Robust growth expected in secondary market for private funds and assets

[SINGAPORE] Activity in private-market secondaries, where investors can buy and sell existing interests in private investment funds, has grown exponentially, said Vladimir Colas, Ardian executive vice-president and co-head of secondaries and primaries.

Even with the strong growth in transactions, Colas reckons the market is just at the start of an uptrend, and he expects a doubling or tripling of assets over the few years.

Ardian is a pioneer and the largest investor in the secondaries market for private equity and other unlisted assets. It has around US$192 billion under management and advice, of which secondaries account for nearly US$100 billion.

“(Market) growth has been tremendous and we’ve grown a lot with it… Since 2022, more than 50 per cent of transactions are first-time sellers, which is a boon for the market. In our experience, a seller who does the first secondary trade will love it,” Colas said.

“It’s a great tool; suddenly they have liquidity in their portfolio. They become programmatic sellers, and sell every 18 months or two years. We think we’re really only at the beginning.”

He said: “Today, private-market assets are about US$13 trillion around the world. We’re very confident, just looking at the dynamics, that it’s going to double in the next five years to reach around US$25 trillion. Today, the percentage of the whole pie that trades on the secondary market is only 1.5 per cent; that share could easily reach 2 per cent very soon.”

The secondary market enables liquidity for investors in primary private-market funds, a boon at a time when exit opportunities and distributions have slowed. The funds’ underlying assets may be invested in private equity, real assets or credit.

In private markets, primary or direct investors are referred to as limited partners (LPs). Over the past year, more LPs have turned to the secondary market to sell their interests, driven by the need for liquidity or portfolio rebalancing.

General partners (GPs), who are the active managers of a private-market fund, may also participate in the secondary market through the transfer of assets from an existing fund – which may be near the end of its life – into a continuation vehicle. This effectively extends ownership of the asset and provides liquidity to LPs.

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Ardian began in 1996 as a French buyout company under the Axa Group. It started a secondaries business around 1999. In 2013, an employee buyout of Axa Private Equity led to the creation of Ardian, with US$36 billion under management and advice.

The search for uncorrelated assets has intensified interest in private markets, and this has benefited Ardian in its fundraising. In January, it raised US$30 billion for its ninth generation secondaries platform, which it says is the largest secondaries fundraise globally. Private wealth accounted for 22 per cent of the equity. Its eighth generation platform in 2020 attracted US$19 billion, of which private wealth’s share was 11 per cent.

Chance to invest in more mature assets

Investors in secondaries enjoy a number of advantages. They invest in a more mature portfolio with a shorter J curve, which enables them to receive distributions earlier than in a primary fund. Because the underlying portfolio companies are known, they also avoid the risk of a blind pool.

Ardian has rolled out evergreen funds – where it collectively manages around US$2.5 billion in assets – in an effort to capture more of the private wealth market. Just this year it launched Ardian Access Sicav-Raif, which gives exposure to Ardian’s secondaries, primaries and co-investment platforms.

Last year the firm raised a total of US$20 billion in capital, of which private wealth accounted for more than 20 per cent.

Amid a surge in the number of secondary funds and continuation vehicles, acquiring quality assets is key to risk mitigation. Jan Philipp Schmitz, Ardian executive vice-president and deputy co-head of primaries and secondaries, said: “Usually the assets we buy are around four to five years old and just about to generate liquidity. But there’s still more value creation with some of the younger (underlying) assets that were bought a year or two ago.

“So, the multiple is good, unlike some of our peers who are buying more tail-end portfolios of seven to nine years old. We’re sort of in the middle, which I think is the sweet spot. We want to make sure our LPs get liquidity back and we deliver returns. We need to ensure we understand the portfolio, asset by asset. It’s really a bottom-up approach.”

Colas said Ardian’s edge lies in its extensive database, comprising 650 GPs, 1,600 funds and around 10,000 portfolio companies. There are more than 100 investment professionals in its primaries and secondaries business. “Our database is valuable because it’s all private data… It’s still a very concentrated market and few buyers have access to that data; you can’t get the data unless you’re invested in those clients.”

He said: “The market is more sophisticated and bigger, and it’s easier today to cherry-pick assets. But we’re not necessarily playing a discount game. Of course we prefer a discount for good-quality assets, but the top criteria is high-quality portfolio companies and a good fund manager who knows how to work on the assets in good times and bad.”

Jefferies’ global secondary market review for the first half noted a record growth of 51 per cent in market volume to US$103 billion in H1 2025, from US$68 billion in H1 2024. LP volume reached US$56 billion in 2025, “amid improving pricing and a well capitalised buyside”.

“LPs increasingly turned to the secondary market to generate liquidity, rebalance portfolios and manage overallocations, particularly as traditional exit channels remained subdued,” it said.

GP-led volume expanded by 68 per cent. Jefferies said heightened demand from new investors pushed the average size of continuation vehicles to a new high, and those invested in venture, credit and real assets gained “significant traction”.