Golding’s core argument will be familiar to anyone who has tracked the small-cap buyout thesis: less standardization means fewer competing bidders, wider pricing dispersion, and — for managers with the underwriting muscle to do the work — the potential for outsized returns. The flip side is that the same lack of standardization is where lower-end CVs go wrong.

The framing shift: CVs as toolkit, not workaround

The paper opens by dispatching what it calls an “outdated” view — that continuation vehicles are primarily a release valve for weak exit markets. Citing Preqin’s Private Equity in 2026 survey, Golding notes that 52% of investors now consider the GP-led secondaries strategy attractive and 38% are active as buyers or sellers, with single-asset CVs dominating that activity. KPMG’s estimate that continuation vehicles already represent roughly a fifth of sponsor-led exits is presented as confirmation that the structure has moved from cyclical patch to permanent fixture of the private equity lifecycle.

That framing aligns closely with the editorial position this publication has taken repeatedly: secondaries, including GP-leds, are portfolio management tools rather than distress signals. Golding’s contribution is to push that argument down-market, where — the paper argues — the dynamics are structurally different from the large-cap CVs that dominate headline volume figures.

Seven pitfalls, one underlying theme

The bulk of the paper is organized around a framework of seven recurring failure modes that Golding says it sees across cycles and geographies in the lower end of the market. The through line across all seven is that smaller CVs are more “situation-specific” — fewer standardized data rooms, more concentrated investor groups, and managers whose organizational capacity may not scale with the size of the vehicle relative to their existing fund program.

The governance lens: why rationale drives conflict management

The Linklaters-authored governance sections — credited to Martin Mager and Zornitsa Chorbadzhiyska — make a structural argument that’s worth flagging separately from the investment framework. Their point is that the sponsor’s inherent conflict in a GP-led deal (representing both the selling fund and the buying vehicle) isn’t resolved by documentation alone. Where the transaction rationale is genuinely credible — a defined growth phase, an operational transformation — disclosure tends to be more comprehensive and LPAC engagement “more constructive,” even where investors disagree on price. Where the rationale is weak, the paper argues, governance mechanisms get asked “to do more than they can realistically deliver,” and tensions surface as compressed timelines and selective disclosure.

This is a useful framing for LPs evaluating CV consents: the quality of the process itself can be read as a signal about the quality of the underlying rationale.

Practitioner notes: pricing, leverage, and the “bridge” toolkit

Beyond the seven pitfalls, the paper closes with three market-practice observations framed as neither risks nor opportunities in themselves, but as execution trends specialist investors are increasingly navigating:

Bridging valuation gaps — deferred consideration, earn-outs, and performance-linked instruments are described as most effective when negotiated early through trust-based GP dialogue, rather than bolted on late to win a competitive process.

Pricing convergence with M&A logic — Golding notes that GP-led pricing, historically anchored to discounts off last reported NAV, is increasingly converging with traditional M&A methodologies, including concurrent debt refinancings. W&I insurance use is rising but remains selective at smaller deal sizes, reflecting a cost-versus-risk-transfer trade-off.

Vehicle-level leverage as a value driver — or not — the paper is blunt that incremental structural leverage at the vehicle level “rarely enhances the underlying economics of the asset itself” in the lower-middle market, where value creation is operational rather than financial-engineering-driven.

The takeaway

Golding’s framework doesn’t break new conceptual ground for readers steeped in the GP-led literature — the tension between rationale and structure, the conflicted-sponsor problem, and the case for the small- and mid-market have all been made before by various secondaries platforms. What this paper does is package those arguments specifically around the European sub-€500 million segment, with a governance overlay from Linklaters that goes deeper on process design than most LP-facing secondaries marketing material typically does. For an audience increasingly asked to evaluate CV consent requests on tight timelines, the seven-pitfall checklist functions less as new insight and more as a structured diligence template — which may be exactly the point.

The Performance Baseline

EQT now presents four business lines with their own realized return metrics: Private Capital, Infrastructure, Real Estate, and Secondaries. For Secondaries — Coller Capital’s track record — the deck shows a 15% realized Net IRR and a 1.7x realized MOIC. Both are competitive numbers for a top-tier dedicated secondaries manager.

Although, the other three business lines show Gross MOIC. The endnote confirms that the 1.7x for Secondaries is actually Net MOIC. To put it in perspective: if Coller's MOIC were restated on a gross basis — as EQT reports for its other three strategies — the number would be higher than 1.7x. How much higher depends on the fee and carry structure, but the direction is clear. The Secondaries segment may be closer to its peers than the slide suggests.

The Financial Projections

Beyond performance, the Value Creation Day endnotes contain something more forward-looking: EQT’s own projections for what Coller Capital will contribute financially in 2026. These figures were disclosed as part of the transaction rationale at announcement in January, but their appearance in a capital markets day presentation — in the context of a firm talking to shareholders — gives them a different weight.

A ~50% fee-related EBITDA margin is notable even by alternative asset management standards. For context, the listed alternatives managers that most investors use as a reference point — StepStone, Hamilton Lane, Partners Group — typically report FRE margins in the 35–45% range. A 50% margin on a dedicated secondaries platform reflects the relatively lean operating model of a focused fund manager: Coller does not run a large direct investment team, does not require operational resources to manage portfolio companies, and benefits from the scale of managing large pools of capital with a relatively small professional headcount.

The $40bn fee-generating AUM figure is also important to contextualize. Coller’s total AUM at close is approximately $49bn — the gap between total AUM and fee-generating AUM reflects assets in older, winding-down funds that are past their fee-earning periods. The $40bn figure is the commercially relevant number: it is the base on which management fees are calculated and against which any new fundraising adds directly to fee revenue.

— EQT VALUE CREATION DAY 2026, CLOSING STRATEGIC SUMMARY

What the July 17 Report Will Tell Us

EQT’s H1 2026 half-year report — scheduled for July 17 — will be the first earnings release in which Coller Capital’s financials appear as a consolidated segment, assuming the transaction closes on its expected mid-to-late Q3 2026 timeline. There is a real possibility that the close happens after the H1 reporting date, in which case Coller will not yet be consolidated but EQT may provide a pro-forma view. Either way, July 17 is the first moment at which the secondaries strategy shifts from a transaction story to a business performance story.

