• Secondaries volume is estimated to surpass USD 200bn for first time in 2025
• Playing field gets bigger, but market still faces under-capitalization challenge
• Private credit secondaries expected to grow as larger deals hit the market

Private equity secondaries activity surged to record levels in 2025, defying any suggestions that a long-awaited recovery in the traditional exit market could slow demand.

Across asset classes, global secondaries volume is estimated to have surpassed USD 200bn for the first time, reaching as much as USD 220bn, according to market participants. The surge came alongside a marked improvement in private equity exit activity, with North America exit volume rising 58% year-on-year to USD 436bn across 842 deals.

As exit momentum continues to build, some GPs are bracing for a “tidal wave” of transactions in the first half of the year, Mergermarket has reported.  

Still, investors expect secondaries activity to keep accelerating, with some arguing that improved liquidity from the expected uptick in M&A is more likely to support pricing and participation in the secondary market than dampen demand.

“If the exit market opens up and liquidity increases significantly, we are going to factor that into our price,” said Verdun Perry, global head of Blackstone Strategic Partners. “If we factor that into our pricing, it will pull potential sellers off the sidelines and into a transaction.”

Average secondary market pricing across asset classes was around 90% of net asset value (NAV) last year, according to Jefferies’ 1H25 review. At those levels, pricing is already a pull for LP sellers.

Anthony Shontz, a partner and co-head of private equity partnerships at Partners Group, views current pricing levels as a “sweet spot,” with just enough discount on quality positions. “Sellers are not having to take huge losses in markdowns when they sell,” he said. “So long as pricing stays in that zone, that will facilitate a lot of activity on the LP-led side.”

According to Evercore, LP-led deals accounted for 53% of total 1H25 secondary volume of USD 102bn, as new and returning investors tapped the market to rebalance their allocations and generate liquidity.

On the GP-led side, total volume came in at USD 48bn in 1H25. Multi-asset continuation vehicles (CVs) made up 50% of this volume, but the dollar value on single-asset deals rose on the back of more sponsors bringing stronger assets to market.

A number of GPs tapped the secondaries market for the first time, such as Stone Point, which raised a USD 3bn multi-asset CV for assets across some of its older vintages. On the single asset side, EnCap Investments closed a USD 2bn CV for PennEnergy backed by Andros Capital Partners and Goldman Sachs.

Among middle market sponsors, Incline Equity Partners completed a USD 300m CV for Accredited Labs that was anchored by LGT Capital Partners. Others, including North Carolina-based Broadtree Partners and Chicago-based Vistria, are pursuing multi-asset deals.

On the buyside, new entrants including traditional buyout shops bring over increased specialization to CV deals, which has contributed to a more bespoke approach to dealmaking, as reported. HIG Capital and Golub Capital are among the latest players to have launched GP-led secondaries strategies.

“The introduction of all of those new players adds to the count of participants in addition to the depth and breadth of capital availability,” said Jeremy Duksin, managing director and co-head of Baird’s global GP solutions group. “What it’s also doing is diversifying what buyers are able and willing to do ”

Bigger field, more players

Market participants widely anticipate that there will be more first-time users of CVs in the next year, predominantly from the mid-market.

Their motivations are similar to larger peers, said Clelia Zacharias, a partner at LGT Capital Partners, noting that many sponsors are seeking solutions for assets that may be performing well but could benefit from additional capital.

Notwithstanding the improving exit environment, other GPs are also turning to the secondary market to provide solutions for businesses they had previously attempted to sell.  More CV deals involving assets that underwent an M&A process are expected to emerge, according to a recent survey by Lazard.

“In some cases, we have seen sponsors start a traditional sale process and decide that they are more buyers as opposed to sellers once valuations have come through in the indicative round,” said Nadira Huda, a managing director in Lazard’s private capital advisory group.

In recent examples, InTandem Capital Partners’ pivoted to a CV process for Ivy Fertility after initially exploring a sale. Audax Private Equity, meanwhile, is exploring a CV for Beacon Mobility after a sale fell through over a valuation mismatch, as reported.

Still, in a recent Q&A with Mergermarket, Christophe Browne, a partner on the secondaries team at Lexington Partners, said that his firm’s data suggest that “less than a quarter” of the single-asset CV market may involve companies where some kind of exit alternative was explored in the past. “I don’t think the CV market is meant to be a substitute for a regular exit or more traditional M&A process,” he told Mergermarket in December. “And discerning buyers aren’t particularly excited about opportunities that stem from failed sale attempts.”

