Factors fueling the growth of secondary markets

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22 April 2025

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1 minute(s) read

The private equity secondary market has transformed from an obscure corner of alternative investments into a thriving ecosystem with record-breaking transaction volumes. As we previously touched on the origin of secondary markets in private equity, this market emerged as a solution to the fundamental illiquidity challenges found in private equity, where traditional closed-end fund structures typically lock up capital for 7-10 years or longer.

Secondary market tailwinds are here to stay

What was once a niche market primarily serving distressed sellers, has now evolved dramatically. The global secondary market saw an all-time-high in transaction volume of $160 billion in 2024, representing substantial growth from $114 billion in 2023 and $103 billion in 2022. Over the past decade, secondaries have grown at an impressive compound annual rate of 18%, outpacing even the robust 15% growth rate of the primary private equity market¹.

This robust growth can be attributed to the favourable market environment especially over the last few years, but more importantly to long-term structural changes within private markets.

GLOBAL SECONDARIES TRANSACTIONS ($BN)

Source: Evercore Secondary Market Review 2024. Note: CAGR stands for Compound Annual Growth Rate.

Benefit from the current macroeconomic landscape…

The current macroeconomic environment has created favourable conditions for secondary market growth. Elevated interest rates have impacted traditional exit pathways, with both IPO activity and M&A transactions experiencing significant slowdowns. Consequently, private equity managers have extended holding periods for portfolio companies, creating a mismatch between fund lifecycles and investor liquidity expectations.

This prolonged holding period phenomenon has had cascading effects throughout the private equity ecosystem. As fund managers continue to retain investments beyond anticipated timelines, limited partners (LPs) face delayed distributions, potentially hampering their ability to make new commitments. Some institutional investors have also found themselves overallocated to private equity relative to public market investments due to the denominator effect—where declining public market valuations automatically increase the percentage allocation to private assets. These factors collectively create compelling motivations for LPs to consider secondary sales.

… as well as long term structural needs from Private Equity firms

The sustained growth of the private equity secondary market is being propelled by transformative structural trends that are reshaping the industry landscape. One pivotal development is the growing sophistication of investors, who are proactively recalibrating their portfolios to align with strategic priorities or respond to evolving market dynamics. Rather than viewing secondaries as a last resort, investors now leverage them as a strategic tool to optimize portfolio management. For example, the California Public Employees' Retirement System (CalPERS)—the largest public pension fund in the United States—launched a secondaries program in 2022 and has since been active in the secondaries market, as both a buyer and seller.

The exchange of hands of PE portfolios is hence becoming more mainstream, leading transaction volumes in the secondary market to experience substantial growth. By 2025, the number of LPs signalling intentions to divest private equity positions is expected to be 2.5 times higher than in 2019², further accelerating deal activity and cementing the secondary market's role as a cornerstone of modern portfolio management. This trajectory underscores a future where secondary transactions become increasingly integral to institutional investment strategies, providing greater flexibility and improved investment management.

Exploiting this segment’s potential: Carmignac Private Evergreen

The secondary market's expansion shows no signs of slowing down, with some projections suggesting annual transaction volumes potentially reaching $200 billion by 2025³. As the market matures, we can expect further innovations in transaction structures, pricing mechanisms, and accessibility. Funds such as Carmignac Private Evergreen are already capitalizing on these trends.

¹Source: Evercore 2024 Secondary Market Review. ²McKinsey Global Private Markets Report 2025. ³Bain & Company, Global Private Equity Report, Private Equity Outlook 2025.

Carmignac Private Evergreen

Granting privileged access to diversified private equity opportunitiesDiscover the fund page

Carmignac Private Evergreen A EUR ACC

ISIN: LU2799473124

Recommended minimum investment horizon: 5 years

Risk indicator*: 6/7

SFDR - Fund Classification**: Article 8

*Risk Scale from the KID (Key Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time. **The Sustainable Finance Disclosure Regulation (SFDR) 2019/2088 is a European regulation that requires asset managers to classify their funds as either 'Article 8' funds, which promote environmental and social characteristics, 'Article 9' funds, which make sustainable investments with measurable objectives, or 'Article 6' funds, which do not necessarily have a sustainability objective. For more information please refer to https://eur-lex.europa.eu/eli/reg/2019/2088/oj.

