Private equity is facing lackluster fundraising and few options to sell portfolio companies — but that has been a tailwind for the secondary market, which investors use to sell their stakes in PE funds. In 2024, secondaries had a record year by raising what PitchBook estimates was $101.6 billion, a 29 percent increase over 2023.
That burst of activity in secondaries came as overall fundraising in private markets fell about 45 percent, according to the research firm’s annual review of the market. Even private credit, which has been on a tear in recent years, suffered a decline. Private credit fundraising fell almost 20 percent, with $196 million raised.
The secondaries boom is helping to make up for the lack of distributions from private equity funds, a trend that began when public markets fell in 2022, according to allocators who have been able to raise cash by selling their interests in the secondary market. And given tariffs and the instability in the markets so far in 2025, this year could be another boom year for secondaries.
“It’s like the gears of the economy are grinding, and the only release valve is the secondaries market,” said Charles Jaskel, co-founder of New Vintage Partners, a secondaries firm founded in 2023 to buy investors’ stakes in venture capital and growth funds in the wake of the 2022 downturn.
And there is likely more to come. “In the middle of 2024, everybody was really looking to 2025 for the liquidity coming back to the market,” added New Vintage co-founder Ben Slome. “It’s just so important to realize how quickly things can shift. Capital markets from a liquidity perspective have now been pushed out another at least nine to 12 months.” He said that means “investors are going to be increasingly looking to the secondary market.”
It appears that they will continue to pay for the privilege. Through secondaries, investors will typically have to accept a discount to the fund’s net asset value when they sell their interests. Critics have pointed out that while investors sell these assets at a discount the new investors can write them up immediately, thanks to a 2015 Federal Accounting Standards Board rule.
The biggest discounts are found in the venture and growth market, which make up only about 5 percent of the secondaries markets, according to Jaskel. These assets are trading at massive discounts to net asset value. He said New Vintage typically buys venture and growth stakes at discounts of 60 to 70 percent of NAV.
On average, however, LP-led transactions were priced at 89 percent of NAV in 2024, less than the 85 percent discount in 2023, according to Jefferies’ 2024 global secondary market view. The investment bank said that secondary trading volume hit $162 billion in 2024, a 45 percent increase from 2023.
Jefferies also said that GP-led secondaries are approximately 45 percent of the market. These secondaries allow managers themselves to purchase assets in aging funds and place them in a new fund known as a continuation vehicle.
But the trend has “given some LPs pause,” said Hilary Wiek, senior strategist at PitchBook. “If these deals are such a great opportunity, are the exiting LPs being disadvantaged in some way when it comes to pricing these assets? Quite possibly.”
She noted that while many of these transactions happen at or near the fund’s current NAV, “the correctness of that NAV is debatable.” In the VC world, for example, Jaskel said variance of the NAVs of the same asset by different firms can be wide enough to “drive a train through.”
“Those buying these stakes seem to be basing their investment thesis on the idea that considerable upside will be unlocked when the underlying assets in the [continuation vehicle] are eventually sold. If the exit is where a major portion of the value is unlocked, then the valuations at which the [continuation vehicle] transactions are priced are not indicative of what the original LPs would get if they hung on,” Wiek said.
While a number of firms launched their tenth and eleventh secondaries funds last year, 2024 also saw first-time ventures into secondaries from established players Accel-KKR and TPG. Both have a focus on GP-led secondaries.
Lexington Capital Partners X was the biggest secondaries fund of 2024, raising $22.7 billion in 2024. Other top secondaries were Dover Street XI, which amassed $15.1 billion; Crown Global Secondaries VI, raising $7 billion; Hamilton Lane Secondary Fund VI, raising $5.6 billion, and Pantheon Global Infrastructure Fund IV, which raised $5.3 billion.