GP-led secondaries hit record levels in 2026

The private equity secondaries market has witnessed unprecedented growth, reaching a record $233 billion in 2025 and continuing its upward trajectory into 2026 with H1 volumes surpassing $120 billion, as reported by Evercore. This expansion is fueled by both GP-led and LP-led transactions growing in tandem, with GP-led deals alone contributing $65 billion in the first half of 2026. Leah Lazarek Calver highlights that GPs increasingly view continuation vehicles as strategic tools to retain high-quality assets longer while providing much-needed distributions to investors amid subdued M&A activity, marking a transformative shift in market dynamics.

LPs are leveraging the secondaries market not merely as a liquidity outlet but as an active portfolio management mechanism, driven by favorable pricing and enhanced market liquidity. Jan Rabat of Dawson underscores that about 40% of LPs remain overallocated to private equity, prompting tactical reallocations that propelled LP-led volumes past $120 billion in 2025, with projections of $150 billion in 2026. This evolution from a reactive crisis-era tool to a proactive, established strategy is echoed by Pauline Wetter of LGT Capital Partners, who stresses that secondaries now address fundamental liquidity needs within portfolio management frameworks.

Regional distinctions shape the secondaries landscape, with Europe exhibiting a more mid-market orientation compared to the U.S., reflected in differences in seller composition and transaction types. Nick Marandi notes this nuanced seller base, while Gabriel Molleberg observes a cultural shift among European LP sellers toward greater pragmatism, increasingly willing to accept discounts to unlock capital—a mindset long prevalent among U.S. plans. This convergence signals a maturing European market aligning more closely with U.S. behaviors, thereby broadening the global secondary ecosystem.

The supply side of the secondaries market is fundamentally anchored in the massive inflows into private equity over the past decade and the inevitable turnover of these investments. Michael Granoff of Pomona explains that the vast universe of tens of thousands of private companies held within private equity portfolios necessitates ongoing liquidity solutions, a pattern unlikely to abate in the medium term. This structural underpinning, combined with secular and cyclical liquidity demands, ensures that the secondaries market will remain a vital and growing component of private equity’s broader ecosystem.

By mid-2026, GP-led continuation vehicles (CVs) have surged to prominence, growing to a scale comparable to the LP-led secondaries market and cementing their role as a mainstream mechanism within private equity. This evolution reflects a strategic shift where middle-market firms leverage CVs not only to extend asset hold periods but also to unlock liquidity on carried interest, thereby reshaping traditional exit pathways. As a result, these vehicles are enabling GPs to retain fee-paying assets under management longer, which in turn bolsters management fees and alters the dynamics of GP stakes investing by reducing the frequency of asset sales to subsequent private equity buyers.

By early 2026, private credit secondaries had emerged as a dynamic and fast-growing segment, constituting around 10% of the overall secondary market and exhibiting strong fundraising momentum fueled by the asset class’s yield-producing characteristics. This growth is notably driven by GP-led continuation vehicles, which accounted for approximately 83% of the $20.4 billion transaction volume in the first half of 2026, reflecting GPs’ strategic use of continuation funds to provide earlier liquidity to LPs while optimizing mature portfolios and extending the duration of performing assets.

The private credit secondaries market is increasingly shaped by liquidity pressures and investor demand for portfolio rebalancing amid rising concerns over concentration risk and GP dispersion. Institutional investors, as Rakesh Jain highlights, are leveraging secondaries to manage exposures and adjust allocations, while redemption pressures in business development companies (BDCs) and semi-liquid vehicles are creating fresh secondary opportunities. Despite elevated redemption requests not yet translating into a surge of secondary transactions, market participants like Michael Schad anticipate that ongoing uncertainty and liquidity needs will continue to fuel robust deal flow, potentially propelling the market to $50 billion by 2027.

While private credit secondaries offer compelling liquidity solutions, the segment may exhibit greater cyclicality than private equity secondaries due to investor sensitivity around pricing of senior secured assets. As noted in early 2026, this potential for heightened cyclicality has not yet fully manifested but remains an important consideration for market participants navigating this evolving landscape. Meanwhile, the broadening base of sponsors and buyers engaging in private credit secondaries signals wider market adoption and maturation, underscoring the segment’s transition from niche to mainstream within the secondary ecosystem.