The questions that report needs to answer — and that the Value Creation Day data now allows us to benchmark against — are straightforward. Is Coller’s fee-generating AUM on track to reach $40bn by year-end? Are revenues running at the $350–375m pace? And critically: how is the integration being structured — does Coller operate as a standalone segment with its own reporting, or does EQT fold it into a broader solutions-oriented line that makes segment-level performance harder to parse?

For secondaries market watchers, the integration of Coller into EQT is not just a consolidation story. It is the first test of whether a dedicated secondaries platform can maintain its performance edge inside a large, multi-strategy manager — a question the industry has not yet had to answer at this scale. The $3.2bn acquisition price implies a high bar. The 50% EBITDA margin tells you Coller is a structurally excellent business.

That sentence, from one of the most widely read institutional research firms in private equity, lands at a significant moment. GP-led secondaries volume reached $115 billion in 2025, according to Jefferies — up 53% year-over-year, with continuation vehicles representing 89% of that activity. The market has spent the better part of three years arguing that CVs have matured from an opportunistic tool into a structural feature of the private equity ecosystem. Bain’s midyear read suggests that structural case now faces a real test.

The mechanics of the friction

The report identifies the core tension clearly. A four-year stretch of record-low distributions has left LPs across the institutional landscape starved for cash. The implied capital cycle for the buyout industry now sits at approximately seven years — well above historical norms. Roughly one in five LPs, per an April 2026 ILPA poll cited in the report, are actively reducing their buyout allocations due to liquidity pressure or lower return expectations.

That creates an obvious appetite for liquidity solutions. The complication is that the same distribution drought has made LPs acutely sensitive to the price at which liquidity arrives. The report cites a separate ILPA poll finding that the majority of LPs begin losing confidence in a GP once an exit discount to last reported mark exceeds 5%. For GPs running continuation vehicle processes, this is a narrow corridor to navigate: LPs need liquidity, but not at a price that calls their portfolio marks into question.

The result is a self-reinforcing tension. GPs are reluctant to bring assets to market at discounts that would undermine LP confidence in their valuation discipline. LPs, meanwhile, are increasingly skeptical of marks on assets that were underwritten before the pandemic and have since weathered inflation, rate hikes, trade disruption, and now AI-driven uncertainty. The longer an asset sits — and Bain’s data shows that a majority of buyout NAV in North America and Western Europe comes from assets acquired in 2021 or earlier — the more that skepticism compounds.

A harder market for second-tier assets

Bain is careful to note that the secondary market is not broken. High-quality assets with strong strategic value continue to clear, and at strong prices. The friction is concentrated in what the report calls “a second tier of assets” — older or more challenged positions where buyers cannot get comfortable with proposed marks given uncertainty about future performance.

This has direct implications for the CV market. The continuation vehicle as a product was built, in part, on the premise that it allows GPs to ring-fence their best assets and offer LPs a clean choice: roll or exit at fair value. That logic holds for genuinely premium assets. For the broader portfolio of aging positions — the 2018–2021 vintages that have been through years of disruption without producing distributions — executing a CV process that satisfies LP price expectations is becoming structurally harder.

The MSCI data in the report offers some counterweight. More than 75% of buyout assets are still exiting above their next-to-last quarterly mark, broadly consistent with historical patterns. The relationship between marks and realized exit values has, so far, held up better than LP perception might suggest. But perception matters in fundraising, and LP confidence in GP marks is an input to every CV negotiation.

Our Secondaries’ read

The Bain report does not cover secondaries market volumes or fundraising — for that, the Jefferies and Evercore annual reviews remain the primary sources. What it adds is a granular picture of the LP behavior dynamics feeding into secondary deal flow: the distribution drought, the valuation sensitivity, the mounting pressure on aging portfolios.

The 5% markdown tolerance threshold from the ILPA poll is the most operationally specific data point in the report for secondaries practitioners. It quantifies, with survey evidence, the pricing band within which GP-led processes must operate to preserve LP relationships. As CV volume scales and the asset quality distribution widens — from flagship single-asset processes to older, more challenged fund restructurings — that 5% ceiling will be tested with increasing frequency.

Bain’s warning on CV execution difficulty is not a prediction of market reversal. It is a calibration: the easy part of the GP-led boom, when any high-quality asset could clear a CV process with LP support, may be giving way to a more selective, more negotiated, and more LP-scrutinized market. That is, ultimately, a sign of a maturing asset class — but maturation has friction costs, and 2026 is where those costs are beginning to show up.

Sources: Bain & Company, Private Equity Midyear Report 2026. ILPA Webcast Poll, April 2026. MSCI Private Capital Solutions. Jefferies Global Secondary Market Review, January 2026.

“We believe that the credit secondary market is $20 billion today and will grow to over $80 billion by 2030, implying significant runway ahead.” Michael Hacker, Global Head of Portfolio Finance, Carlyle AlpInvest

The firm projects the $80 billion market by 2030 will be driven primarily by GP-centered transactions (~$55 billion), with LP interest sales making up the remaining ~$25 billion.

What Is Driving the Growth

The rise of credit secondaries tracks directly with the growth of private credit itself. Since the Global Financial Crisis, banks pulled back from leveraged lending and private credit managers filled the gap. The overall private credit market now stands at nearly $2 trillion in AUM, growing at a 13% CAGR since 2012, with direct lending alone compounding at 25% over the same period.

As the primary market matured, so did the need for secondary solutions. Private credit funds carry structural duration mismatches: investment periods end, but loans originated late in the cycle often remain outstanding well beyond a fund’s contractual life. Since 2022, rising rates have pushed borrowers toward amend and extend solutions, lengthening loan lives further. LPs holding these funds increasingly need a way out that does not require waiting for natural portfolio runoff.

Perceptions have shifted accordingly. Selling a private credit fund interest used to signal distress. Today, both GPs and LPs treat secondary transactions as a routine portfolio management tool.

