About Secondaries

What is the private equity secondaries market?
The market provides liquidity to private equity investors, allowing them to sell positions in private equity funds and liquidate equity stakes in private companies. (The latter transactions are known as 'direct' or 'synthetic' secondaries, or sometimes simply as ‘directs’.)

The need for liquidity
All secondary markets are a natural consequence of large pools of capital, investors’ strategies and situations change over time and this creates the need for additional liquidity. Commercial loans, mortgages and various types of insurance are just some of the areas that have developed active secondary markets. Indeed, in terms of the vast bulk of their transactions, the world’s stock exchanges are secondary markets.

Private equity is an illiquid asset class, with funds usually structured as ten year partnerships, and it was therefore inevitable that it, too, would develop a secondary market.