In a recent ION Influencers fireside chat, Matt Jones, Co-Managing Partner at TPG GP Solutions, shared invaluable insights on the booming GP-led secondary market, emerging trends, and the future of private equity liquidity. Here are the topics discussed.

1. The Rise of GP-Led Secondaries: From Zombie Funds to Single-Asset Continuation Vehicles

• Post-2008 Financial Crisis: The secondary market emerged to restructure “zombie funds” (struggling PE funds with stagnant assets).

• 2013-2015: High-quality GPs began using continuation vehicles for top-performing assets needing more time.

• 2017 Onwards: The single-asset GP-led deal took off, allowing GPs to retain their best companies while providing liquidity to LPs.

2. Why Single-Asset Continuation Vehicles Are a Game-Changer

• Alignment of Interests: GPs invest 5-15% of the continuation fund, far more than in traditional buyout funds (1-2%).

• Solving a Structural Issue: Not every company should change hands every 4-5 years—continuation vehicles allow GPs to maximize value while keeping management and strategy intact.

3. The Critical Role of Sector Expertise in Underwriting Deals

• Traditional secondary investors (focused on LP stakes) lack the direct investing skills needed for single-asset deals.

• Winning firms will integrate with sector-specialized buyout teams (like TPG’s healthcare or software experts) for deeper due diligence.

• Future of Secondary Teams: Expect more ex-buyout professionals joining secondary groups, mirroring the evolution of private equity.

4. Market Growth Predictions: How Big Can GP-Led Secondaries Get?

• Current Size: GP-led deals make up ~50% of the $130B+ secondary market.

• Future Outlook:

  • Single-asset deals could dominate, growing from 25% to 50%+ of the secondary market.

  • Trillion-dollar potential? While predictions vary, the lack of specialized capital remains a bottleneck—more players are entering the space.

5. Private Wealth & Advisors: Disrupting the Secondary Ecosystem

• Private Wealth Channel: Semi-liquid funds are aggressively bidding on LP stakes, but single-asset deals require lead investors with direct PE experience.

• Advisory Shift: Banks with sector-focused M&A teams are entering GP-led deals, challenging traditional secondary advisors.

6. Europe vs. US: Where’s the Growth?

• US dominates due to market depth, but Europe follows similar dynamics.

• No major regional shift expected—GP appetite for continuation vehicles is strong in both markets.

Final Thoughts: The Future of GP-Led Secondaries

• The GP-led secondary market is evolving rapidly, with single-asset deals leading the charge. Success will favor firms with:
  Deep sector expertise (like TPG’s integrated model)
• Direct investing experience (beyond traditional secondaries)
• Strong alignment with GPs (skin in the game matters)

As more capital flows into this space, expect explosive growth—and a reshaping of private equity’s liquidity landscape.

Key timestamps:

00:06 Introduction to the Fireside Chat
02:35 Evolution of GP Led Transactions
05:21 Emergence of Single Asset GP Led Transactions
06:57 Growth of the GP Led Market
07:49 Evaluating Assets for Continuation Vehicles
11:53 Sector Specialization in the Market
14:59 Future of Team Composition in Secondary Markets
18:37 Market Evolution and Competition
20:27 Predictions for Market Growth
23:20 Appetite for Secondary Market from Private Wealth
26:16 Advisers and Market Dynamics
28:27 Comparative Growth in US and Europe