Looking to the past, the present, and the future as the secondaries market gets off to a flying start.
January 28, 2025 (Preqin News) – The year was barely two weeks old when Ardian held a €30bn final close of its ninth secondaries fund, hitting its hard cap and becoming the largest private equity secondaries fund ever. Ardian’s success was confirmation that secondaries is one of the hottest strategies in private markets.
The fundraising boom is set to continue, with Preqin currently tracking 257 secondaries funds in market targeting a total of $93.8bn, which understates the amount of capital sought as many managers do not disclose targets. Fund managers seeking more than $3bn include Coller Capital ($10.0bn), Intermediate Capital Group ($6.0n), Clipway ($4.0bn), Lexington Partners ($4.0bn), Partners Group ($3.5bn), FS Investments ($3.5bn), Hollyport Capital ($3.0bn), and Pomona Capital ($3.0bn). A further 13 GPs are in the market for more than $1bn.
Last year, 59 secondaries funds across private equity, private debt, real estate, and infrastructure raised a total of $65.2bn, down 37% on the $104.1bn total across 81 funds in 2023.
On the deal side, the estimated transaction value of more than $150bn would be a new record. However, private equity secondaries dry powder of $173.5bn as of December 2024 is barely higher than 2024 deal value, much less than for private equity buyouts, where there is $1.04tn of dry powder (which will be multiplied 2–3 times by leverage) against $1.27tn of deal value last year.
This dynamic is made more complicated by the rapid growth of evergreen ‘Act 40’ funds. While these funds are included in the data above, they have deployed capital much more rapidly, meaning that the headline numbers do not tell the full story of the balance of supply and demand.
The evolution of the secondaries market will continue to gather pace this year, particularly the extension into alternative asset classes other than private equity. Infrastructure is attracting attention, with Marc Meier, Managing Director at Partners Group, saying the market is at ‘an inflection point’ and could grow 4–5 times by the end of the decade.
Just five infrastructure secondaries funds have closed since 2021 raising $13.2bn, giving an annual average over the past four years of 1.25 funds and $3.3bn. Preqin data shows 21 infrastructure secondaries funds in market, backed by heavyweight GPs including Ardian, Macquarie Asset Management, Stepstone, Partners Group, Pantheon, Ares Management, HarbourVest Partners, and AXA IM Prime.
An unstoppable force?
Secondaries funds raised and in market by vintage year, 2016–2025
Source: Preqin Pro. Data as of January 2025
Preqin News spoke with infrastructure managers to gather their thoughts, opinions, and predictions for fundraising, deals, and performance in 2025.
Fundraising
Secondaries will continue to be strongly in favor in 2025 as this strategy delivers an extremely compelling value proposition to investors – strong risk-adjusted returns, faster cash back, and low volatility – and has become a permanent tool in the portfolio management toolbox of many investors. The recent liquidity crunch has only further solidified secondaries use cases on both the LP and GP-led sides of the market.
Michael Flood, Managing Director & Head of Private Equity, Northleaf Capital Partners (Toronto, Canada)
We've seen 12–18 months of very strong fundraising activity. Whenever there's a gumming up of the M&A market, you see managers looking at how they can access other routes or opportunities to create liquidity and the natural consequence of that is a rise in secondaries dry powder. There’s been a very strong period of fundraising activity by secondaries houses in anticipation of a large wall of transaction volume.
James Bromley, Partner, Private Funds Group, Weil (London, UK)
We are actively capitalizing on a generational buying opportunity for secondaries. With the continued exponential growth in private markets, investors increasingly look to secondary buyers to help them actively manage their private equity portfolios. And more recently, with a changing interest rate environment and public market volatility, many find themselves overallocated and in need of a solution.
Mark Benedetti, Executive President & Co-Head of Secondaries, Ardian (New York, US)
Benedetti was commenting on Ardian’s fund close in January 2025, as reported by Preqin News here.
The advisors can say it with much more authority than I can, but this is an undercapitalized market. There’s less than 2x dry powder to transaction volume, whereas in the primary space it’s in excess of 3x. On that basis alone you could argue it’s significantly undercapitalized, regardless of the exponential growth the market’s gone through.
