Trends in the Secondaries Market for Private Equity

Private Thoughts From My Desk…….#40   The secondary market is warming up.   That is the unambiguous message from the Campbell Lutyens 1H 2025 report. With $110 billion in volume during the first half alone, this market is now operating at a scale and speed few would have imagined even two years ago. But beyond the headline figures, what stood out to me most was the continued evolution of GP-led deals—specifically, the fact that over half of these transactions priced at or above par (See chart below).   Yes, you read that right. Par. In a secondary market.   This is not just a technical pricing detail. It is a signal that something fundamental is happening in private markets. GP-led secondaries are becoming the preferred path for some of the best-performing assets in private equity. Pricing at or above par is not just a win for GPs and existing LPs. it is a reflection of intense demand among buyers who are now competing for access to scarce, high-quality paper.   What’s driving this pricing strength? A few things stood out. First, the selection bias. GPs are not bringing just any asset to market. They are bringing trophy assets. Cash generative. Durable. Often tech-enabled or exposed to long-term secular tailwinds. That kind of quality commands a premium in today’s environment.   Second, the supply-demand balance has shifted. Dedicated GP-led vehicles now control more than $31 billion of dry powder. Traditional secondary funds continue to raise more capital and do more GP-led deals. Sponsors have pricing leverage they simply did not have before.   And it’s not just single-asset deals that are seeing the love. Multi-asset continuation vehicles—long considered a harder sell due to structural complexity—are also seeing meaningful momentum. In fact, 44% of MACVs priced at or above par, a staggering jump from just 28% in 2024. This tells me the market is heating up. This is a trend. The presence of evergreen vehicles and more specialized capital has added further depth to the buyer pool. The result is a more liquid, more competitive, and more pricing-efficient market.   For GPs, the message is clear. The secondary market is no longer just a tool for liquidity. It is now a strategic extension of fund management. And for LPs, pricing at or above par is a signal that continuation vehicles, once viewed with a touch of skepticism, are delivering real value.   If this keeps up, we may need to start treating the secondary market as one of private equity’s most dynamic growth engines. #privateequity #privatemarkets #privatethoughtsfrommydesk

Secondaries Are Quietly Taking Over Not a niche anymore. A core strategy for uncertain times. What raised 30% of all private equity capital last quarter—and why aren’t more people talking about it? Secondaries aren’t just a side dish anymore. In Q1 2025, they accounted for 30% of all global PE fundraising—the highest share ever recorded. That number was inflated by one $30B fund close. But don’t let the outlier distract you from the trend. This is structural. Not cyclical. Here’s what’s changed: - LPs want liquidity without giving up exposure. - GPs need more time—and vehicles—to unlock value. - Everyone’s under pressure from slower exits and longer J-curves. Secondaries offer flexibility, price transparency, and faster capital recycling. From my CIO seat, they’ve moved from “interesting” to essential. It’s also where dislocation becomes investable. Discounts are real. Quality is up. And vintage diversification is built-in. What we’re watching - Continuation fund terms and volume - Discount levels in LP-led deals - Secondary pricing trends vs. reported NAVs Investor action plan - Reframe your allocation lens: Secondaries aren’t just tactical—they’re foundational. - Monitor manager selection: Skill dispersion is wide in secondaries. - Match secondaries to outcomes: Want cash flow? Vintage diversity? - Quicker turns? Clarify the goal. If the front door of private equity is slow, the back door is now an opportunity in itself. #bealtetnative #alternativesforall

For the first time, US VC secondary sales exceeded IPO exit value Here's why this matters 👇 ◾️ The numbers are clear (Jun 24' - Jun 25'): - Secondary transactions: $61.1B - IPO exits: $58.8B This isn't a close race anymore. Secondaries have officially overtaken public markets as the primary liquidity mechanism for VC. Here's what's behind this shift. ◾️ Let's walk through each driver, starting with the biggest one: companies staying private longer. The average time to IPO has stretched from 4 years (1999) to 11+ years today. Stripe, OpenAI, and other unicorns have zero rush to go public. Why deal with public market volatility when you can access capital privately? ◾️ Driver #2: The SPV explosion is wild. The data: - 545% jump in secondary SPV count (2 years) - 1,000% growth in total value raised What was once a niche financing tool is now the backbone of venture liquidity infrastructure. ◾️ Driver #3: Tender offers became routine. Companies like Ramp now regularly offer employees liquidity through structured tenders. I think this shift is brilliant – it's simultaneously: - Employee retention tool - Pressure release valve for early stakeholders - Recruitment advantage ◾️ Driver #4: Sector concentration amplifies everything. Hot sectors driving secondary demand: - AI companies (obvious winner) - Cybersecurity (Trump priorities) - National defense (geopolitical focus) When everyone wants exposure to the same 50 companies, secondary markets heat up fast. ◾️ Now, let's talk about what this really means. Here's my contrarian take: this "success" masks a structural problem. When your primary exit strategy becomes "sell to other VCs," you've created a closed loop that doesn't generate real wealth for the broader economy. ◾️ The sustainability question keeps me up at night. The math: - Secondary markets provide liquidity - But they don't create new value like IPOs do - You're shuffling existing equity around Instead of accessing true growth capital from public markets. ◾️ What does this mean for GPs? You need secondary market expertise now. Your LPs will ask about: - Tender offer strategies - Secondary SPV structures - Alternative liquidity plans This isn't optional anymore – it's table stakes for fundraising. ◾️ What does this mean for LPs? I assume you'll see more secondary-focused strategies in GP pitches. But ask the hard question: are you getting exposure to real growth, or just paying higher prices for the same assets in a closed ecosystem? ◾️ Bottom line: we're witnessing a fundamental shift in how VC creates and distributes liquidity. The data supports it. The trend is accelerating. But eventually, this ecosystem needs real exits to public markets. The question is when, not if, this dynamic reverses. What do you think about the state of secondaries market?

