annual level of investment. Institutional appetite shows no signs of slowing – in January, Ardian closed a $30Bn fund, its ninth and the largest ever secondaries fund.
Secondaries Dedicated
Available Capital
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Source: Jeffries
Secondaries Funds Keep
Getting Bigger
The growth in the opportunity set is matched by growth in capital targeting the segment. Secondaries dry powder reached $288Bn last year9, which equates to roughly 1.8x the annual level of investment. Institutional appetite shows no signs of slowing – in January, Ardian closed a $30Bn fund, its ninth and the largest ever secondaries fund.
Secondaries Dedicated
Available Capital
Click to find out more
Source: Jeffries
Democratization adds another element to potential secondaries growth. Open-ended funds, such as U.S. 40-Act funds, European Long-Term Investment Funds (ELTIFs) and UK Long-Term Asset Funds (LTAFs) are providing retail investors – as well as institutional investors such as defined contribution pension funds – with a route into private equity. Those funds frequently invest in secondaries portfolios to get access to maturing private assets with the potential for early distributions.
Not only are private equity secondaries expanding, so are other private asset classes. Blackstone is reported to be targeting $4Bn for an infrastructure secondaries strategy10, while advisor Campbell Lutyens estimates that the infrastructure secondaries market could reach $30Bn by 202911. Rapid growth in private credit has spurred the creation of secondaries strategies by credit and secondaries specialists alike, including Apollo, Ares, Coller Capital and Pantheon.
The VC market is attracting increased interest too, with StepStone closing the largest ever VC-focused secondaries vehicle in September at $3.3Bn, reflecting the rising scale of VC managers and their sprawling portfolios of assets12. Another notable entrant is Pinegrove Capital Partners, a specialist venture capital secondaries manager, which launched in 2024 with the backing of Sequoia Heritage and Brookfield Asset Management.
Infrastructure Secondaries Capital, 2016-2024 ($Bn)
Source: Preqin
Conclusion
The continuation of tough market conditions and rising LP frustration over distributions coincided with a record secondaries year in 2024. However, should M&A activity recover as many hope – despite ongoing geopolitical uncertainty, volatility and an uptick in inflation – private markets secondaries can also continue to grow.
Transactions are likely to continue to track private markets AUM growth, with expansion into maturing asset classes, such as infrastructure and private credit, only adding to overall deal flow. At the same time, continuation vehicles continue to grow in popularity as more GPs investigate strategies to hold onto performing companies for longer and the democratization of private markets adds another source of demand for private assets. Taken together, there are strong drivers for secondaries growth whatever the market backdrop.
Conclusion
The continuation of tough market conditions and rising LP frustration over distributions coincided with a record secondaries year in 2024. However, should M&A activity recover as many hope – despite ongoing geopolitical uncertainty, volatility and an uptick in inflation – private markets secondaries can also continue to grow.
Transactions are likely to continue to track private markets AUM growth, with expansion into maturing asset classes, such as infrastructure and private credit, only adding to overall deal flow. At the same time, continuation vehicles continue to grow in popularity as more GPs investigate strategies to hold onto performing companies for longer and the democratization of private markets adds another source of demand for private assets. Taken together, there are strong drivers for secondaries growth whatever the market backdrop.
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