Ed Gay, Partner & COO, Hollyport Capital (London, UK)
Secondary issuance in the public markets is far larger than primary issuance. In private equity, it’s flipped. Primary fundraising is $800bn–$1tn and secondaries are $150–160bn, which shows you just how much growth is left in the secondaries market. How big will the market get? That’s an impossible question to answer with a number, but from a relative scale perspective, the secondary market is a drop in the bucket.
Sunaina Sinha Haldea, Global Head of Private Capital Advisory, Raymond James (London, UK)
Secondaries are 100% a great place to be. Depending on the year, 1–1.5% of total NAV is exchanged. And then investors tell you the number one issue is the lack of liquidity. So, if we move to a world where 4–5% of NAV is trading, you’re talking about multiplying overall volume many times over. There’s still a lot of growth to be done, both on the LP-led and the GP-led sides.
William Barrett, Managing Partner, Reach Capital (Paris, France)
Given the slower distribution environment, we have increasingly seen GP-led deals brought to market with strong support from existing LPs who have encouraged near-term distributions. We’re also reaching a pivotal moment in the relatively short history of GP-led transactions – as the number of GP-led deals completed since 2020 begins to mature and deliver exits increases, investors are gaining access to more substantial performance data, and the early indicators are validating GP-led deals as a compelling investment type.
Shane Feeney, Global Head of Secondaries, Northleaf Capital Partners (Toronto, Canada)
Our deal flow in terms of available transactions is rising faster than the capital to support it. So, while investors are interested, it’s taking time, either because of the macro fundraising environment or the education required for investors to figure out their allocation for infrastructure secondaries specifically. Once we get through this phase and have more adapters and participants, then we will see a real take-off. Right now, there is not enough dry powder to address seller needs.
Wandy Hoh, Head of Infrastructure Secondaries, Macquarie (New York, US)
The other very important trend that picked up steam was the entry of established GPs to the secondaries market with dedicated strategies. We had Leonard Green, CVC–Glendower, Audax, Accel-KKR, and more. We’ll look back at 2024 as the moment when the dam burst.
Sunaina Sinha Haldea, Raymond James
Deals
2024 is expected to be another record year for secondary transactions, with some advisors estimating up to $160bn of transaction volume, which is extraordinary. GP-led deals, such as continuation vehicles, and growing opportunities in credit and infrastructure have driven deal flow, but the emergence of 40 Act funds have also had a significant impact. They’ve deployed around $15bn which, if you annualize it, is like a new $45bn fund coming into the market. If managers who invest in LP-led transactions think these funds won’t impact them, they might be proven wrong.
Ed Gay, Hollyport
The secondary market last year will have reached a new high watermark north of $150bn of transacted volume. It’s a phenomenal showing for the industry and for the adoption of secondaries as a liquidity tool for GPs and LPs alike. LPs came back in force and now we have many GPs who've done their first CV and are programming in 1–2 continuation vehicles per fund.
Sunaina Sinha Haldea, Raymond James
The past 12 months marked a record-breaking year for secondaries volume. Using the secondary market for liquidity and portfolio rebalancing is no longer a one-off decision but now an integral part of institutional investors' private markets investment strategies. This has led to much larger volumes of assets for sale, creating unprecedented opportunities for buyers of scale while at the same time allowing even greater selectivity.
Vladimir Colas, Executive Vice-President & Co-Head of Secondaries, Ardian (New York, US)
The option to extend the hold period of a high-performing asset or to infuse additional capital to enable continued value creation can continue to play an important role in the private equity ecosystem. This a strategic choice that we expect GPs to weigh alongside traditional exit options moving forward. Even as M&A activity increased throughout 2024, we continued to see robust activity on the GP-led side.
Shane Feeney, Northleaf Capital Partners
Activity really ramped up in the second half of 2024, particularly on the GP-led side. And, based on the pipeline, we envisage that continuing through to at least the first half of next year. Negotiations can in some ways be more challenging and protracted than they have been historically in these processes, as the market has matured. In particular, buyers tend to expect more in terms of detailed DD and warranty packages and the like. However, secondaries are clearly a very useful and now widely accepted option available to fund managers to offer liquidity to investors in the right circumstances.
