GP-led secondaries are one of the standout private markets growth stories of the past five years. But as more capital floods into the space, intensifying competition for deals, managers are looking for more nuanced narratives. Differentiation has become a key selling point.

“Specialization in secondaries is just table stakes now,” said Raudel Yanez, a managing director at HighVista Strategies, which recently launched a GP-led strategy focused on the lower middle market. “Everyone has to pick their own specialization.”

Global transaction volume reached USD 344bn in 2021-2025, a more than fourfold increase on the prior five years, according to Evercore. It tracked USD 65bn in GP-led secondaries in 1H26, up 35% year-on-year, with single-asset CVs accounting more than half of the total.

While there is still room in this widening universe for large-scale investors pursuing diversified private equity exposure, others are rolling out more targeted strategies. This goes hand in hand with the emergence of a more diverse investor pool.

Leonard Green & Partners, Accel-KKR (AKKR), TPG and Apollo Global Management were among the first buyout players to launch GP-led strategies. They have since been joined by the likes of New Mountain Capital, Warburg Pincus, H.I.G. Capital, and Hg.

There is also a growing crop of smaller specialists – such as SQ Capital and NorthSands Capital – as well as various longstanding secondaries market participants that are scaling dedicated GP-led operations.

These arrivals and expansions are in the very early innings, with only a handful of managers closing funds, let alone building track records as lead investors. Still, for some the trend portends a shift whereby secondaries will increasingly adopt the segmentation found in the broader private equity ecosystem.

“Many parties are raising capital on the basis that they have a differentiated angle,” said Quinn Kolberg, a partner and managing director at William Blair. “Some have deep sector expertise, so their secondary strategy piggybacks on that expertise and their executive relationships within those sectors. Others have broad company coverage.”

Sector insight

A telltale sign of increasing specialization is that, even as the buyer universe grows, investors are not necessarily treading on each other’s toes. According to Kolberg, managers are picking their spots in terms of deal size, sector, and structure and even the profiles of target GPs and portfolio companies.

This is happening most visibly by sector, with software-focused investors making their mark as the first specialists in GP-led secondaries. AKKR completed its debut deal in early 2024, backing a CV for two Germany-based assets managed by LEA Partners, as Mergermarket previously reported. Later the same year, the Menlo Park, California-based firm closed its first dedicated secondary fund with commitments of more than USD 2.2bn.

More recently, London-headquartered Hg, which invests in software, services and data businesses on both sides of the Atlantic, announced plans to launch a single-asset CV strategy.

Last year, software was one of the most active sectors in GP-led secondaries, accounting for as much as a quarter of deal flow for some investors, as previously reported by Mergermarket. Activity cooled materially in 1H26 as the so-called SaaSpocalypse rippled through private markets.

As investors grapple with how artificial intelligence (AI) may disrupt software business models, market conditions arguably favor those with deep sector expertise. AKKR, for example, was comfortable enough to lead a CV for cybersecurity company Securepoint, which is backed by DACH-focused sponsor Maxburg, in June when the S&P 500 Software index was still struggling.

“Today, perhaps more than ever, fast technological transformation, driven by AI in particular, requires deep expertise to understand what you’re buying and whether that investment thesis will still hold a year from now,” said Bruno Bertrand-Delfau, co-head of Proskauer Rose’s secondaries practice.

Healthcare could prove to be the next frontier, with Chicago-based sector specialist Linden Capital Partners reportedly evaluating a dedicated secondaries strategy.

Bertrand-Delfau expects this trend to take a firmer hold as the market continues to mature. He referenced industrials and technology but observed that numerous sectors could come into play.

Others, however, believe specialization will be more asset class-driven than sector-driven. As CV adoption expands, deal volume is notably increasing in infrastructure and credit, which accounted for 16% and 11% of GP-led volume in 1H26, compared to private equity’s 65%, according to Evercore.

The infrastructure share has quadrupled since the end of last year, when it represented 4% of deal flow across the whole of 2025, while credit has remained flat at 11% after what was a record high.

“Infrastructure, real estate, credit and venture all have distinct valuation frameworks, participants and return profiles,” said Jeff Hammer, a managing director at Moelis & Company’s private capital advisory group. “But within traditional buyouts, whether a CV involves healthcare or technology assets, the underlying return objectives are generally similar.”

What remains to be seen is how deep it goes within asset classes. There are already examples of niche secondaries strategies in private equity, from Hollyport Capital focusing on tail-end interests and legacy assets to Kline Hill Partners targeting smaller opportunities overlooked by mainstream managers.

But when the market moves from a handful of niches to segmentation at scale, the dynamics shift. In Hammer’s view, doubling down on specialization risks narrowing the opportunity set too far. Managers may strive for differentiation at the expense of flexibility and opportunism, two of the traditional strengths of secondaries.

Middle ground

One clear fault line is transaction size. CVs requiring USD 1bn in equity all the way up to the multi-billion-dollar deals that dominate headline volume remain the preserve of a relatively small group of scaled investors. The likes of Ardian, Lexington Partners, HarbourVest Partners, CollerEQT, Goldman Sachs, Carlyle AlpInvest and StepStone pair vast pools of secondaries capital with dedicated GP-led teams.

Of the newer entrants, only a handful have so far competed consistently at the top end of the market. TPG and Accel-KKR, for example, formed part of the anchor investor group in Ethos Capital’s USD 2bn-plus CV for internet domain business Identity Digital. Leonard Green and Apollo are also cited among those active in larger GP-led transactions.

“A handful of new entrants can write USD 1bn checks and effectively take down an entire large GP-led transaction,” said Isabel Dische, a partner at Ropes & Gray. “They’re operating in one segment of the market.”

