Secondaries Had a Big 2023. This Year Could Be Bigger.

“Liquidity continues to be a core factor for all institutional investors.”


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Last year was a big one for the secondary market. The party isn’t over yet though: Industry experts predict that 2024 will be another record year for the exit strategy.

Between $110 billion and $115 billion of stakes in private funds changed hands in 2023, depending on who you ask. According to a recent secondaries report from BlackRock, this is the second-highest year of closed transaction volume on record.

“Liquidity continues to be a core factor for all institutional investors,” said Adrian Siew, managing director of private capital advisory — GP solutions at Eaton Partners, a wholly-owned subsidiary of Stifel . He added that with the IPO markets locked up and private equity firms avoiding selling portfolio companies, limited and general partners alike are looking for ways to get their capital back.

In 2022 and the first half of 2023, PE firms called more capital from investors than they distributed back to them, data from Eaton Partners showed. This has forced investors to sell stakes in the secondary market for liquidity.

Overall, buyout funds got most of the love on the secondaries market in 2023, making up 83 percent of continuation fund deals (those led by general partners), and 76 percent of LP-led deals, according to Eaton Partners.

“The buyout strategy is well understood by basically every secondary investor,” Siew said. “Your ability to price and underwrite is better.”


Buyout deal pricing rebounded in 2023, hitting 91 percent of net asset value, increasing from 87 percent in 2022, according to BlackRock. Buyout pricing though has not come back to its peak, 99 percent in 2017. Venture capital secondary deals were priced far lower, staying steady at 68 percent of net asset value year over year. This is down from 88 percent in 2021, the asset class’s peak on the secondary market.

In terms of assets sold, Eaton Partners notes that high-quality, newer vintage funds were more attractive for LPs to sell. These assets were less likely to be discounted, and market pricing reflects this. BlackRock estimates that LP-led transactions made up 55 percent, or about $63 billion, of all secondary deals. LP-led transactions grew by 15 percent year-over-year.

Pension funds make up the largest portion of sellers — 45 percent, according to Eaton Partners. This is unsurprising: Pension boards tend to be stricter about allocation policies. These asset owners ramped up their private equity investments over the past five years or so, with valuations remaining high. As a result, pensions are overweight alternatives — the denominator effect — prompting some funds to sell.

Secondaries led by general partners also increased year-over-year, growing about 5 percent to more than $50 billion of closed deals in 2023, according to BlackRock.

“As the volumes increased and more quality GPs entered the market, there’s been a much wider acceptance of it,” Siew said, nodding to LP concerns that GPs can set up favorable pricing for continuation vehicles.

Looking ahead to 2024, industry experts are optimistic. BlackRock noted that in 2023 alone, secondaries strategies raised $117 billion in assets, meaning there’s quite a large pool of capital to be put to work.

“We continue to have high conviction that another record year is in place for 2024,” Siew said. “I think we’re going to see volumes increase.”