Carlyle Is Betting on It

Carlyle’s own commentary from its February 2026 Shareholder Update reinforces the conviction. Co-President John Redett, speaking about the AlpInvest platform, was direct: “Credit secondaries, portfolio finance, and insurance should further accelerate growth when we look forward.” He described the broader secondaries market as doubling in size every four to five years, a tailwind he called both secular and structural rather than cyclical.

That confidence is grounded in scale. They have 375 GP relationships, data on 30,000 companies, and a 25-year track record. Redett noted that 75% of GPs they speak to today plan to use the secondary market in the next two years, up from roughly 25% five years ago.

What Comes Next

The market is still early. A 1% turnover rate on nearly $2 trillion in AUM means current volume is a fraction of what could theoretically trade. Even a move to 1.5% turnover would imply a market roughly double its current size, and it would still trail private equity secondaries penetration rates.

The trajectory from here depends on continued growth in the primary private credit market, broader GP and LP adoption of secondary solutions, and a deepening buyer base with the expertise to underwrite credit risk properly. All three are moving in the right direction, and the largest players are already positioning credit secondaries not as a niche strategy but as a core part of how the private markets ecosystem will function going forward.

Ardian just published its 2025 Integrated Report — and as expected, we went straight for the secondaries section.

In 1996, when Dominique Senequier was handed a mandate to build a private equity business inside AXA, the European secondaries market barely existed. Today, Ardian runs the world's largest secondaries platform, with $97 billion in Secondaries & Primaries AUM, a 110-person team spread across 14 offices on three continents, and a proprietary database absorbing five million data points every quarter. The 30th anniversary of the firm is also, in many ways, the coming-of-age story of the secondaries market itself.

FROM NICHE TO NECESSITY

A Market That Remade Itself

The secondaries market of 2025 is structurally different from anything that existed even five years ago. Private equity secondary volume reached approximately $240 billion in 2025 — up roughly a third on 2024, and double the volume recorded in 2023. Ardian projects the market will double again within three years, driven by forces it describes as “getting stronger and reinforcing each other.”

The first force is structural over-allocation. As exits slowed in the higher interest rate environment that followed 2022, LP portfolios have matured without the liquidity events that would normally rebalance them. More than 80% of unrealized value in buyout funds has now been held for at least four years — the point at which exits would historically begin to flow. Instead, IRRs for recent vintages have declined across the industry, and portfolio sales to the secondary market have accelerated sharply.

The second force is behavioral. Over the past two years, more than half of all secondary market sellers have been first-time sellers — a cohort that barely existed a decade ago. Ardian’s observation, drawn from its own deal flow, is that first-time sellers typically return: once LPs complete an initial secondary transaction and recognize it as a portfolio management tool, they become recurring participants. This creates a compounding effect on deal supply that is independent of the exit environment.

COMPETITIVE ADVANTAGE

Scale, Relationships, Information — and Why They Compound

Ardian identifies three mutually reinforcing barriers to entry. Scale enables it to write large checks with certainty of execution — evidenced by ASF IX, a $30 billion oversubscribed close in January 2025. Relationships are deepened by Ardian’s dual role: through Ardian Customized Solutions, it is also a significant primary LP in the same funds it transacts on the secondary side. That positioning unlocks GP consent on transfers and generates company-level data flows competitors cannot replicate. Information — captured through quarterly GP interactions at company level, covering forecasts, business plans, and exit timing — feeds iBIP, the firm’s proprietary database. Ardian runs bottom-up LBO analysis on every underlying company in its portfolio each quarter, building what it describes as a permanent state of due diligence.

The result is an origination capability that is proactive rather than reactive: Ardian develops a live buy-list and approaches GPs and LPs directly to propose continuation fund structures or portfolio sales. The same names that led the secondaries market a decade ago still lead it today — Ardian argues this persistence reflects how difficult the underlying loop is to break into at scale.

2025 IN NUMBERS

ASF IX, SACVs, and a Loss Ratio Below 1%

Private wealth clients accounted for 22% of ASF IX commitments — a structural shift in the LP base the firm is building for deliberately. On risk-adjusted returns, the sub-1% loss ratio across approximately $50 billion deployed over more than 20 years is the headline figure Ardian offers in a market where investor scrutiny of performance metrics is intensifying.

In the GP-led segment, single-asset continuation vehicles generated more than $60 billion in deal flow in 2025, up roughly 70% year-on-year and up from just $3 billion in 2018. SACVs now represent approximately a quarter of total secondary market volume. Ardian completed its first continuation vehicle on the sell side in 2025 — Syclef, a refrigeration services platform held for five years by the Expansion team — and has deployed approximately $800 million as a buyer in this segment, with about $1 billion in dry powder allocated and a stated priority of increasing that firepower over the next two years.

ADJACENT MARKETS & OUTLOOK

Infrastructure Secondaries and What Comes Next

Infrastructure secondaries — approximately $28 billion in deal flow in 2025, growing at 33% CAGR since 2021 — is the segment Ardian describes as mirroring where buyout secondaries were a decade ago: earlier in the curve, growing rapidly, and structurally undercapitalized. The market expanded from $10 billion to $25 billion in just two years. Ardian's first infrastructure secondaries fund closed in 2015 at $525 million; the current generation is roughly 15 times larger and raising in half the time.

“Information cannot be bought. It can only be assembled, quarter by quarter over decades, by those that have the scale, the right relationships, and the team to draw on 26 years of investment judgment.”

— Ardian 2025 Integrated Report

But embedded in his remarks was a data point that cuts to the heart of why Goldman has quietly built one of the most powerful secondaries franchises in the world — and why that business is better positioned today than at almost any point in its 25-year history.

THE NUMBER THAT MATTERS

“You’ve got $1 trillion of dry powder and $4 trillion of embedded portfolio company valuation owned by private equity and venture capital firms,” Waldron said, describing what he sees as a coiled spring in the M&A market. The implication: once PE firms begin exiting and redeploying in earnest, dealmaking activity could see another step-change higher.