Most new entrants have joined a growing cohort of managers targeting opportunities further down the size spectrum. The common belief is that investors in this space can use informational advantages to get an edge.

“On mid-market companies, you need to dig further. You need to know them much better,” said Christophe Bavière, co-CEO of the Paris-headquartered Eurazeo, which announced the close of its fifth secondaries fund on EUR 2.3bn in July.

SQ Capital launched a GP-led strategy last year based entirely on a mid-market thesis, recognizing that relatively few sponsors of this size had executed CV transactions. Targeting lead investor roles, it has already completed several deals in the USD 150m to USD 1bn range. These include recently co-leading a EUR 750m CV for Exponent-backed H&MV Engineering.

SQ’s angle is bringing a bottom-up, fundamentals-based playbook to middle market secondaries – it has largely recruited from blue-chip private equity shops – that includes drawing on longstanding relationships with mid-market GPs. The majority of the CVs SQ has invested in came through a direct reach-out from the managing partners of those GPs, Mustafa Siddiqui, SQ’s founder and CEO, told Mergermarket.

“We’re unusual in the market in that we come with a buyout heritage but secondaries is all we focus on,” he added. “We built a private equity-style team, with experienced private equity investors.“

Among the direct sponsors, H.I.G. views the market through a similar lens. As reported, the Miami-headquartered sponsor is looking to leverage its mid-market platform – including relationships sourced through its WhiteHorse Capital direct lending arm – to target deals in the sub-USD 1bn equity space. It would even go as small as USD 100m-USD 200m.

Dan Wieder, who heads the firm’s GP-led strategy, recently told Mergermarket that many middle market sponsors receive less attention than their large-cap peers.

“Capital within secondaries is increasingly concentrated in larger funds that are either hybrid strategies combining LP and GP transactions or dedicated GP-led funds that need to deploy hundreds of millions of dollars at a time,” he said. “That naturally pushes them toward larger transactions and larger sponsors.”

HighVista’s lower middle market strategy, meanwhile, is focused on companies with EBITDA of USD 20m-USD 50m. The firm estimates there are around 2,000 sponsors investing across a universe of approximately 10,000 companies in that segment.

“Folks have realized that there’s a lot to love about the lower middle market, but it’s really hard to execute that strategy at scale,” said Yanez, who leads the strategy. “That’s what makes this part of the market a little bit less competitive than the larger end of the market.”

Inevitably converging?

Segmenting the market by size seems logical, but some believe the reality is more nuanced. As reported, Andrew DiGeronimo, a managing director and co-head of partnership solutions at Warburg Pincus, prefers to delineate between investors seeking diversified portfolios of CV assets and those approaching transactions as concentrated private equity investments.

Those in the former group tend to pursue larger deals that enable deployment of significant capital. Those in the latter place more emphasis on speed, conviction and concentrated underwriting – and this is where buyout firms are looking to leverage industry knowledge to get an edge.

“I see two markets emerging: one that resembles M&A and another that resembles syndication and co-investment,” DiGeronimo said.

Proskauer’s Bertrand-Delfau endorsed this view, describing a GP-led landscape that is “getting closer and closer to the LBO market in respect of certain legal execution aspects, such as vendor due diligence or W&I [warranty and indemnity] insurance.”

David Krueger, a director at Asante Capital, added that due diligence is becoming more robust and buyout-like in nature. “They’re leveraging their networks, they’re calling customers, they’re doing a lot of the things that you traditionally saw in an M&A takeout,” he said.

Not everyone subscribes to the notion of convergence, however. According to Dische of Ropes & Gray, the extent to which a CV process resembles an M&A deal depends less on the investor and more on the advisers involved.

“In my experience, the shape of the documentation is more heavily influenced by which counsel the GP is using,” she said. “Are they using a dedicated secondaries team? Are they using M&A counsel? Those factors can have a much bigger impact.”

Regardless of how industry participants look to classify GP-led secondaries, they are trying to interpret a market that is evolving as quickly as it is growing. Moreover, differentiation can be demonstrated in multiple ways – not only sector, size, and deal profile, but also execution.

At the top end of the market, for example, some large investors have built strategies around sourcing proprietary opportunities and, where possible, underwriting very large portions of each transaction. Hammer of Moelis sees this approach as a form of “technique specialization.”

In these scenarios, large investors may look for off-market situations, deploying enough capital to take down most of the equity.

One secondaries advisor noted that this phenomenon is also playing out in the middle market. Covering the bulk of an equity check allows investors to exert more influence over how the underlying asset is managed and, as the advisor put it, “who else participates [in the process].” To some extent, it is also a function of rising competition.

“Both new entrants and established players are increasingly trying to shorten processes and lock up deals earlier,” said Ropes & Gray’s Dische. “Some will agree to almost any set of terms to win a deal, and that can alter negotiations for everyone else in the process if others are unwilling to push back.”

Question of culture

This raises a broader question as to whether specialization is driving cultural change in a secondaries market known for its collegiality.

Many leading investors have collaborated for years, if not decades, partly because there wasn’t always enough capital to pursue certain opportunities on a solo basis. This may not always be the case. Some industry participants claim behavior has already changed with the arrival of more buyout firms and intensifying competition for deals.

At the same time, it could be argued the cast of characters is unchanged – they’re just sitting in different seats. Buyout firm entrants, for example, have habitually built teams by recruiting from established secondaries platforms. DiGeronimo spent nearly two decades at LGT Capital Partners before joining Warburg Pincus, while H.I.G. recruited Dan Wieder and several colleagues from Morgan Stanley.

Consequently, many relationships that underpin the market have persisted even as platforms and strategies have evolved. “Whether I would give the same answer in five years is another question, but for now the collegiality remains intact,” said Ropes & Gray’s Dische.