Other investors note that when these scenarios do emerge pricing is a key consideration. “What you want to be careful of is that the secondary market does not pay a premium to what an asset would trade for, and that’s the risk that people are more worried about when those companies come to market in a CV format after a failed sale,” said LGT Capital’s Zacharias.

More broadly, a bigger playing field with more potential variance in asset quality underscores the need for thorough due diligence. “Firms will need to be much more disciplined and smarter about what they buy, and that is where it becomes critical to have insight and do a full bottom-up due diligence,” added Shontz of Partners Group.

Under-capitalization

New entrants are adding firepower, while incumbent players are raising significant funds. In September, Carlyle AlpInvest closed its eighth fund on USD 20bn in commitments, and Blackstone said on its 3Q25 earnings call that it is currently raising its tenth flagship vehicle that it expects to be at least the size of its prior USD 22.2bn ninth fund.

Yet, according to market participants, a notable supply/demand imbalance persists, with more potential deals than capital available.

“There’s a relatively limited universe of buyers and dry powder available to address the opportunity,” said Wilfred Small, a senior managing director and co-head of US secondaries and primaries at Ardian. “So, we continue to believe that the limiting factor to getting transactions done is actually dry powder raised among buyers.”

Semi-liquid 40 Act funds have chipped away at the gap. Long active on the LP-led side of the market, these vehicles have ramped up deployment into CVs; about 52% of their allocations went to GP-leds in 1H25, Campbell Lutyens found.

While more evergreen vehicles are investing in secondaries, their activity is typically focused away from larger transactions and tends to be episodic rather than continuous. On top of this, evergreen funds’ total dry powder remains limited to less than 10% of the overall secondary market’s dry powder, said Small.

Similarly, the arrival of traditional buyout sponsors into the GP-led market is yet to move the dial on the capital imbalance, which could take five to 10 years to address, Mergermarket has reported.

Overcoming this capitalization challenge is seen as the chief obstacle to the market’s long-term growth. Some sponsors and secondary investors are seeking to increase the level of rollover among incumbent LPs as one way to address the gap, as reported.

“These markets have room to grow by multiples in the years ahead, and the speed of that growth will depend on how quickly capital flows in,” said Leor Landa, a partner at Davis Polk, where he heads the firm’s investment management practice. “GP-led secondaries have become mainstream, used by top managers for their largest and highest-performing assets, and there is no reason for that trend to end.”

Credit’s time to shine

While the market for private equity secondaries evolves, private credit secondaries are also seeing robust growth. Globally, private credit secondary volume reached USD 9.2bn in volume and is projected to exceed USD 18bn in 2025, according to a paper from Evercore.

As private credit AUM continues to grow as a whole, it is widely expected that the opportunity set for credit deals will expand alongside it. “It’s grown to a critical size where there’s real opportunity, and I think it will continue to grow,” said Blackstone’s Perry.

In parallel to the PE secondaries market, LP-led deals make up the bulk of private credit secondaries transactions, but a number of GP-led deals worth USD 1bn or more have emerged.

In August, TPG Twin Brook raised a USD 3bn CV made up of a diversified portfolio of senior secured loans across two prior funds, anchored by Coller Capital. A month later, Coller backed a USD 2.3bn CV for Benefit Street Partners, representing the largest deals for loans out of a single fund to date.

Growing fund sizes and the emergence of new capital pools have increased investors’ ability to underwrite larger GP-led deals, said Daniel Roddick, founder of London-based Ely Partners.

Last year, a number of GPs launched new funds aimed specifically at credit secondaries. In July, Coller Capital set a record by raising USD 6.8bn in a final close for its Coller Credit Opportunities II that targets senior direct lending and performing credit portfolios, as reported. Similarly, Pantheon closed on USD 5.2bn for its oversubscribed Pantheon Senior Debt III in April. Meanwhile, CVC Secondary Partners launched a dedicated strategy for credit secondaries, while HarbourVest and Partners Group have announced plans to invest into the space.

“Incumbent groups have raised bigger funds, and, alongside new entrants, this has given GPs the confidence to bring large deals to market,” said Roddick.

There is also a continued flight to quality among secondaries investors. Historically, many credit CVs and portfolios were focused on mezzanine, special situations or junior debt. However, that has gradually shifted to more diversified portfolios and quality senior secured loans that offer more downside protection, while contributing to lower discounts for deals, said market participants.

“Whether you are an investor on the primary or secondary side, credit investing is about managing your downside risks,” explained Roddick. “The bulk of the demand has therefore been for diversified portfolios of good quality performing loans, and that’s where most of the capital closed to date is targeting,”