The popularity of continuation funds in Europe, the Middle East and Africa (EMEA) shows no signs of abating in early 2025, with the vehicles increasingly being used to derisk sale processes.

The idea behind a continuation fund is to allow fund managers, known as general partners (GPs), to continue to manage long-standing portfolio companies, while simultaneously offering an exit for any investors, known as limited partners (LPs), who need liquidity. The assets are bought by a new fund run by the same GPs.

Continuation funds became fashionable for distressed assets after the 2008 financial crisis. Since around 2015, the private equity (PE) industry has increasingly used them for trophy assets as well, particularly when exit markets are soft around the end of the GP’s usual holding period.

“Continuation funds will continue as an attractive alternative exit and liquidity solutions,” according to Shimin Lee, PE partner at Clifford Chance. In 2024, the market grew, showing confidence in the structure, she said.

One development involves the possibility of a continuation fund being flagged at the beginning of a sale process. “This ability to bridge the equity gap for buyers is also increasingly offered at the outset in auction processes,” Lee said.

Advisors have been quick to adapt sellside offerings to be able to adequately provide these vehicles, which are also known as GP-led secondaries, throughout an auction. Last year, for instance, Houlihan Lokey acquired Triago to “double its private placement practice,” with secondaries being a core component of that.

The number of continuation funds in EMEA has been growing rapidly since 2018, according to Mergermarket data. It hit 27 in 2024, up from 14 in 2023 and four apiece in 2022 and 2021. The disclosed deal volume in 2024 was EUR 1.8bn, which is up 44% from EUR 1.3bn the previous year.

So far, 2025 has already seen one deal, a new continuation fund from Hivest Capital Partners for Agora Makers, a company that designs and makes public lighting and street furniture solutions.

A particularly large deal came in late 2024. Carlyle Group‘s [NASDAQ:CG] AlpInvest joined Sixth Street in a deal to recapitalise Essential Pharma of the UK. The continuation vehicle was said to be worth EUR 584m.

Single asset vs multi asset

The majority of GP-led secondaries, 55%, involve single asset continuation vehicles (SACVs), according to research from Evercore last year. As the name implies, SACVs house extends the holding period for one portfolio company.

Around 31% of dealflow is for multi-asset continuation funds (MACVs), noted the same research, adding the vehicles are still a prevalent portfolio management solution particularly for large-cap sponsors to generate optimal liquidity and reset holding periods.

Last year, Warburg Pincus held a first close on a MACV with over USD 2.2bn in commitments. The vehicle will house global assets, including Austria-based human resources software company Infoniqa, as reported.

CapVest mulls Curium options

With the market continuing to grow, names to watch include France-based nuclear medicine company Curium. Its owner CapVest is exploring a fresh continuation fund solution for the asset as it mulls wider exit options, as reported in January.

Meanwhile, PE firm Inflexion is working to raise a continuation fund for portfolio company Aspen Pumps, a UK-based heating, ventilation and air conditioning (HVAC) provider, as reported last month.

Finally, KKR [NYSE:KKR] was in the early stages of reviewing options for French television and film production group Mediawan, as reported in August 2024. A continuation fund is one option on the table, as is a sale this year. Its sector is ripe for M&A, as reported.

This year, dealmakers in EMEA can expect to see the possibility of SACVs being flagged by the sellside at the beginning of auctions to concentrate minds on the buyside. With a growing pool of possible deals, the number of continuation funds is likely to continue as well.