The Secondary Surge: Navigating a Transformative Era in Private Markets

The secondary market isn’t just growing—it’s redefining private capital’s role in global finance. In 2024, the sector shattered records with $87 billion in LP-led transactions, a harbinger of even greater momentum in 2025. As GP-led restructurings, ’40 Act fund adoption, and institutional liquidity demands converge, secondaries are no longer an alternative to the market—they’re becoming the market itself.

Why 2025 Marks a Pivot Point

2025 marks a pivot point because with a staggering $216 billion in committed capital ready to deploy as per Evercore, buyers are racing to clear the worst exit backlog since 2005; 40% of 2024’s sellers were first - time participants, indicating secondaries’ evolution from a last resort to a core portfolio tool; and in 2024, 27 mega - transactions (over $1B) closed, a 42% year - over - year jump, with pricing tightening to 89% of NAV (a 400 - basis - point increase), while valuations, still 6 - 10% below 2021 peaks, create a rare “sweet spot” for buyers.

LP Transaction Volume

Amidst a less robust exit environment, the LP secondary market witnessed its most successful year ever in 2024. In fact, the LP transaction volume of $87 billion in 2024 ranked as the sixth largest year in the history of the entire secondary market. Approximately 40% of the sellers in these transactions were new to the secondary market in 2024. This indicates that the secondary market is becoming an increasingly important tool for portfolio management.

In 2024, 27 LP transactions worth over $1 billion were successfully completed. This represents a significant increase compared to the 19 such transactions that closed in 2023. Additionally, the average pricing has risen by 400 basis points. It has increased from 85% of the Net Asset Value (NAV) to 89%. Even with this increase, the pricing is still lower than the historical peak levels. The rise in pricing has helped to narrow the differences between buyers and sellers. There is great anticipation that the LP market could exceed a volume of $100 billion in 2025.

Pricing Trends

The pricing in 2024 remained below the peak levels observed in 2017 and 2021. We hold the view that the NAVs of buyout funds are more accurately valued currently. This situation is likely to result in a higher number of exits in 2025. Sponsors will be able to divest more of their investments at values equal to or higher than their holding values. The potential for increased liquidity is desperately needed, considering that the backlog of exits is at its worst state since 2005.

The Liquidity Lifeline

In a landscape where IPO windows are sporadic and M&A activity is sluggish, the secondary market has emerged as a crucial alternative, offering services that traditional exit routes cannot. It enables portfolio rebalancing, allowing LPs to divest aging assets and reallocate resources to high - conviction strategies. GP - led innovation is also on the rise, with sponsors using continuation funds to retain valuable assets while providing investor liquidity. Moreover, NAVs in buyout funds now better reflect post - pandemic realities, putting the market on track to achieve a target LP volume of over $100B in 2025.

Pi Partners' Perspective

From Pi Partners’ perspective, the secondary market surge is not merely about the volume of transactions; it’s about the expanded options available to investors. As capital pools grow deeper, savvy LPs and GPs can monetize stakes in top - quartile funds at over 90% of NAV, execute GP - led restructurings without facing dilution pressure, and utilize hybrid structures such as NAV loans and preferred equity to bridge valuation gaps.

However, the secondary market isn’t without challenges. There’s a significant human capital gap, as the demand for specialized underwriters far exceeds the growth in available talent. Additionally, concentration risk is a concern, with mega - funds dominating market flow, necessitating thorough due diligence on “trophy” assets.

Positioning for a New Era

Pi Partners is well - positioned to navigate this new era. The firm is leveraging the shift in the secondary market through various strategies. It helps LPs offload positions worth over $1B via curated buyer syndicates, provides GP advisory services to structure continuation funds with aligned carry mechanisms, and offers NAV financing to unlock capital against mature portfolios at advance rates of 85 - 92%.

The Bottom Line

In conclusion, the secondary market’s evolution from a niche segment to a necessity highlights the maturation of private markets. For forward - thinking investors, 2025 presents a two - fold opportunity: capitalize on current pricing dislocations and build frameworks to thrive in an annualized market projected to exceed $200B in the future. Pi Partners is at the vanguard of this transformation. Contact us to explore customized secondary market solutions.

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