Goldman knows this dynamic better than most — because it sits on both sides of it. As one of the world’s leading M&A advisors and one of its largest secondaries buyers, Goldman has a direct line of sight into the liquidity pressure building across the private markets ecosystem. That $4 trillion in unrealized portfolio value is not just M&A optionality. For the LPs holding aging positions in those portfolios, it is a liquidity problem. And liquidity problems are Goldman’s Vintage Strategies platform’s core business.

WHY EXITS MATTER FOR SECONDARIES

Waldron’s remarks also contained a detail that secondaries professionals will recognize immediately: PE-related M&A is down 4% year-over-year, even as corporate M&A has surged 62% over the same period. PE sponsors are not exiting at the pace the market needs. That means LPs are sitting on longer hold periods, facing portfolio concentration, and managing J-curve pressure from newer vintages — exactly the conditions that drive secondary market supply.

Goldman has built its Vintage platform around this structural reality. Active since 1998, the program covers LP portfolio sales, venture and growth secondaries, and GP-led continuation vehicles — the full spectrum of how secondaries have evolved from a niche liquidity tool into a core part of institutional portfolio management.

A PLATFORM BUILT FOR THE MOMENT

Goldman’s Vintage Funds tell the fundraising story clearly. Vintage VIII closed at $10.3 billion in 2020. Vintage IX closed at $14.2 billion in 2023 — above target, reflecting both LP demand for secondaries exposure and confidence in Goldman’s execution. Each successive fund has raised meaningfully more than its predecessor, tracking the broader expansion of the market.

Vintage X, launched in April 2025, has no stated target — only a stated ambition to surpass Vintage IX. By September 2025 it had already raised approximately $8 billion, putting it on pace to become one of the largest secondaries fundraises ever recorded. Alongside Blackstone Strategic Partners, Ardian, and Lexington Partners, Goldman has raised nearly $35 billion in secondaries capital over the past five years, cementing its position as one of the four or five firms operating at true mega-scale in this market.

The platform has also expanded beyond its PE secondaries roots. Goldman now runs dedicated strategies in infrastructure secondaries, real estate secondaries — Vintage Real Estate Partners III closed at $3.4 billion in 2024, the largest dedicated real estate secondaries fund raised at the time — and, following the January 2026 acquisition of Industry Ventures, venture capital secondaries.

THE MARKET BACKDROP

The scale of Goldman’s ambition is matched by the scale of the market opportunity. Global secondaries transaction volume hit a record $152 billion in 2024 and was tracking toward approximately $176 billion in 2025, according to industry estimates, with analysts projecting volumes above $200 billion by 2026. If those numbers hold, the secondaries market will have more than doubled in annual transaction volume in under five years.

Continuation vehicles are a major driver. GP-led transactions now account for nearly half of all secondary activity, with single-asset CVs making up a large share of that. Goldman’s own LP survey data adds another dimension: 45% of LPs surveyed reported being below their target allocation to secondaries — a persistent undersupply of capital relative to demand that supports pricing and deal flow for buyers like Goldman.

THE WEALTH CHANNEL AS THE NEXT FRONTIER

Waldron’s conference remarks also pointed to a longer-term structural tailwind that will matter for secondaries. Goldman is investing heavily in the RIA channel and third-party wealth platforms, with its cohort of RIA partners seeing assets grow 60% since 2024. The firm is actively educating wealth advisors on private markets and private credit — part of a broader push to bring institutional-grade alternatives to high-net-worth and mass-affluent investors.

For secondaries, this creates a two-sided opportunity over time. More retail and wealth channel investors entering private markets means more future LP supply — individuals and smaller institutions that will eventually need liquidity from their illiquid holdings. It also means growing demand for secondary fund structures designed for wealth platforms: shorter duration, more liquid, more accessible than traditional blind-pool commitments.

WHAT WALDRON DIDN’T SAY

Goldman Sachs’ COO was not talking about secondaries. His $5 trillion framing was a thesis about M&A recovery, not about secondary market dynamics. The connection is Secondary Scoop’s own editorial interpretation — and it is worth flagging that not all of that $4 trillion will flow through secondary channels. Much of it will ultimately exit through IPOs, strategic acquisitions, or sponsor-to-sponsor deals.

But the structural logic holds: a large and growing pool of unrealized value, slow traditional exit routes, an expanding LP base, and a secondaries market already approaching $200 billion in annual volume are the conditions under which this market continues to grow. Goldman’s data point simply puts a scale on the opportunity that most participants already intuitively understand.

The engine, as Waldron put it, has not yet turned on. Goldman has spent 25 years building the infrastructure to capture it when it does.

The operational scorecard on Landmark

A few weeks ago, Arougheti made the structural case for why Ares built its secondaries platform when it did. At Bernstein, he added a concrete milestone: since the Landmark acquisition roughly five years ago, Ares has doubled both the profitability and the AUM of the secondaries business. That number had not been stated publicly in those terms before. It puts a specific operational floor under what had previously been a thesis-level argument.

GP-led at nearly 50% — and the competitive moat behind it

The GP-led shift was central to the Q1 earnings call narrative. At Bernstein, Arougheti reaffirmed it: GP-led transactions now represent close to half of total secondaries deployment, a structural transformation he described as unlikely to reverse. What he added at Bernstein was the explicit competitive framing: the skillset required for GP-led — asset-level underwriting, deep and trusted relationships with the global GP community — is fundamentally different from buying LP portfolios at a discount. Ares, he argued, runs “probably the largest” GP coverage team in private equity and real assets of any secondaries platform. That claim, stated plainly, didn’t appear in the earnings call commentary.

Q1 pipeline: secondaries held up while direct lending slowed

On the earnings call, Arougheti made the counter-cyclical case for secondaries in broad strokes — volatility generates deal flow rather than suppressing it. At Bernstein he made it specific: Q1 activity in U.S. direct lending was slow, but secondaries was explicitly named as one of the areas seeing “real strength” in the pipeline, alongside asset-based finance and digital infrastructure. The diversification point is not new, but the direct callout of secondaries as a Q1 bright spot adds texture to the earlier argument.

Day-one markups: the debate Arougheti doesn’t think is a debate

This topic didn’t come up on the earnings call but got airtime at Bernstein. Arougheti pushed back firmly on the framing of day-one markups as a controversial “practice.” His position: GAAP requires that assets purchased at a discount to NAV be marked up to NAV, because every other holder of those same assets carries them at NAV. It is an accounting convention, not a choice.

