The private equity secondary market is experiencing unprecedented growth; within 2024 this is projected to hit up to $150 billion in sales, according to an October report by Financial Times. This momentum reflects a range of factors positioning secondaries as a key driver in private market activity, even as questions arise about whether the market is nearing its peak. Our recent report, in partnership with Private Equity Wire, examines the growth and complexities of the PE secondary market. Fund managers and allocators express strong confidence in continued growth, citing structural and macroeconomic trends that are unlikely to fade soon. Our survey revealed that 83% of responding managers expect secondaries volumes to increase over the next six to 12 months.
One significant driver of secondaries' growth is their adaptability across different market cycles. Both GP-led and LP-led transactions have evolved in sophistication, making them versatile tools for navigating complex financial landscapes. In our survey, 36% reported that most of their secondaries transactions over the past six to 12 months have been GP-led. As these processes gain traction, they enable market participants to unlock value, particularly in a high-interest-rate environment. This adaptability is underscored by the sheer volume of unsold assets—28,000 worldwide on private equity buyout books, worth $3.2tn according to Bain & Company—creating a substantial backlog that will take time to work through.
Economic conditions also play a pivotal role. Elevated interest rates remain a dominant factor propelling secondary volumes, creating a logjam of assets awaiting distribution or sale. Even as interest rates begin to stabilize and the M&A landscape shows signs of revival, the companies awaiting sales or IPOs are creating a backlog that is expected to prolong high activity levels. This dynamic, delays distributions back to LPs, maintaining demand for secondary transactions as a liquidity solution.
Additional growth catalysts stem from broader macroeconomic concerns, including fears of recession, geopolitical instability and inflation. These uncertainties drive sellers toward secondaries for risk mitigation and liquidity generation. Behavioral trends among sellers further reinforce this, with many anticipating continued market volatility and acting proactively to reposition portfolios or address liquidity needs.
Ultimately, the convergence of structural, economic and behavioral factors suggests that private market secondaries are positioned for sustained growth, offering resilience and opportunity even amid shifting market conditions.
To learn more about what is driving the rapid growth in the secondaries market, read the full "The Secondary Market" report.