In a recent ION Influencers fireside chat, Stephan Wessel, CEO of Montana Capital Partners (MCP), pulled back the curtain on the explosive growth and increasing sophistication of the private equity secondary market. Part of the $1.3 trillion PGIM, MCP has navigated the market’s evolution from a niche liquidity solution to a central pillar of institutional portfolios.

Wessel, with a background in M&A, direct PE, and a PhD in business, outlined a future where secondaries are not just an alternative, but a superior risk-adjusted vehicle poised to bridge the gap between private and public markets.

Here are the key topics and takeaways for LPs and GPs navigating this dynamic landscape.

The Structural Tailwinds: Why Secondaries Are Booming in 2025

Wessel identified powerful, enduring drivers fueling the secondary market’s growth:

• A Derivative of Primary Market Growth: The $13+ trillion private markets universe, growing at nearly 20% annually, creates a massive and growing base of assets that will eventually need liquidity. “This is essentially the growth driver number one.”

• The Rise of GP-Led Solutions: The market has professionalized beyond traditional LP stake sales. GP-led transactions (e.g., single-asset continuations) now allow investors to make targeted bets on specific geographies, sectors, and top-performing assets, combining diversification with precision.

• Active Portfolio Management: MCP’s annual survey reveals a 1.5x increase in LPs actively managing their PE portfolios. This trend, coupled with a strategic shift from large-cap to specialized mid-market managers, is generating a sustained supply of assets in the secondary market.

The MCP Playbook: Three Proprietary Niches in a Crowded Market

In a “very crowded” and professionalized market, Wessel revealed MCP’s strategy for finding alpha by focusing on three distinct, underserved niches:

1. Fund Secondaries (SMAs): As a “purebred” secondary firm with no fund-of-funds business, MCP holds a unique advantage. They can transact in the SMA portfolios of large pension funds without competing against their own primary business—a conflict that restricts many rivals. This results in auctions with “less than a handful of buyers globally.”

2. Partnership Transactions: These are bespoke, non-intermediated deals built on long-term relationships. MCP spends 6-12 months structuring solutions around unique seller needs, such as retaining certain exposures or extending payment terms. This high-touch, resource-intensive approach creates highly proprietary deal flow.

3. Capitalizing on the “Trickle-Up” Effect: A fundamental trend in primary markets is the movement of assets from lower mid-market sponsors to large-cap funds desperate to deploy capital. MCP backs specialized, lower mid-market GPs to help them build “trophy assets” for sale into the upper mid-market, creating value in a subdued exit environment.

The Data Moat: How AI-Style Analysis is the New Competitive Edge

Wessel positioned data sophistication as the critical differentiator for future winners in the secondary space.

• A Thirteen-Year Head Start: MCP has built a proprietary database over 13 years, comprising 7,000 funds and 15,000 transactions, now augmented by PGIM’s vast resources.

• A Dual Underwriting Engine:

  • Bottom-Up Modeling: Used for concentrated, GP-led deals to model key value drivers.

  • Top-Down Modeling: Leverages Monte Carlo simulations and historical cash flow data from their database to underwrite broad, diversified portfolios statistically.

• Centralized Data Management: By moving beyond “Excel on a transaction level,” MCP can populate investment models in minutes, backtest assumptions, and continuously refine its underwriting, uncovering and eliminating biases.

“This is now called AI,” Wessel noted, “but we’ve been doing essentially that for the past ten, eleven, twelve years.”

The Future Landscape: Bifurcation and the “Speedboat” Advantage

Wessel predicts a clear bifurcation of the asset management industry:

• The Winners: Large platforms that benefit from scale and specialized, nimble firms that can capitalize on unique pockets of opportunity.

• The Losers: Mid-sized firms that lack the advantages of either extreme.

• The MCP Model: Wessel believes his firm has the “best of both worlds”—the backing and resources of the PGIM platform combined with the agility of a “speedboat” to execute on its proprietary niche strategies.

Key Takeaways for the Industry:

• For LPs: Secondaries are no longer just a fee-saving tool but a strategic asset class offering high Sharpe ratios, liquidity, and resilience during downturns. The most sophisticated managers are using data to uncover asymmetric opportunities.

• For GPs: The secondary market provides essential portfolio management tools and new pathways for value creation, especially for lower mid-market firms looking to “trade up” their assets.

• The Bottom Line: The secondary market’s professionalization is leading to a convergence between private and public market returns. The firms that will lead this charge are those that have built an unassailable data advantage and the strategic agility to exploit structural inefficiencies.

Key timestamps:

00:07 Introduction to ION Influencers Fireside Chats
00:37 Stephan Wessel’s Background and Experience
01:34 The Rise of Secondary Investments
03:20 Convergence of Primary and Secondary Markets
04:50 Professionalization of the Secondaries Market
07:20 Benefits of GP-Led Transactions
11:23 Montana Capital’s Unique Positioning
13:42 Trends in Capital Deployment
15:44 Active Portfolio Management in Private Equity
16:34 The Importance of Data in Secondary Investments
21:22 Leveraging AI in Investment Strategies
22:09 Industry Trends and Bifurcation
23:34 Conclusion and Acknowledgments