By mid-2026, secondaries had transcended their traditional role as opportunistic, discounted purchases to become integral tools for active portfolio management within LP portfolios. Jake Elmhirst of Coller Capital emphasized that secondaries—both LP-led and GP-led—serve as strategic solutions addressing liquidity needs and enabling continued investment in high-quality assets. This evolution demands enhanced underwriting skills and a proactive management approach, reflecting a broader shift towards integrating secondaries into holistic, actively managed private market strategies.

Secondaries have firmly established themselves as core holdings in LP portfolios due to their unique combination of diversification benefits, transparency, and proximity to exit events. Analysts highlight that these investments, often purchased at discounts to NAV, offer more predictable and stable returns than primary commitments, with median returns surpassing those of buyout, growth, and venture funds. This reliability and risk mitigation make secondaries particularly attractive for newer investors and wealth platforms seeking a solid foundation for holistic portfolio construction.

The contemporary secondary investment strategy prioritizes acquiring high-quality, growing assets at fair prices over chasing deep discounts, ensuring sustainable returns irrespective of market subscription velocity. As articulated in 2026 analyses, this disciplined approach aligns with LPs’ goals to build resilient portfolios that balance growth and risk, underscoring why GP-led continuation vehicles and LP-led secondaries have become favored mechanisms for both liquidity and long-term value creation.

By early 2026, the middle-market GP stakes arena has emerged as a vast, largely untapped opportunity, with over 700 GPs managing $1-10 billion in AUM yet to sell stakes, highlighting significant potential beyond the saturated large-deal segment. Investors emphasize underwriting scalability and sustainable competitive advantages—such as operational expertise or sourcing capabilities—favoring GPs at Fund 3 or later to ensure profitability and genuine track records rather than mere paper gains. This rigorous due diligence often reveals operational gaps, prompting investors to offer resources like upgraded CFOs or enhanced back-office support, but a GP’s willingness to embrace such changes remains a critical investment litmus test.

The rise of GP-led continuation vehicles (CVs) is reshaping middle-market GP stakes investing by enabling firms to retain assets longer, thereby expanding fee-paying AUM and providing liquidity on carried interest. This shift allows GPs to reset management fees and roll carry into new funds, effectively aligning incentives and enhancing long-term sustainability. As one analyst noted, "Continuation vehicles, single and multi asset... reset their management fees on those assets which we get our share of again... that trend is happening very quickly," underscoring how CVs are supplanting slower M&A activity and fueling growth in the middle market.

Successful GP stakes investing hinges on meticulous underwriting of GP readiness and growth plans, focusing on top-quartile managers operating in segments with positive capital flows to avoid simply enabling GPs to cash out. This involves assessing market size, performance persistence, and strategic expansion—whether through scaling fund sizes or branching into adjacent products like credit—while ensuring existing LPs support growth ambitions. Notably, around 80% of GP stakes capital is primary, deployed onto GPs’ balance sheets to fund investments in flagship funds or new products, reinforcing a model centered on partnership and value creation rather than extraction.

By mid-2026, private equity investors grapple with mounting capital constraints amid ever-expanding fund sizes and an accelerating fundraising cadence by sponsors, intensifying pressure on LPs to deploy capital efficiently. The secondaries market has emerged as a vital pressure valve, offering much-needed liquidity to navigate these challenges. However, despite growing market activity, LPs remain cautious about direct involvement in secondaries and continuation vehicles, as highlighted by BCI’s global head of private equity who described such participation as 'the exception, not the norm.' This hesitancy underscores persistent valuation uncertainties and market complexities that temper enthusiasm even as demand for alternative access grows.

Continuation vehicles have evolved over the past decade from niche instruments into mainstream exit strategies, prompting a diversification of capital sources. Traditional investors and an increasing number of family offices are now proactively raising capital to lead investments in these vehicles, effectively broadening the capital base available for continuation transactions. This shift not only reflects adaptation to market dynamics but also signals a structural transformation in private equity, where innovative fundraising approaches—such as BCI’s newly launched capital solutions strategy—seek to provide structured access and attractive returns amid LP-GP alignment challenges and evolving market conditions.