Many in the secondaries market predict 2024 will have been a record-breaking year for volume.
The previous record, set in 2021, saw around $130 billion of volume transacted upon, according to various advisory reports. While 2024 figures are still being processed, some buyers have predicted year-end volume of $146 billion, affiliate title Secondaries Investor reports.
According to secondaries market professionals and LPs that Private Equity International has spoken with, momentum is unlikely to slow in 2025. Here are some of the market’s main predictions for the next 12 months.
Secondaries activity to remain hot
“Following a likely record-breaking year for deal volumes in 2024, we expect the secondaries market in 2025 to at least match, or even surpass, these high levels of activity… Market growth [will be fuelled] by a more sophisticated approach from both sellers and GPs. While it remains primarily a buyer’s market, new entrants continue to emerge. The secondaries market will continue to become more dynamic thanks to these new players.” – Jan Philipp Schmitz, executive vice-president, Ardian
A return to the norm with LP-leds
“Pricing is adjusting, which has opened the market to many sellers who wouldn’t have previously considered selling at a 10-15 percent discount, but might now look to sell for other reasons. This reflects a return to the structural norms of the LP-led secondary market, where liquidity needs are not necessarily linked to constraints in allocation. Importantly, this will increase the volume of dealflow.” – Ingmar Vallano, managing partner, Clipway
The spotlight will be on evergreen activity
“As each quarter goes on, all the underlying assets [in perpetual vehicles] will be published, and I imagine there will be scope from market participants to piece together a clear picture of the activity of these vehicles. It will be interesting to see the degree to which they’ve been able to grow in size and the degree to which, if at all, they will be deemed to be having a material impact on overall market pricing.” – Iyobosa Adeghe, investment partner, Coller Capital
Another record-breaking year
“We believe the secondary market will hit $200 billion in 2025, which would make it a record-breaking year for that market. For LPs, while we expect greater distribution activity from private equity generally and certainly an increase from the lows experienced in 2023 and 2024, we also expect greater capital calls from these same portfolios as GPs become increasingly active in deploying capital. This would likely result in many LPs remaining overallocated to private equity as the benefits of an increasing distribution environment would likely by offset by increasing levels of capital calls. In addition, we are seeing pricing in the secondary market now returning to single-digit discounts for high-quality buyout portfolios, and with that we believe more LPs will turn to the secondary market.” – Yann Robard, managing partner, Dawson Partners
More options in the market
“We will start to see secondary investors and, by extension, their parent sponsors offering more holistic solutions to the market. With GP-led transactions increasingly including concurrent refinancings and in some cases direct equity sales – either through minority sales, co-investment or retail – groups that are able to successfully offer multiple products to sponsors will have a greater advantage.” – Nadira Huda, managing director, Lazard
An uptick in PE exits could benefit secondaries
“Exit activity has been depressed for an extended period of time, and we believe there is a pent-up need for liquidity and rebalancing across a wide range of investors. Importantly, and it may seem counterintuitive at first, we also believe an improvement in exit activity may help pricing and enable more sellers to access the [secondaries] market. As a buyer, we like investing into a market upswing and seemingly strengthening economy.” – Ben Perl, global co-head of secondary private equity, Neuberger Berman
GP-led pricing power
“Rising demand for secondaries has… driven a contraction in discounts available for buyers, while exit activity remains at historical lows, with not many sellers achieving their desired reservation prices in sale processes. As such, many private equity firms next year may prioritise acquiring new portfolio companies before selling existing ones, which could capture higher valuations once interest rates decline further. This trend will likely benefit GP-led secondaries strategies, such as continuation funds, as sponsors utilise these vehicles to generate liquidity and hold quality assets for longer.” – Andres Small, managing director, Partners Group
The rise of private credit secondaries
“[Private credit secondaries] is becoming a growing asset class… I think the rationale is the same for private equity and private credit. It’s becoming more accepted as a liquidity option and there are always going to be reasons where LPs need to sell – whether it’s rebalancing portfolio or CIO changes, team changes… We’ve always liked [secondaries] because it helps mitigate the J-curve for some of our primary commitments in our portfolio, and we like the discounts that we get. We like that you have more visibility into the underlying portfolio.” – Jimmy Caraluzzi, investment specialist, Penn Mutual Asset Management
A year for mid-market activity
“Globally, everyone is waiting for 2025 to be the year where liquidity breaks out, but activity in the middle market is likely to ramp up first due to the more manageable enterprise values. This favours mid-sized secondary funds where paths to liquidity are more readily available, versus trying to get liquid on a $40 billion enterprise behemoth.” – Patrick Gerbracht, managing director, Portfolio Advisors
A tool for sophisticated LPs
“For sophisticated LPs, the secondary market continues to provide large-scale opportunities for portfolio and liquidity management. 2024 should be a record year with up to $150 billion of transacted volume, and 2025 is expected to continue that trend, with several $20 billion-plus funds raised and strategies now expanding into credit, infrastructure, real estate and venture capital.” – Simon Marc, global head of PE and strategic partnerships, PSP
New exits will be explored
“The pressure on private equity firms to enhance DPI is intensifying; however, the persistent valuation gap between buyers and sellers is prompting firms to explore alternative exit strategies. In this context, continuation vehicles are emerging as a pivotal driver of secondary market expansion, offering a viable solution to address liquidity needs while enabling sponsors to retain value in high-performing assets.” – Damir Ratkovic, head of alternative investments, SEB Life and Pension
– Helen de Beer, Katrina Lau, Adam Le, Joe Marsh and Silas Sloan contributed to this report.