Within the Ares context, the exposure is limited. The vehicle where it is most relevant is APMF, the firm’s wealth-channel secondaries fund, at approximately $3 billion in AUM. Around 58–60% of that portfolio is currently LP-led — the segment where day-one markups apply. That represents less than 10% of total Ares secondaries AUM. And as GP-led exposure grows within APMF — a stated priority — that percentage is expected to come down. Day-one markups are not a feature of GP-led transactions.

Taken together, the Bernstein appearance didn’t rewrite the secondaries thesis Arougheti laid out a few weeks ago — it reinforced it with operational specifics. The doubling of Landmark’s profitability and AUM since acquisition. The explicit Q1 pipeline strength. The GP-led competitive moat. And a clear-eyed rebuttal of the day-one markup conversation that has been circulating across the industry.

The core argument remains the same: the secondaries market is under-capitalized relative to the demand it serves, volatility accelerates rather than suppresses deal flow, and Ares built its platform early enough and broadly enough to be a primary beneficiary of both trends.

Looking ahead, Ares is set to have more to say later this week. The firm has announced that Co-President Blair Jacobson will present at the Goldman Sachs European Financials Conference — and given everything Arougheti laid out on the secondaries opportunity, we will be listening closely for the European angle. With GP-led activity accelerating and the continent's secondaries market still maturing relative to the U.S., there is plenty of ground to cover.

The message was clear. If the Q1 earnings call established AlpInvest as a cornerstone of Carlyle’s growth strategy, Schwartz’s latest remarks reinforced that view with even greater confidence. More importantly, the conference surfaced several new insights that could shape how investors think about secondaries over the next 24 months.

AlpInvest Signals a Return to the Fundraising Market

Perhaps the most significant development emerged almost casually during a discussion about Carlyle’s future fundraising cycle.

Schwartz noted that AlpInvest would be returning to market alongside Carlyle’s other flagship investment platforms. While he did not provide timing or fund details, the statement represents the clearest indication yet that a new AlpInvest fundraising effort is on the horizon.

The implications are substantial. AlpInvest currently manages approximately $107 billion in assets under management and has been growing at roughly 20% year-over-year. Any new fund launch—whether focused on secondaries, co-investments, or broader solutions strategies—would rank among the largest capital raises in the alternative assets industry.

At a time when institutional investors continue to increase allocations to secondaries strategies and wealth channels are expanding access to private markets, a new AlpInvest vehicle could become one of the most closely watched fundraises in the sector.

Carlyle Holds Its Ground on Day-One Markups

The conference also provided Schwartz with an opportunity to address one of the most debated topics in today’s secondaries market: day-one markups in GP-led transactions.

The issue has attracted increasing scrutiny from limited partners who argue that immediately increasing asset valuations upon transfer into continuation vehicles can inflate reported returns before any operational value creation occurs. Critics contend that the practice may disadvantage rolling investors and obscure underlying performance.

Asked directly about the controversy, Schwartz offered a concise but firm response.

Carlyle, he said, follows GAAP accounting standards and aims to apply valuation practices conservatively. Notably, he offered no indication that the firm intends to alter its current approach.

For market participants, the message was straightforward: Carlyle does not view the debate as a material threat to the GP-led continuation vehicle market, nor does it appear inclined to change its valuation methodology in response to growing criticism.

Software Weakness Is Creating Secondary Market Opportunity

One of the more interesting shifts from Carlyle’s Q1 narrative involved software exposure.

During the earnings call, management largely addressed software from a risk-management perspective, emphasizing that AlpInvest’s exposure remained diversified and broadly in line with market benchmarks. At Bernstein, however, Schwartz reframed the discussion entirely.

His argument was that persistent software valuation compression is becoming a significant source of secondary transaction volume.

Many private equity portfolios continue to hold software assets that cannot be exited at historical valuation levels. As a result, sponsors face longer holding periods while limited partners experience reduced liquidity. The pressure to rebalance portfolios creates demand for secondary solutions, including LP transactions, structured liquidity solutions, and continuation vehicles.

In Schwartz’s view, this environment positions AlpInvest as a capital allocation partner rather than merely a buyer of assets. As long as software exits remain constrained, the need for liquidity solutions may continue to grow.

The implication is notable: what some investors see as a headwind for private equity may actually be a tailwind for secondaries managers.

Middle Eastern Capital Remains Active Despite Regional Tensions

Another noteworthy observation came from Schwartz’s comments on fundraising conversations with Middle Eastern investors.

Despite heightened geopolitical tensions across the region, Schwartz indicated that sovereign wealth funds and institutional investors remain actively engaged in private markets allocation decisions.

He described ongoing conversations with investment partners who continue evaluating commitments and participating in fundraising discussions even amid escalating regional uncertainty.

For the secondaries market, this is an important signal. Gulf sovereign wealth funds represent some of the largest and most influential pools of capital in private markets. Their participation is often critical in large LP transactions, continuation vehicle financings, and flagship fundraises.

Market observers have speculated that regional instability could slow deployment activity. Schwartz’s firsthand observations suggest that, at least for now, allocation momentum remains intact.

The Bigger Picture

Taken together, Schwartz’s latest remarks reinforce a consistent theme: Carlyle sees the secondaries market entering a period of sustained structural growth.

A new AlpInvest fundraising cycle appears to be approaching. Software valuation pressures continue to generate liquidity needs across private equity portfolios. Major institutional investors remain engaged despite geopolitical uncertainty. And Carlyle shows no signs of retreating from industry debates surrounding GP-led transactions and valuation practices.

Three weeks after emphasizing AlpInvest’s strategic importance during earnings season, Schwartz has become even more explicit about the opportunity ahead.

For one of the industry’s largest secondaries platforms, the outlook remains decidedly bullish—and Carlyle appears intent on expanding its role at the center of that growth.

