Key Takeaways

82% of respondents expect secondaries activity levels to remain buoyant or increase in the next two years following 4x growth in the past five years.

  • The slowdown in exits and fundraisings seen over the last year is prompting PE firms to explore new routes to liquidity.
  • In this context, GP-led secondaries and GP stakes have become more common – the trend towards both that was noted in last year’s research appears to have continued over the past 12 months.

This year, almost a fifth of PE firms (17%) expect to increase dealmaking through GP-led secondaries – and in North America, that figure rises to 22%. That will extend a trend – the volume of GP-led secondaries quadrupled over five years to the end of 2023.

This is a good example of the agility of the sector, which is putting a wider range of tools to work as it navigates challenging market conditions. For LPs in the primary fund, there is an opportunity to cash out current LP positions or roll them into the new fund to extract additional value; GPs, meanwhile, get extra time and capital to create more value.

Depending on the maturity of the fund, the asset class, when the next fund is likely to be raised and a number of other factors, the fund manager will pick the most appropriate tool. Sometimes that might mean holding the asset for longer, and in other cases it could mean organizing a GP-led exit to ensure LPs get their money back – there are a broad range of liquidity strategies available to GPs.” Sabina Comis, global co-managing partner

Importantly, however, GP-led secondaries are not purely defensive mechanisms employed by firms with few other options. That might have been the case in the past, but such arrangements are no longer automatically viewed in this light – there are plenty of positive reasons to pursue these transactions.

Indeed, PE firms are focusing on GP-led secondaries for a wide range of different-use cases. Almost three-quarters (71%) see these structures as providing a means through which they may pursue more lucrative opportunities. And two-thirds (65%) are focused on the flexibility of portfolio company holding periods that these strategies can provide. By contrast, only 35% point to a lack of exit opportunities in the primary market as the main driver of their focus on GP-led secondaries.

However, Dean Collins, managing partner of Dechert's Singapore office, points out these deals are rarely easy options.

GP-led secondaries can be very challenging – they may take 18 months to two years to complete. However, the good news is that we’re seeing investors come into the secondaries market that we’ve not seen before – that increase in demand is very helpful.” Dean Collins, managing partner of Dechert's Singapore office

Footnotes

The preceding article is an excerpt from the 2025 Global Private Equity Outlook report, an annual publication that uses qualitative and quantitative findings to look at current PE industry trends and views on where the market is heading in 2025.