Private market secondaries, from 2022-2023, experienced fundraising growth in excess of ~100%—the highest of any sector.* Key driving factors of this growth are post-ZIRP portfolio rebalancing as a byproduct of over-exuberance (denominator effect), a relatively closed IPO window, muted M&A activity, and the private markets valuation “lag”, among others.  This broader market reset and increasing robustness of secondaries markets can present a compelling opportunity for private market investors. Investors should broadly consider how their portfolios are positioned with respect to the valuation lag—on both sides—situationally executing dispositions and adding exposure, where favorable.  For example, in 2022, the unprofitable public markets tech index was down ~70% and private market valuations remained largely unchanged—we took this opportunity to conduct a full review of our portfolio exposure to high-growth, unprofitable portfolio companies. As a result, we exited a significant amount of such exposure.   And now, nearing the end of 2024, the converse is largely true—private market valuations have generally lagged those of their public market counterparts—creating a situation where adding exposure via secondaries can be attractive in select pockets of the market.   For example, in private equity, there are instances of indiscriminate selling for both single-asset exposures and LP interests at relatively low multiples (<6x EBITDA) with durable cash flow and strong fundamentals. In such a case, adding exposure can offer favorable risk/return asymmetry.    Here’s a quote from one of our investment partners regarding the opportunity in private equity continuation vehicles, “80-90% of the LPs on the other side of the trade (i.e., the sellers), didn’t even look at the data room.”   Investors should have a deep understanding of underlying valuation policies, actively monitor their exposures, and be proactive in secondaries to create value for clients and generate excess return.  *Source: Pitchbook, 2024.   

The Explosive Growth of Secondary SPV Markets Exciting new data from Sydecar reveals unprecedented growth in secondary Special Purpose Vehicles (SPVs) for private market investments. This week Last Money In shared Sydecar's secondary SPV transaction data to highlight what is taking place in the private markets (link to full post in comments). 🚀 Key Findings: - Secondary transaction volume surpassed $150B in 2024 (35% CAGR since 2019) - Secondary-focused SPVs on Sydecar grew 470% in 2024 compared to 2023 - Secondary deals close 28% faster than primary investments (34 days vs 47 days) - 77% of secondary deals are concentrated in just 8 tech leaders: Anduril, Anthropic, Groq, OpenAI, Perplexity, SpaceX, Stripe, and x.AI - This "Elite Eight" has become a gravitational center for secondary market capital. Collectively, these companies have attracted over $481 million in investment through Sydecar's secondary market infrastructure—representing a 10-fold increase from the $48 million deployed to these same companies in 2023. Looking ahead to 2025 The secondary SPV sector is expected to continue its explosive growth despite potential high-profile IPOs, with historical data showing over 65% of institutional investors redirecting liquidity from previous tech IPOs back into private markets. While concerning trends exist—including companies implementing restrictive transfer policies and evolving legal documentation with anti-syndication provisions—the convergence of transformative technologies like AI (projected to create $15.7 trillion in global economic value by 2030) continues to drive institutional interest, positioning secondary markets to expand due to the efficiency and flexibility SPVs offer investors. -- Powered by Sydecar, Last Money In is the most actionable Venture Capital newsletter with 60k+ readers. Written by Zachary Ginsburg and Alex Pattis, global syndicate leaders with 900+ VC SPVs closed.

Private Equity’s New Liquidity Hacks: Smart Innovation or Slippery Slope? Exits are kinda tough right now. IPO windows are thin, strategic buyers are cautious, and funds are under pressure to show returns. So GPs are getting creative. The Dechert Global Private Equity Outlook 2025 report points to two tools taking off fast: • GP-led secondaries → letting managers keep holding on to “trophy assets” while giving LPs an option to cash out • NAV-based financing → using the fund’s portfolio as collateral to borrow and send cash back to investors Both approaches solve a real problem: how to get liquidity in a market where exits are scarce. And they’re not fringe anymore - 82% of respondents in the report expect secondaries activity to stay buoyant or increase over the next two years, after growing 4x in the past five. But they also raise some thorny questions. If GPs are setting the value of assets they still control, how much transparency do LPs really have? And could these structures create conflicts of interest down the line? For some investors, it’s a welcome bridge until exits pick back up. For others, it’s a red flag that could complicate alignment between managers and LPs. ❓ The big unknown: Are these clever fixes that will stick around as part of the toolkit - or temporary band-aids that could erode trust if overused?