How secondaries are moving mainstream as private equity grapples with liquidity
Once the overlooked younger sibling of private equity, secondaries are becoming one of the most effective responses to today’s liquidity squeeze
10 August, 2026
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Private equity is facing challenges: Distributions have slowed, exits are harder to execute, and investors are under pressure to rebalance portfolios in volatile conditions. For the growing number of investors active in secondaries, however, this is not an obstacle; it is precisely the opportunity.
In the world of private capital, few asset classes have undergone a more striking shift in perception than secondaries. Long dismissed as a niche solution for distressed sellers, the asset class has emerged in the past decade as an important tool for investors seeking liquidity, flexibility and resilience.
At the heart of that shift is a behaviour change. A prolonged slowdown in exits has left limited partners grappling with the denominator effect, as falling public market valuations inflate private equity allocations. Distributed-to-paid-in capital (DPI) has become an increasingly sharp focus, while general partners are under pressure to hold on to assets for longer rather than force value-destructive sales. In that environment, secondaries have moved from a tactical fix to a strategic release valve.
What are secondaries?
Secondaries refer to the purchase and sale of existing interests in private equity or other alternative investment funds. Unlike primary investments, where investors commit capital to a fund at its inception, secondaries involve acquiring stakes from existing investors who wish to exit their positions before the fund’s lifecycle concludes. These transactions enable the buying party to enter mature investments, often at a discount, while providing liquidity to the selling party.
There are two primary types of secondaries’ transactions:
- LP-led secondaries: These occur when a limited partner (LP), such as an institutional investor, sells its stake in a private equity fund to another investor without waiting for a traditional exit event. This can be motivated by a need for liquidity or portfolio rebalancing.
- GP-led secondaries: These are initiated by the general partner (GP) of a fund and often involve creating a continuation vehicle to hold high-performing assets. Existing LPs are given the option to sell their stakes or roll them into the new structure.
What has changed in recent years is not the mechanics, but the motivation. Secondaries are now increasingly used proactively — to manage overallocation, generate liquidity in uncertain markets, and provide buyers with access to assets that are typically past the early ‘J curve’ phase, offering greater visibility on performance and cash flows.
2026 has not started auspiciously for private markets. Investor anxiety over the disruptive potential of artificial intelligence triggered a rout in software stocks, causing tech valuations to tumble. This public market volatility quickly spilt over into private capital. Institutional investors, suddenly over-allocated to private assets, found themselves needing to rebalance portfolios and meet redemption requests.
Geopolitical uncertainty has further dampened risk appetite, as investors pause exit processes and new investments amid market turmoil. The result is a renewed surge in demand for liquidity, and a new number of LP-led and GP-led secondary transactions.
The rise and rise of secondaries
Secondaries were already gaining momentum. In 2025, the market reached a record $240bn in deal volume, surpassing the $200bn mark for the very first time and marking a 48 per cent increase on 2024’s record-breaking year. Closed-end fundraising for secondaries strategies accounted for 18 per cent of total private capital raised, a remarkable leap from just 7 per cent in 2021. GP-led volume for buyout funds soared 39 per cent year-over-year to $81bn, while closed continuation vehicle volume surged 93 per cent in Europe alone.
Private credit secondaries nearly tripled in volume, reflecting the asset class’s growing breadth and appeal. Investment bank Evercore estimates over $200bn will be raised in the next 12 months.
But the story is not just about numbers — it is about a fundamental shift in how secondaries are perceived and utilised. As Jada Funds of Funds, the Saudi investment company, detailed in its Secondaries: Effective Portfolio Management Tools for PE & VC report in November, “the mainstreaming of secondaries reflects a broader shift in private markets, where flexibility, liquidity, and active management are increasingly valued by investors.”
Relative to private equity, secondaries remain a small part of the market, but with nearly 50 per cent of GPs looking to utilise secondaries, the potential for such strategies is only set to increase. Buy-out firms are aware of this: January saw the sale of one of the industry’s pioneers, Coller Capital, to Swedish firm EQT at a value of $3.7bn — an impressive feat for a firm which, when it was founded by Jeremy Coller in the 1990s, saw only a few million dollars in transactions a year.
The secondaries market is still in its early stages of maturity in the Middle East. However, the strategy is gaining traction, driven by high demand for liquidity and the increasing number of international fund management firms entering the region. Key activity includes large-scale partnerships, such as ADIA and Ardian launching a real estate secondaries platform, and the growth of local platforms for venture secondaries.
Looking ahead
The implication is clear. As private equity continues to grapple with delayed exits and liquidity constraints, secondaries are no longer a peripheral option. Limited partners that fail to incorporate them risk losing flexibility at precisely the moment it is most needed. General partners, meanwhile, face a choice: treat continuation vehicles as a short-term workaround, or embed secondaries more deliberately into long-term portfolio strategy.
In a market defined by uncertainty, secondaries have emerged not as a temporary solution, but as a structural response. For investors willing to adapt, they may prove to be one of the most enduring features of private capital’s next phase.
The writer is the head of Financial Services MENA at APCO.




