The headline numbers are striking. Hamilton Lane has now committed over $29 billion to secondaries across its platform’s history, deployed $5.5 billion in calendar 2025 alone, and is simultaneously running three distinct secondaries vehicles in market: its seventh closed-end LP-led secondary fund, its first dedicated GP-led secondary fund, and a growing suite of secondaries-focused Evergreen vehicles for both institutional and private wealth investors.

Yet the firm’s own description of its market position is notable for its candor. “If you look at us on a stack rank, weighting from just capital under management in the secondary space, we’re sort of a mid-tier player who has aspirations to be a top-tier player,” Hirsch told analysts. “We think we’ve got a lot of room to grow in that market environment.”

Hamilton Lane’s secondary history begins in the late 1990s, well before the market had reached any meaningful institutional scale. The firm completed its first GP-led transaction in 2014 — years before continuation vehicles became a mainstream tool — and has since built what it describes as a $20 billion-plus secondary platform through six closed-end fund vintages.

The fund progression tells a clear growth story. Secondary Fund V closed on $3.9 billion in 2021. Secondary Fund VI closed in June 2024 at $5.6 billion — the largest fund in Hamilton Lane’s history at the time, materially exceeding its $5 billion target — drawing from corporate and public pension funds, sovereign wealth funds, endowments, foundations, and private wealth platforms across more than 30 countries.

At the time of that close, Hamilton Lane’s secondaries platform stood at approximately $20.9 billion in assets under management. By the FY2026 earnings call, the figure had grown to over $29 billion in total committed capital across the platform’s history — a figure Hirsch cited as context for the firm’s scale and deal selectivity.

“Secondaries continue to offer one of the most compelling risk-reward profiles across private markets. Even after a record 2025, with a reported $240 billion of transaction volume completed, the market remains supported by a favorable supply-demand dynamic.”

— ERIC HIRSCH, CO-CEO, HAMILTON LANE — FY2026 EARNINGS CALL, MAY 21 2026

The Return Model: Appreciation, Not Just Discount

One of the most substantive parts of Hirsch’s secondaries commentary addressed a widespread misconception about how secondary returns are actually generated. The conventional narrative holds that secondaries managers earn their returns primarily by buying at a discount to NAV. Hamilton Lane’s data tells a different story.

— ERIC HIRSCH, CO-CEO, HAMILTON LANE — FY2026 EARNINGS CALL, MAY 21 2026

“After over 25 years of doing secondary deals and over $29 billion of committed capital, nearly 70% of our performance is achieved from the appreciation of the underlying investments post-purchase,” Hirsch said. “About 30% of our return came from good purchasing and good structuring.”

This framing has direct implications for how Hamilton Lane approaches pricing. The firm has paid premiums to NAV in numerous instances — explicitly — when conviction on underlying asset quality justifies it. “If we have high conviction that an asset marked today at $1 will ultimately be worth and sold for $3, we might gladly pay the seller $1.50 today,” Hirsch explained. When that happens, Hamilton Lane takes the asset onto its books below what it paid, showing a near-term loss — a deliberate choice that prioritizes long-term value over short-term optics.

The approach is validated by recent exit data. In Hamilton Lane’s sixth secondary fund, from calendar 2023 through 2025, there were more than 340 individual company exits across the underlying portfolio. On average, those assets were monetized at values nearly 9% above where they were marked two quarters prior to exit — consistent with the firm’s thesis that underlying company performance, not entry discount, is the primary driver of secondary returns.

The Market Context: Supply-Demand Still Favors Buyers

Hamilton Lane’s secondaries outlook is grounded in a structural market observation: despite record volumes, the secondary market remains supply-heavy relative to available capital. In 2025, the market transacted approximately $240 billion in volume — a record — yet available dry powder covers that volume at roughly one times. That imbalance, in Hamilton Lane’s view, continues to create an attractive backdrop for buyers: discounted entry, faster distributions, and a more muted J-curve.

Hirsch placed this within a longer arc of market growth. Secondary volume has grown at 18% annually from 2013 through 2024, with 2024 itself hitting a record $162 billion before 2025 surpassed even that. Hamilton Lane’s own deal flow reflects the scale: in calendar 2025, the firm reviewed enough secondary transactions to have deployed $5.5 billion while turning down 99% of total dollar deal flow. Hirsch was explicit that the rejection rate is not a function of competition pricing it out — it is a function of quality standards.

“We’re looking for really high quality assets managed by really high quality fund managers at an appropriate price,” he said. “The luxury of having as much deal flow as we have means that the team doesn’t need to agonize over things that don’t quite hit the bar. They just have a quick no, and they move on to the next thing.”

The GP-Led Expansion: A New Fund, a Long History

The most significant product announcement on the earnings call was the launch of Hamilton Lane’s first dedicated GP-led secondary fund. The timing reflects the segment’s maturation: what was an emerging transaction type a decade ago is now, in Hirsch’s words, “a mainstream high-quality part of the secondary toolkit.”

Hamilton Lane is not new to GP-leds. The firm completed its first continuation vehicle transaction in 2014, building a track record across buyout GP-led deals with a focus on high-quality middle market opportunities alongside GPs with whom it has longstanding relationships. The new dedicated fund formalizes that activity into a standalone vehicle — targeting a first close before calendar year-end 2026.

Hamilton Lane’s own research on the GP-led market, published in February 2026, points to the quality of assets flowing through continuation vehicles: across CV transactions the firm reviewed as an existing LP between Q4 2022 and Q2 2025, the average realized multiple of cost for selling funds was 4.5x across multi-asset CVs and 3.9x across single-asset CVs. GP alignment is also high — average GP commitment to CVs over the past three years has been approximately 9% of total commitments, with GPs rolling 100% or more of realized carry proceeds in 88% of deals.

“High-quality managers are now using GP-leds as a regular portfolio management tool, and in some cases, as an alternative to a traditional M&A exit or IPO.”

— ERIC HIRSCH, CO-CEO, HAMILTON LANE — FY2026 EARNINGS CALL, MAY 21 2026

Democratizing Secondaries: The Evergreen Push

Beyond its institutional closed-end franchise, Hamilton Lane has moved aggressively to bring secondaries exposure to a broader investor base through its Evergreen platform. In September 2025, the firm launched the Hamilton Lane Global Private Secondary Fund (HLGPS) — its 10th Evergreen vehicle and the first dedicated to secondaries within the platform. The fund opened to accredited high-net-worth investors and institutions across Europe, the Middle East, Asia, Latin America, and Canada. Demand at launch nearly doubled the target size, with commitments exceeding $365 million at commencement.

