How are LP-led secondaries reshaping private market liquidity?

A recent PitchBook article explored the surge in LP-led secondaries, featuring insights from Sam Whitaker, a partner in DLA Piper’s Investment Management & Funds team.

Once viewed as a niche liquidity solution for LPs, LP-led secondaries have evolved into a core component for LPs in managing portfolio allocations.

Building on that discussion, DLA Piper offers additional analysis on how these transactions have matured, the forces driving their growth, and what this shift means for investors navigating today’s more complex liquidity environment.

 

Why the surge?

Several forces have driven this growth. First, liquidity pressures have intensified. Distributions from private funds have slowed, leaving LPs searching for ways to free up capital for new commitments or re-balance their portfolio allocations. Selling fund interests on the secondary market has therefore become an effective way to achieve this without waiting until the end of the life cycle of a fund.

Second, holding periods have lengthened. For many investors, that’s too long to keep capital locked up, especially when market conditions remain uncertain.

Finally, regulation and strategy have played a role. For some LPs, secondaries offer a practical way to meet compliance requirements or adjust exposures. What was once reactive, selling when liquidity was tight, has become proactive, with investors using secondaries as part of their long-term planning.

 

How the market has evolved…

The LP-led segment has matured quickly. Deal sizes have grown significantly, with billion-dollar transactions now commonplace. In 2024 alone, there were 27 such deals, up from 19 the year before [source: Blossoming New Era of Secondaries]. These transactions often involve multiple portfolios and require bespoke structuring to meet the needs of different investors.

Pricing has also improved. Discounts to net asset value, once a defining feature of secondaries, have narrowed as confidence in the market has grown. For high-quality portfolios, pricing is now much closer to NAV, thanks to strong competition among buyers and the depth of capital available.

The buyer base has broadened too. Specialist secondary funds still dominate, but family offices, evergreen vehicles, and even some primary managers have entered the market, attracted by the chance to invest in seasoned assets with greater visibility on performance.

 

What does this mean for LPs?

For investors, LP-led secondaries have become a powerful tool for active portfolio management. They allow LPs to fine-tune exposures, exit non-core positions, and manage liquidity without disrupting broader strategies. They also help mitigate risk by reducing concentration and improving resilience, particularly valuable in today’s uncertain macroeconomic environment.

For regulated entities, secondaries can also ease compliance pressures, enabling them to adjust holdings in line with capital adequacy or diversification requirements.

 

Looking to the future…

The rise of LP-led secondaries marks a structural shift in the private funds market. Several factors point to continued growth:

• the development of semi-liquid fund structures, record levels of dry powder among secondary buyers, and
• increasing institutional adoption of secondaries as a standard portfolio tool.

As these dynamics continue to evolve, LP-led transactions are set to remain a key feature of private market liquidity strategies, no longer a fallback option, but an integral part of how investors manage capital.

DLA Piper’s Investment Management & Funds team advises fund sponsors and investors across the spectrum of private capital strategies, including secondary transactions, liquidity solutions, and portfolio management. For more information, please contact Sam Whittaker, or a member of our team.