Private equity secondaries: record year 2024
Market growth continues
The dynamic development is evident in both the LP-led and GP-led segments, which each accounted for about half of the total transaction volume. The increasing attractiveness of the market for buyers and sellers alike is also reflected in a steady recovery in price levels: After higher discounts as a result of rising interest rates, macro concerns and the general increase in uncertainty, LP portfolios in the buyout segment were recently trading at 89-94 per cent of net asset value (NAV), which represents a healthy level in historic comparison.
Why the secondaries market continues to grow
Several factors suggest that the boom in the secondaries market will continue. Institutional investors – including pension funds and insurers – are increasingly selling stakes in order to free up capital and generate liquidity or to rebalance and realign their portfolios. In addition, the GP-led market is in full swing and more and more private equity managers are turning to so-called single-asset continuation funds (SACFs) to hold their best portfolio companies for longer while simultaneously raising follow-on capital to support the further growth agenda. And last but not least, the increasing participation of semi-liquid evergreen funds is creating additional competition on the buyside in the LP-led segment, which in particular has enabled sellers of larger portfolios to obtain better prices.
Increasing opportunities in the mid-market
While the secondaries market has historically been concentrated to a large extent on North America, Europe is increasingly growing in importance. Particularly the historically underserved small and medium-sized private equity segment stands out, as investors often find more attractive valuations and less competition there.
In addition, structured solutions such as NAV loans or preferred equity structures are continuing to gain in importance. These instruments enable fund managers (GPs) to generate liquidity for their funds without having to immediately sell assets – a strategy that is becoming increasingly popular.
Outlook for 2025: Growth continues
Forecasts for 2025 suggest that transaction volumes in the secondaries market could increase to 175 to 185 billion US dollars. Continued demand for liquidity, growing acceptance of GP-led solutions and increasing strategic specialization– for example, private debt and infrastructure secondaries – are likely to further fuel growth.
The past year has impressively demonstrated that the secondaries market has become an integral part of the private equity landscape. With transaction volumes on the rise, robust pricing and a growing investor base, the market remains highly attractive and will offer numerous new opportunities in 2025.