Peter Boulle, Partner, Private Funds Group, Weil (London, UK)
Smaller LPs, whether they are family offices, multifamily offices, or individuals who came in through a private bank, have fewer liquidity options than the big institutional investors, even though they may need them more. There’s a lot of friction to doing a secondary transaction, from price discovery to closing and settlement. By streamlining the process, our platform makes it possible to do deals that were previously uneconomic. We’ve been able to get 70+ buyers to bid on very, very small deals.
Khalil Hibri, Managing Partner, Tangible Markets (London, UK)
Infrastructure secondaries are definitely experiencing growth. We’ve seen the deal flow expand in terms of variety and the number of participants that are interested in selling, both from LPs and GPs interested in continuation vehicles. There’s been a lot more momentum this past year and we’re seeing a healthy growth of 15–20% in AUM in infrastructure secondaries.
Wandy Hoh, Macquarie
This quote also appeared in our Infrastructure in 2025 story.
The infrastructure secondaries market is currently at an inflection point, with transaction volumes expected to grow by four to five times by the end of the decade. Two structural tailwinds will power this dynamic growth: primary AUM is set to approximately double by 2030, and we are observing an ever-larger share of primary AUM being transacted on the infrastructure secondary market and expect a convergence towards private equity and real estate levels during the coming years. Given the limited number of established infrastructure secondaries players and with the current capital overhang ratio being roughly half of the levels in private equity, this opens a highly attractive opportunity set for incumbent investors.
Marc Meier, Managing Director, Partners Group (Zug, Switzerland)
There’s been a move away from generalist secondaries funds into specific strategies. A number of managers, both longstanding secondary players and newer entrants, are looking at raising GP-led-only vehicles. It’s going to be interesting to see the evolution in the market over the next 12 to 18 months, whether that trend continues, and how it actually gets deployed in practice.
James Bromley, Weil
We expect 2025 will bring heightened volatility given the uncertain path of monetary policy, inflation, and political instability. Earn-out and deferral structures to bridge the bid-ask spread can be an important tool for buyers and sellers and we expect to see them remain an important transaction mechanism in periods of heightened volatility and uncertainty.
Shane Feeney, Northleaf Capital Partners
Performance
One of the challenges for secondary investors is that they are used to a very tight band of returns. They get a pretty solid IRR and regular cashflows, and everyone’s happy. What the GP-led market has created is the opposite of that. Some secondary funds will do very well, but some will impair capital. If you buy 10 single assets, you look like a pseudo primary fund that doesn't have control, which is a very different dynamic.
Ed Gay, Hollyport Capital
Credit secondaries have come out of nowhere to become an asset class in itself. If you look at the number of direct lending and special situations credit funds that have been raised in the last half a decade, you see why the secondaries market exists, because that paper, sooner or later, will seek liquidity.
Sunaina Sinha Haldea, Raymond James
Infrastructure secondaries funds can typically generate stronger early value uplifts as you can often invest at lower implied valuations compared to primary funds and access the underlying assets at a point in time when further value uplift is imminent and the underlying fund is out of the j-curve.
Marc Meier, Partners Group
When you look at infrastructure secondaries versus private equity, a big differentiator is the buyer base – with more large European insurers, Canadian pension funds, and some of the large Nordic and Dutch pensions. Not only are they capable and able to go direct, but they’ve got the scale and the balance sheet to take some of these investments and assets on a solo basis.
James Bromley, Weil
A successful infrastructure secondaries strategy requires a relative information advantage on manager and asset quality. This can be sourced from three key areas: the scale of your primary program, the quality of your manager and asset-level database, and your ability to leverage asset-level insights from your co-investment platform. This data set is vital to being able to underwrite secondary investments in an efficient and low-risk manner. Investing from the ‘outside in’ is no longer viable in infrastructure secondaries.
James O’Leary, Partner and Head of Infrastructure and Real Assets, StepStone Group
O’Leary’s comments appeared in Preqin 2025 Global Report: Infrastructure. Read the full article here.
There’s a big gap in the secondaries market, which is the $1.5tn of NAV on the VC side, where close to zero is being traded, even though people are dying for liquidity. There are just three or four buyers, so it’s a market that has not been explored. We’re super excited about the opportunity.
William Barrett, Reach Capital
The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.