The Role of Secondaries In a Private Markets Portfolio

Secondaries have moved from a niche corner of private equity (PE) to one of the fastest-growing and most closely watched parts of private markets investing. The ability to trade stakes in private markets strategies creates liquidity in an otherwise highly illiquid market, offering investors diversification, or the option to get their money back more quickly if needed.

In 2026, EQT added secondaries to its portfolio of investment strategies with the acquisition of Coller Capital, a global leader in the space. The transaction also broadened EQT's private wealth offering, bringing several evergreen secondaries vehicles onto the platform. EQT’s Chief Executive Per Franzén has said the ambition is to more than double the size of the rebranded Coller EQT secondaries business in around four years.

The secondaries market has grown noticeably in recent years as investment managers have taken longer to exit portfolio companies and return capital to investors. Global secondaries transaction volume reached a record $240bn in 2025, a fourfold jump since 2020, according to law firm Ropes & Gray.

Meanwhile, capital commitments to dedicated secondaries funds rose for a third consecutive year in 2025, and closed-end fundraising for secondaries strategies made up around 18 percent of total private capital raised that year, up from just 7 percent in 2021.

Secondaries transactions have increased fourfold since 2020

Secondaries in private markets portfolios

Secondaries in private markets are trades where a PE firm or other alternative investment fund buys a portfolio position from another PE firm or alternative investor.

As part of the secondaries sale, the buyer agrees to take on ownership of the investment they are purchasing – for example a series of portfolio company stakes – and also take on any outstanding commitments the initial investor agreed to, such as upcoming funding rounds.

Buyers have the benefit of being able to choose what private market assets they want to acquire while sometimes negotiating a discount on the quoted price.

Sellers trade on the secondary market to raise capital, to avoid funding the investment any further, for regulatory reasons, and to rebalance their portfolio by reducing their exposure to a certain asset class or sector.

Types of secondaries

Secondaries transactions can be carried out by either the general partner (GP) or limited partner (LP), each taking different forms.

The most common type of secondaries transaction is when the LP initiates the sale of its stake in a private markets vehicle. This is called a LP-led secondaries. The buyer could be an institutional investor or a secondaries vehicles of the type managed by Coller EQT and other specialists.

Such secondaries specialist firms were sitting on $327bn of unspent investor commitments at the end of 2025, an amount of dry powder that could indicate a busy dealmaking period ahead.

The other secondaries transaction type is initiated by the investment manager (the GP), when they sell part or all of the asset or portfolio companies to another private markets investment vehicle. Transactions can include both baskets of assets as well as single position portfolios. Such deals are known as GP-led secondaries.

In this instance, secondaries transactions often use what is known as a continuation fund. This allows the GP to roll an asset or assets from one or more existing strategies into a new investment vehicle to be managed by the same GP.

A continuation vehicle extends the investment management period over an asset beyond what the original fund document proscribed. Some LPs may decide to keep their investment for this longer period, while others can choose to sell and be replaced by new LPs.

Available capital held by secondaries investment vehicles

Benefits of secondaries for investors

There are several benefits to investors of secondary PE transactions.

Access to liquidity

Secondaries provide vital access to liquidity for sellers. Private markets investments are illiquid and subject to long lock-up periods. The secondary market, by comparison, allows investors to sell their stakes in order to unlock capital that can then be invested elsewhere, or used for their immediate cash needs.

Portfolio diversification

Rebalancing private market portfolios is another advantage of secondaries. Private market investors can better tailor their portfolios by buying and selling secondaries stakes in buyout, real estate, credit and venture, enabling portfolio diversification across asset type, life cycle stage, sector and geography.

Holding on to winners

The GP-led transaction type enables investors to stay invested in successful businesses for longer than the original investment vehicle term length (usually capped at 10 years).

Risk mitigation

Secondaries also mitigate what is known as ‘blind pool risk’ when LPs invest 'blind' in a strategy during the fund raising process and before the portfolio is built. With secondaries, investors can invest in known companies where there is more transparency about their performance and the GP value creation strategy for the portfolio company is underway.

Higher, faster returns

Investors can sometimes buy secondaries portfolios at a discount to stated net asset values, creating opportunities for superior returns when they come to sell. Secondaries investors buying mature assets also don’t have to wait as long to see their cash returned, a strategy known as ‘J curve mitigation’.

Compliance and regulatory benefits

Secondaries can also be a useful compliance tool. Insurers, for example, when they invest in private markets, have to keep a certain amount of capital in reserve to cover potential losses arising from such investments. By using the secondaries market, insurers have been able to sell some of their positions and, in doing so, meet the capital cover they are required to hold to stay within the rules.

Expected growth

While the secondaries market is still a relatively new kid on the block - it grew out of the dot-com crash when worried investors were looking for an early exit from their PE investments - analysts expect secondaries’ share of the overall market to continue growing rapidly as the broader private market industry matures.

In a survey of LPs taken in April 2024, secondaries topped their list of the most attractive private markets strategies over the next 12 months, Preqin found, with 64 percent of LPs citing it as the best opportunity. Estimates from Coller EQT point to roughly $500bn in annual volume by 2030 as the opportunity set continues to widen.