James Martin, Head of Global Client Solutions at Hamilton Lane, described the rationale at launch: “The secondary market has evolved into a permanent fixture in private markets and is one of the fastest growing strategies today, as evidenced by this fund being oversubscribed.”

By the FY2026 earnings call, Hamilton Lane’s overall Evergreen platform — which now includes multiple secondaries-focused vehicles — had reached $17.5 billion in total AUM, representing 64% growth year-over-year. Institutional investors now account for over 25% of inflows into Evergreen products, a share Hirsch described as rising, with large pension plans using Evergreen secondaries vehicles for tactical portfolio construction in ways that closed-end drawdown structures cannot support.

What Comes Next

Hamilton Lane enters the second half of calendar 2026 with three secondaries vehicles simultaneously in market — an unusually broad simultaneous deployment across LP-led, GP-led, and Evergreen structures. The seventh secondary fund and first GP-led fund both target initial closes in the coming months. A separately launched insurance-wrapped vehicle investing in secondary Evergreen offerings is designed to open the insurance channel as a new source of secondaries capital.

The firm’s strategic self-description — mid-tier with top-tier ambitions — is not false modesty. By AUM, Hamilton Lane sits below the dedicated secondaries giants that manage $50 billion or more. But by deal volume, data infrastructure, relationship depth, and the breadth of its product architecture, it is building the infrastructure of a much larger platform. The question, as Hirsch framed it, is not whether the opportunity is there. “The secondary space continues to be one of the most imbalanced in terms of just tons of volume, and frankly, not enough capital,” he said. The question is execution at scale.

“Why is there so much money available in secondaries?” O’Hanley asked. “It’s because there’s just this complete lack of transparency in what you’re buying, particularly if you’re trying to buy something or sell something quickly. So, okay, that was the NAV that was struck way back then. A quarter ago, a lot’s happened. I’ll give you a 20% haircut and we’ll buy that. Oftentimes that’s what the market is.”

It was a striking encapsulation of the LP-led secondary discount dynamic from someone running the world’s second-largest asset servicer — a firm that sits on the data flows of some of the largest institutional portfolios globally. And it was not an abstract observation.

“Why is there so much money available in secondaries? It’s because there’s just this complete lack of transparency in what you’re buying.”

— RON O’HANLEY, CHAIRMAN & CEO, STATE STREET CORPORATION — BERNSTEIN CONFERENCE, MAY 27 2026

Context: State Street Already Has Skin in the Game

O’Hanley’s comments carry particular weight given State Street’s own recent moves in the secondaries space. In November 2025, State Street Investment Management took a strategic minority stake in Coller Capital, one of the largest dedicated secondaries managers globally with over $46 billion in assets under management across institutional and semi-liquid private wealth vehicles.

The investment was positioned explicitly around the secondaries market’s growth trajectory — over $160 billion transacted in 2024, a 16% CAGR over the prior decade, with projections pointing toward $500 billion by 2030. State Street framed the deal as access to secondaries capabilities for its institutional client base, which spans more than 60 countries.

Two months later, in January 2026, EQT announced it had agreed to acquire Coller Capital for a base consideration of $3.2 billion. State Street’s minority stake converts to EQT equity as part of the transaction, expected to close in Q3 2026. Notably, EQT’s own rationale for the deal explicitly names the State Street distribution partnership as a mechanism for scaling the secondaries platform globally — meaning the commercial relationship survives and is arguably strengthened by the Coller acquisition.

The Tokenization Thesis: O’Hanley’s Proposed Fix

O’Hanley’s diagnosis of the secondaries discount problem was paired with a structural solution: tokenization. In his framing, the NAV staleness and transparency deficit that drives haircuts in LP-led secondaries are not permanent features of the market — they are data and infrastructure problems that tokenization begins to address.

“For some assets like real estate, [tokens] make the asset much more marketable, much more tradable to help secondary markets,” he said. “Tokenization will help that.” The implication is that tokenized representations of fund interests would allow real-time or near-real-time pricing, reducing the information asymmetry that buyers currently exploit.

This is not a new thesis, but it is notable when articulated by the CEO of a firm that manages $54.5 trillion in assets under custody and administration. State Street sits at the intersection of securities processing and cash settlement — precisely the infrastructure layer where tokenization has to function for secondary market price discovery to improve. O’Hanley acknowledged the transition will be long, describing a “bridge from traditional finance to digital finance” that plays out over years, not quarters.

The Servicing Opportunity: Complexity as Revenue

On the servicing side, O’Hanley pointed to the growing back-office complexity of alternatives managers as a structural opportunity for State Street — an argument with direct secondaries implications. As LP bases diversify and secondaries transactions increase turnover on cap tables, the operational burden on fund managers compounds.

“These firms were pretty simple when they got started,” he said. “They have LPs, but each LP wants something different. So their complexity in back office has gotten greater, which is an opportunity for us.”

State Street’s Alpha platform — its front-to-back institutional servicing solution — positions the firm as the outsource provider for this operational complexity. Longer contract terms (seven years and above, versus the prior four-year standard), full middle-office outsourcing, and interoperable open architecture are the commercial mechanics of locking in that complexity revenue.

The Bigger Picture for Secondaries

What O’Hanley’s Bernstein remarks illustrate is a major institutional platform moving from passive observer of the secondaries market to active participant — on both the investment management side (via Coller/EQT) and the servicing side (via Alpha). The framing of secondaries illiquidity as a solvable infrastructure problem, rather than an intrinsic feature of private markets, is consequential: it implies continued compression of the discount advantage that buyers have historically relied on.

For LPs weighing secondary exits, the medium-term direction of travel — better data, tokenized assets, more institutional servicing infrastructure — points toward tighter pricing. For secondaries managers, that same infrastructure buildout represents both competitive pressure and distribution opportunity, as platforms like State Street’s client network become channels rather than competitors.

