News from Ely Place

The secondary market continues to evolve at remarkable speed. What began as a liquidity solution has now matured into a strategic cornerstone of private capital portfolios. Today, secondaries are not just reactive; they are proactive, complex, and increasingly essential to the allocation and portfolio management of private markets. The growth in the number of market participants and the increase in capitalisation beyond the scope of private equity strategies offer LPs more competitive liquidity options than ever before.

So far in 2025, M&A activity remains subdued, and the IPO market continues to be lethargic, with both lagging their long-term averages. Meanwhile, macroeconomic market uncertainty is impacting deal-making despite a more accommodative monetary policy environment, especially in Europe. This persistent illiquidity is sustaining LPs’ strong appetite for secondary market solutions.

As a result, secondary volumes are higher than ever. Q1 2025 set a new record according to preliminary estimates, and expectations — from LPs, GPs, and regulators alike — are higher than ever. While LP-led deal flow remains strong, GP-led secondaries, driven by sponsors seeking to hold onto their best-performing assets, remains the most dynamic segment of the secondary market, accounting for approximately 55% of market share.

Meanwhile, we’re seeing the expansion of semi-liquid solutions, feeder fund innovation, and increased crossover with private credit — all signs that secondaries are becoming more flexible, dynamic, and multi-dimensional.

Forecasts from SuperReturn

In June, I chaired the Secondaries Summit at SuperReturn. The day provided a wealth of interesting discussions among key market players, as well as insights into where the market is heading from those that operate in it every day. Some of the key takeaways I noted about the direction of travel of the secondaries space for the second half of 2025 and beyond include:

• A strong emphasis on distributions will continue, with “DPI being the new IRR”.
• Several very large portfolios will come to market in H2 2025, although some expect an overall slowdown in LP-led deals alongside a solid flow of GP-led transactions.
• Some forecast that GP-led secondaries could represent more than a third of exits by 2030, and others estimate the GP-led market will grow three-fold over the next 10 years.
• There will be a growing number of “continuation vehicles of continuation vehicles” or “CV-squared”, as the exit environment fails to meaningfully pick up and GPs focus on keeping hold of trophy assets.
• LP appetite for CVs will continue, not least because the lower fees and carry charged make them up to 50% cheaper than allocating to a primary fund offering, and they are a way to deepen relationships with core GPs in a portfolio whilst mitigating the blind pool risk that comes with fund commitments.
• Managing conflicts of interests will increasingly be of focus, with emphasis on fair pricing for existing LPs, a status quo option and sufficient time given to investors to consider options.
• Raising primary capital remains difficult and selective, and secondaries will continue to provide means for GPs to grow AUM. But transactions with a staple requirement will need to factor in sufficient time for LPs’ internal decision-making processes.

Private Credit Secondaries – the fastest growing part of the market

Ely Place Partners is particularly active in private debt, the fastest growing strategy within private markets secondaries. In our survey of the market of April 2024, we estimated the private credit secondary market could be as high as $15bn in 2025, but even that seems conservative today. We see huge, continued growth on both in GP- and LP-led private credit opportunities, as well as new entrants on the buy side.

This growth means that large GP-led transactions will, we believe, become more of a feature of the market. GPs can now bring large CVs to market with confidence that there is sufficient capital to absorb them. I expect to see several more deals in the $1bn size range in the months ahead.

Alongside growing transaction values, the increase in available buy-side capital means that sellers can find appropriate buyers for differing strategies. The variety of assets in both GP- and LP-led deals today ranges from clean, senior, recent-vintage portfolios to tail end positions, opportunistic credit, as well as various asset-backed strategies.

Another factor likely to continue to fuel growth in the space is pricing. This has normalised with increasingly competitive sales processes, meaning sellers are getting a fair price for their portfolios.

Our View on the Next 12 Months

Looking at our own pipeline we expect an exciting 12 months of transactions ahead, especially in the GP-led segment. While the market is discerning, with a focus on quality assets, it will provide an opportunity to provide much-needed liquidity for existing investors, help GPs renew their LP base and grow AUM, bring in fresh capital to fund assets and allow managers to continue to support their portfolios in the next phase of growth.