Main risks of the fund

Liquidity: Should exceptionally large redemptions be made, forcing the Fund to sell, the illiquid nature of assets might require the Fund to liquidate assets at a discount in particular under unfavorable conditions such as abnormally limited volumes or unusually wide bid-ask spreads.Valuation: The valuation method, which is partly based on accounting data (quarterly or semi-annually computed), and the difference in lag with which NAVs are received from the General Partners, could reflect impacts on NAV with a delay. Moreover, NAV is sensitive to the valuation methodology adopted.Discretionary Management: Investors rely solely on the discretion of the Portfolio Managers, and the level of transparency of the information available, to select and realize appropriate investments. There is no guarantee in the ultimate success of investments.Limited control over secondary investments: Where the Fund makes an investment on a secondary basis, the Fund will generally not have the ability to negotiate the amendments to the constitutional documents of an underlying fund, enter into side letters or otherwise negotiate the legal or economic terms of the interest in the underlying fund being acquired. The underlying funds in which the Fund will invest generally invest wholly independently.

The Fund presents a risk of loss of capital.

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Carmignac Private Evergreen: Letter from the Fund Managers

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MARKETING COMMUNICATION. Please refer to the KID/KIID/prospectus of the fund before making any final investment decisions.
The decision to invest in the promoted fund should take into account all its characteristics or objectives as described in its prospectus. This document may not be reproduced, in whole or in part, without prior authorisation from the management company. It does not constitute a subscription offer, nor does it constitute investment advice. The information contained in this document may be partial information and may be modified without prior notice. The Management Company can cease promotion in your country anytime. Investors have access to a summary of their rights on the following link (paragraph 5): https://www.carmignac.com/en/regulatory-information. The Sustainable Finance Disclosure Regulation (SFDR) 2019/2088 is a European regulation that requires asset managers to classify their funds as either 'Article 8' funds, which promote environmental and social characteristics, 'Article 9' funds, which make sustainable investments with measurable objectives, or 'Article 6' funds, which do not necessarily have a sustainability objective. For more information, please refer to https://eur-lex.europa.eu/eli/reg/2019/2088/oj. Reference to certain securities and financial instruments is for illustrative purposes to highlight stocks that are or have been included in the portfolios of funds in the Carmignac range. This is not intended to promote direct investment in those instruments, nor does it constitute investment advice. The Management Company is not subject to prohibition on trading in these instruments prior to issuing any communication. The portfolios of Carmignac funds may change without previous notice. Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations. Carmignac Private Evergreen refers to the Private Evergreen sub-fund of the SICAV Carmignac S.A. SICAV – PART II UCI, registered with the Luxembourg RCS under number B285278. Access to the Fund may be subject to restrictions with regard to certain persons or countries. The Fund may not be offered or sold, directly or indirectly, for the benefit or on behalf of a U.S. person, according to the definition of the US Regulation S and/or FATCA. The Fund presents a risk of loss of capital. The risk, fees and ongoing charges are described in the KIDs (Key Information Document). The Fund's respective prospectuses, KIDs, NAV and annual reports are available at www.carmignac.com, or upon request to the Management Company. The KIDs must be made available to the subscriber prior to subscription. In Switzerland, the Fund’s respective prospectuses, KIDs and annual reports are available at www.carmignac.ch, or through our representative in Switzerland, CACEIS (Switzerland), S.A., Route de Signy 35, CH-1260 Nyon. The paying agent is CACEIS Bank, Montrouge, succursale de Nyon/Suisse, Route de Signy 35, 1260 Nyon. The KID must be made available to the subscriber prior to subscription. In the UK, the Funds’ respective prospectuses, KIDs and annual reports are available at www.carmignac.co.uk, or upon request to the Management Company. This material was prepared by Carmignac Gestion, Carmignac Gestion Luxembourg or Carmignac UK Ltd and is being distributed in the UK by Carmignac Gestion Luxembourg.