On average, however, LP-led transactions were priced at 89 percent of NAV in 2024, less than the 85 percent discount in 2023, according to Jefferies’ 2024 global secondary market view. The investment bank said that secondary trading volume hit $162 billion in 2024, a 45 percent increase from 2023.
Jefferies also said that GP-led secondaries are approximately 45 percent of the market. These secondaries allow managers themselves to purchase assets in aging funds and place them in a new fund known as a continuation vehicle.
But the trend has “given some LPs pause,” said Hilary Wiek, senior strategist at PitchBook. “If these deals are such a great opportunity, are the exiting LPs being disadvantaged in some way when it comes to pricing these assets? Quite possibly.”
She noted that while many of these transactions happen at or near the fund’s current NAV, “the correctness of that NAV is debatable.” In the VC world, for example, Jaskel said variance of the NAVs of the same asset by different firms can be wide enough to “drive a train through.”
“Those buying these stakes seem to be basing their investment thesis on the idea that considerable upside will be unlocked when the underlying assets in the [continuation vehicle] are eventually sold. If the exit is where a major portion of the value is unlocked, then the valuations at which the [continuation vehicle] transactions are priced are not indicative of what the original LPs would get if they hung on,” Wiek said.
While a number of firms launched their tenth and eleventh secondaries funds last year, 2024 also saw first-time ventures into secondaries from established players Accel-KKR and TPG. Both have a focus on GP-led secondaries.
Lexington Capital Partners X was the biggest secondaries fund of 2024, raising $22.7 billion in 2024. Other top secondaries were Dover Street XI, which amassed $15.1 billion; Crown Global Secondaries VI, raising $7 billion; Hamilton Lane Secondary Fund VI, raising $5.6 billion, and Pantheon Global Infrastructure Fund IV, which raised $5.3 billion.
