LP-led secondary deal activity has surged as investors, many of whom are selling for the first time, seek more liquidity for their portfolios.
While GP-led secondaries remain a major driver of growth in the secondaries market overall, LP-led secondaries volume has also been increasing.
According to investment bank Jefferies, LP-led secondary deal volume reached $56 billion in the first half of 2025, representing a 40% increase from H1 2024 and accounting for 54% of the overall secondaries deals in the market. Similarly, 2024 recorded 45% growth in volume, compared with just 7% the previous year.
“The seller universe is broader and more established than it has ever been,” said Philipp Patschkowski, managing director at Neuberger Berman and the firm’s European secondaries strategy lead.
He estimated 40% of LP stake sellers last year were first-timers, as LPs are increasingly proactive about putting assets up for sale.
The reasons are twofold. First is the lackluster exit market. According to PitchBook data, there have been just 5,306 private market exits so far this year, compared to the 6,896 in 2024. The limited distributions to LPs are expediting their decision to sell as the ultimate investors demand to see returns on the investments they have made.
More LPs are also using the secondary market to create liquidity for portfolio rebalancing. With PE fund terms often extending beyond the traditional 10 to 12 years, there is a growing need for LPs to adjust their portfolios.
“It may simply be because the market has changed and financial advisers are telling [LPs] that [they] need to be in a different portfolio,” said Sam Whittaker, partner at law firm DLA Piper. “Or, it may be due to the changes in the forecasted returns on the underlying investments [LPs have] made. [LPs] might have expected it to be realized in 2022, but they are still not realized in 2025, so [investors] are forced to reallocate as a result.”
The phenomenon is becoming particularly prevalent in the current economic environment, which differs significantly from the one in which some portfolio companies were acquired in the late 2010s and early 2020s. Patschkowski said the exit shortfall was unlikely to be rectified in the short term.
“After the [global financial crisis], it was much more of a V-shaped recovery, but now it is not,” he said. “It will take a very long time for that hole to be filled by over-exit activity; it will take many years.”
Supply and demand
At the same time, the increasing supply of LP stakes is also being met with growing demand.
Historically, sovereign wealth funds have been the most active buyers of LP stakes, using them as a means to gain quick exposure to diversified portfolios. However, a broader ecosystem of investors, including dedicated secondary funds, is now increasing its exposure to LP secondaries.
PitchBook data shows that global secondaries fundraising has already reached a record $115.3 billion this year.
There is also a growing number of opportunistic buyers looking to snap up assets at a discount. According to Jefferies, average LP pricing reached 90% of net asset value in H1, up from 89% in 2024. This is supported by rebounding public markets and growing buyer appetite.
LPs are also increasingly willing to buy other LPs’ stakes at a premium to gain access to managers that are historically challenging to allocate to.
“In order to get in a position to invest in the next vintage of that fund, they will buy a stake from an exiting LP in the current vintage to start that relationship with the manager,” Whittaker said.
The rate of growth for LP-led secondaries will also depend on the growth rate of the overall secondaries market, which, in turn, will be influenced by fundraising.
Despite a record volume of capital being invested in the asset class, it is not keeping pace with the transaction volume.
“The dry powder to transaction volume ratio has actually declined, so the run rate of available capital is coming down,” Patschkowski said. “It just speaks to what we believe to be a very under-capitalized market.”
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