In fact, the private equity secondaries market has existed in principle for 15 years or more, but it is only in the last few years that it has really taken off. Less than $4 billion was raised worldwide by secondary funds in the period from 1991 to 1997 – whereas a sum larger than this total was raised in 2003 and in each year since.

Why do private equity investors sell in the secondaries market?
A few years’ ago, some commentators suggested that secondaries were a temporary phenomenon: that the market had developed as a result of rash investors in the ‘internet bubble’ being forced to sell their private equity portfolios cheaply, and that it would therefore evaporate when this need dried up.

However, this notion never adequately reflected the reality of the secondaries market or indeed of the underlying primary market. In point of fact, the number of distressed sellers was always smaller than was popularly supposed.