Secondary exit options in private equity are experiencing rapid evolution in 2025, as a strategy for both Limited Partners (LPs) and General Partners (GPs) to provide a way to unlock liquidity, manage portfolios more flexibly, and demand faster, more flexible investor returns.
GP-Led Secondaries and Continuation Vehicles enable the rolling of assets from ageing funds into new vehicles—often retaining their “trophy” assets for longer, while offering liquidity to limited partners (LPs).
Key market trends:
- Record Volumes: Global secondary activity reached over $160bn in 2024 and is on track to exceed $185–200bn in 2025.
- Deal Mix: Approximately 60% LP-led stake sales and 40% GP-led continuation vehicles, with single-asset portfolios gaining strong traction.
- Continuation vehicles are now a core exit mechanism, especially for high-conviction assets not ready for public markets. LPs can choose to cash out or continue their investment.
Why is the Market growing?
With IPO and M&A activity slowing, GPs are holding assets longer while LPs seek faster liquidity and portfolio rebalancing. Regulatory constraints add further pressure on insurers, banks, and pensions to free up capital.
The rise of evergreen funds—open-ended vehicles allowing periodic redemptions—has broadened the reach of secondaries to retail investors and private wealth platforms. Such funds actively buy seasoned private equity stakes, increasing transaction frequency in the secondary market.
Key Differences between the US and UK/Europe Markets
- Market Share: The US holds about 70% of global secondaries volume, while the UK/Europe accounts for 25–30%, with London as the hub.
- Buyer Base: The US has deeper pools, especially retail and evergreen funds, whereas the UK/Europe’s buyer base is more institutional.
- GP-led Activity: In the US, there are mega-sized continuation vehicles, while the UK/Europe features strong mid-market activity.
- Private Credit Secondaries: The US market is experiencing strong growth fuelled by retail and wealth investors, whereas UK/Europe’s private credit secondaries are growing but dominated by institutional LPs.
- Regulatory environment: The US SEC is actively pushing for disclosure in GP-led deals, while FCA and European regulators are less aggressive but keep a watch on conflicts.
Source: Bloomberg