Secondary market transaction volumes hit US$233bn in 2025, up 53% year-on-year, as persistent exit pressures pushed both GPs and LPs towards secondaries solutions in growing numbers, according to Lazard’s 2025 Secondary Market Report.
GP-led and LP-led transactions accounted for broadly equal shares of the record total. However, the more significant shift, according to market participants, is qualitative: secondaries are no longer a niche liquidity fix but an increasingly mainstream portfolio allocation.
According to Mizuho/Greenhill’s Secondary Market Review 1H 2025, subdued M&A and IPO markets have pushed both sponsors and LPs towards secondary solutions, while Houlihan Lokey’s LP Compass Secondary Investor Survey found LPs are increasingly using secondaries proactively for portfolio rebalancing rather than as a distressed exit.
Joe Clark, director for Europe at Alvine Capital, says the shift in how LPs think about the asset class is fundamental. “Secondaries are increasingly becoming a core allocation in LP portfolios,” he says.
He points to DPI (distributed to paid-in capital) and capital velocity as the key drivers. “Increasingly, allocators are recognising that their primary portfolios are not generating distributions. Until that changes, many are reallocating capital into secondaries, where DPI and velocity of capital are more attractive.”
Clark illustrates the point with a recent conversation with a Nordic institution, whose CIO chose to redirect some distributions and allocations into secondaries to improve capital velocity while maintaining vintage exposure.
Interest in the asset class is also broadening beyond traditional institutional channels. Clark notes growing demand from private wealth, high-net-worth individuals and family offices.
“As investors become more comfortable with private markets, secondaries are often seen as the best entry point because of their diversification benefits and more attractive capital profile,” he says.
Continuation vehicles have been central to that growth. The structure, which allows a GP to transfer assets from an older fund into a new vehicle and gives existing investors a choice to sell or roll, has become a core part of the secondaries market.
Clark says LP sentiment on GP-led transactions has evolved considerably, with investors increasingly distinguishing between LP-led, GP-led and co-investment strategies depending on their objectives.
Buchel believes this evolution is still underappreciated in fundraising conversations. “Many managers still miss the core issue for LPs, which is how a secondaries strategy can deliver a cycle-resilient cashflow profile,” he says.
LPs are also pressing harder on transparency, with growing scrutiny of performance metrics and the use of financial engineering techniques.
On manager selection, Clark says the market is becoming more nuanced. Large, established firms continue to offer diversification and institutional comfort, while more specialised strategies are gaining traction among mature investors.
“Competitive advantage comes from sourcing and access,” Clark says. Buchel agrees, arguing that scale combined with a strong primary platform remains a significant advantage.
Cost sensitivity remains a persistent factor shaping allocation decisions, while track record must increasingly be viewed through the lens of changing market conditions.
That said, Buchel believes the fundamental case for the asset class is now well established. Allocation trends reflect that growing confidence, with some investors now committing as much as 40% of their private equity portfolios to secondaries.
“Increasingly, secondaries are being positioned not only as a tactical liquidity solution, but as a core strategic allocation within private markets.”
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