Legal briefing | 10 Mar 2026 |

Talking Secondaries - Key trends in LP-led secondaries

The secondaries market continues to grow significantly, given the various commercial advantages and strategic solutions such transactions provide to GPs and LPs in a market that is inherently illiquid.

There are various transactions in the secondaries market. Whilst the GP-led segment has attracted a number of industry headlines, the LP-led market has historically formed and continues to form a meaningful portion of secondary market activity.

The continued growth attributable to LP-led secondaries has largely been driven by investor needs for liquidity. Shortening fundraising cycles have increased pressure on investors to fund existing commitments and make new commitments. Geopolitical tensions together with macroeconomic factors such as high inflation, rising interest rates and supply chain disruption, have reduced realisations and depressed the rate and volume of distributions (albeit this is starting to recover). For these LPs, a significant premium has been placed on early liquidity and discounts are common. For other LPs, liquidity needs relate to active portfolio construction where there is a desire to dispose of non-core assets, make re-up commitments with core GPs, and overall, concentrate capital with blue chip GPs in seeking familiarity, quality and a perceived lower risk return profile.

In this latest instalment of our Talking Secondaries series, we discuss four key trends in the LP-led secondary market.

>$165bn

Amount raised by secondaries funds in 2025¹

18%

Closed-end dedicated secondary fundraising represented 18% of all private capital raised in 2025²

52%

In 2025, LP-led transactions comprised 52% of the total secondary market activity²

¹ Note: $165.88bn Secondaries Investor, “Secondaries fundraising breaks new record”, 12 January 2026

² Note: Jefferies, “2025 Global Secondary Market Review: Another Record-Breaking Year”, 10 February 2026

Portfolio strategy innovation

LP sellers, particularly when advised by an intermediary, are strategically structuring the disposal of fund portfolios in new and innovative ways to maximise overall portfolio pricing, attract a meaningful selection of buyers and improve execution certainty.

Breaking up portfolios of fund interests in “mosaic” sales for different specialist buyers is a well-trodden path and an accelerating trend. In a flight to quality, there is an increasing market where sellers are increasingly allowing buyers to cherry pick particular assets in a portfolio which can command attractive headline pricing. Some deals are structured as partial or strip sales which allow sellers to generate early liquidity and lock-in strong returns whilst enabling the seller to benefit from any upside in the remainder of the portfolio. For buyers, they can benefit from the diversification across a portfolio.

With the variety of asset classes now represented in secondaries transactions, in the current market, asset selectivity is in sharp focus. Demand is high for particular asset classes, such as infrastructure, which is characterised by resilient, and inflation linked pricing models and underpinned by mega trends such as energy transition and climate change. Conversely, challenging underlying trading conditions in certain sub-sectors, such as fixed rate private credit portfolios, real estate and the retail sector presents significant opportunity for lower entry prices for buyers. Beauty is truly in the eyes of the beholder.

Alternative consideration mechanics

There has been a rise in alternative consideration mechanics as buyers and sellers look to bridge the bid-ask spread. Whilst the pricing mismatch is narrowing in certain parts of the market, it remains prevalent in others.

To address this, deferral payment mechanisms are increasingly used whereby a portion (or all) of the purchase price is paid by the buyer at a delayed date (6 months to a year is common), either as a bullet payment, or through a set of staggered payments. This can encourage a buyer to reduce the headline pricing discount as it is able to reduce its day one funding obligation on first closing and improve its own IRR on the investment. Delaying closing by several quarters is also not uncommon and yields similar benefits.

Where there is a material difference in buyer/seller pricing expectations, the parties can also agree that the purchase price is subject to an earn-out mechanic where higher consideration is paid if certain future performance metrics are met. The parties should be mindful of the importance of clear drafting in the sale and purchase documentation covering the structure of the earn-out payments, the calculation of performance metrics and hurdles, and any future dispute resolution.

Finally, innovation in the use of preferred equity, NAV financing and hybrid solutions can also help bridge valuation gaps and generate liquidity for the seller.

New buyers and sellers in the market

Levels of activity in the secondaries markets have been boosted by new entrants to the markets. On the seller side, pension funds have long been key players, but this has increased as pension funds increasingly feel over-allocated to private equity strategies and look to offload investments to rebalance their portfolios. That rebalancing has been a driver for a while, but it shows no sign of let-up – we are still seeing pension funds who previously have had little exposure to the secondaries markets make market debuts, with a potential line-up of future sales in the pipeline.

Buy-side has been dominated by the big names in secondary funds, but the rise in evergreen funds launched by multi-strategy GPs has created a new class of player. Competition on secondary deals has hotted up as these new semi-liquid funds, distributed by global GPs via wealth management channels, have entered the market. Increased competition has inevitably had an upward impact on pricing, with discounts to NAV closing.

AI

Artificial intelligence (AI) is being used by LPs to help with portfolio management, monitoring for targets as well as risk management. AI is able to extract and analyse more data for LPs, which previously they would not have had the resources to go through, in a more systemic and efficient way. It allows and is being used by LPs to monitor for targets, model pricing and forecast exits to help with portfolio construction. As the secondaries market becomes more competitive and sophisticated, LPs are exploring how AI can offer an edge in maximising liquidity and optimising returns.