When Rede Partners published its April 2026 report on the private equity opportunity in Poland, it was framed as a case for primary investment. The macro story is compelling — GDP above $1 trillion, growth running at three times the EU average, a $1.5 million-strong ecosystem of family-owned SMEs whose founders are approaching retirement age. But read between the lines, and what emerges is an equally compelling secondaries story: a market whose structural features are quietly assembling the conditions for a liquidity event that has not yet arrived.

Poland is the hub for private equity across the Central and Eastern Europe region, dominating transactions by value in 2024. PE firms have been established there for two decades. Yet the market remains conspicuously underpenetrated by international fund managers, and the LP base has historically been anchored by Development Finance Institutions rather than the diversified institutional pools that characterize more mature European markets. That combination — growing deal activity, limited LP diversity, and constrained exit infrastructure — is a familiar precursor to secondary market development.

The DPI Problem Is Real — and LPs Are Saying So

The most telling signal in the Rede report is not in the data — it is in the investor quotes. Multiple limited partners interviewed explicitly acknowledged that “consistent DPI generation has been hard” in the Polish and CEE market. That admission, from the LP community itself, is precisely the friction that creates secondary market demand. When distributions do not arrive on the expected schedule and fund lifecycles stretch, LPs look for alternative liquidity paths. In a market where IPO and trade sale activity is only now beginning to thicken, the secondary market is often the only viable route.

The exit data supports this reading. Sponsor-to-sponsor transactions — the category most directly connected to secondary market activity — represented only 13% of Polish PE exits in 2023 and 2024. The dominant exit routes were trade sales (45%) and public offerings (37%), with IPOs like Żabka and Diagnostyka generating headlines but not the consistent, scalable liquidity that institutional LPs require across a diversified portfolio. For LPs sitting in earlier-vintage CEE funds whose assets have not yet found buyers, the secondary market represents the only realistic path to capital return.

Entry Multiples That Secondary Buyers Should Know

The 30% discount between CEE deal multiples (6.7x EBITDA) and the broader European average (9.4x) is relevant to secondary buyers for a reason that goes beyond the obvious. When underlying portfolio companies were acquired cheaply, NAV marks are — in theory — more conservative and the buffer against secondary discount erosion is structurally wider. Secondary buyers pricing off NAV in funds with significant Polish or CEE exposure are, in effect, gaining access to assets that were themselves bought at a meaningful discount to Western European comps.

That discount exists for a reason: the GP landscape is thin. Rede’s own research indicates that only four players are operating in the midcap (€200–500 million) space across all of CEE. A shallow GP supply means limited price discovery, longer hold periods as GPs await the right buyer, and reduced competition at auction — all factors that secondary buyers can exploit when acquiring LP stakes or working through GP-led processes.

The Succession Wave as a Pipeline Driver

Poland’s 1.5 million family-owned SMEs, many founded in the immediate aftermath of the fall of Communism in 1989, are entering a generational transition. The founders are aging; their children, many of whom left for Western Europe and are now returning in a documented “reverse brain drain,” do not always want to run the family business. This succession dynamic has been a defining feature of Nordic PE market development — and the Nordics are today one of the most active secondaries markets in Europe.

LIMITED PARTNER, QUOTED IN REDE PARTNERS POLAND PE REPORT, APRIL 2026

The Nordic parallel is instructive beyond the succession angle. In the Nordics, as PE-backed mid-market businesses scaled and attracted a wider buyer universe, sponsor-to-sponsor deal volume rose steadily — overtaking family-to-sponsor transactions in 2025. If Poland follows a similar trajectory, the conditions for a functioning secondaries market — sufficient deal volume, maturing fund vintages, and a broader LP base seeking liquidity — would emerge within the next five to seven years. Secondary buyers who build relationships and pricing frameworks now would have a structural advantage when that moment arrives.

What the Market Still Needs

The honest assessment is that Poland is not yet a secondaries market — it is a market whose structural features are pointing in that direction. The GP base is too small, LP diversity is limited, and exit volumes, while growing (buyout exits rose 13% between 2019–21 and 2022–24), remain modest in absolute terms. The Warsaw Stock Exchange is reopening as an exit route, which is positive for DPI but reduces the pressure that would otherwise push LPs toward secondary solutions.

What would accelerate secondaries development in CEE is precisely what the Rede report documents as currently lacking: more international fund managers entering the market, greater LP diversity beyond DFI anchors, and continued growth in buyout deal volumes that creates larger and more liquid secondary positions to trade. Each of those conditions is, by the report’s own account, beginning to move in the right direction.

For secondary market participants, the question is one of timing. Poland in 2026 has the structural DNA of a market that will need secondary solutions — the succession overhang, the DPI gap, the entry multiple cushion, and the thin GP landscape. The deal flow is not yet there at scale. But in a market where being early is often the precondition for being well-positioned, the conversation is worth starting now.

Source: The Rede View on the private equity opportunity in Poland

Founded in 2007 by Monte Brem, Thomas Keck, and Jose Fernandez — veterans of Pacific Corporate Group — StepStone began as a conflict-free private markets advisory serving institutional investors seeking bespoke portfolio construction. It listed on Nasdaq in 2020 and has since grown into one of the largest private markets platforms in the world. As of March 31, 2026, the firm was responsible for approximately $885 billion of total capital, including $233 billion in assets under management. Its client base spans the world’s largest public and private pension funds, sovereign wealth funds, insurance companies, endowments, foundations, family offices, and private wealth clients. The firm operates across four core asset classes — private equity, infrastructure, private debt, and real estate — through a combination of separately managed accounts, commingled funds, and, increasingly, semi-liquid evergreen vehicles targeting the private wealth channel. It employs approximately 1,090 people across 31 offices globally.

The Washington-based firm generated nearly $14 billion in capital formation in Q4 alone, capping a full fiscal year of $38 billion in gross AUM additions — its best twelve-month period on record. Fee-related earnings surpassed $100 million for the first time, reaching $105 million at a 40% margin. For investors and managers watching the secondaries space, the numbers carry a clear signal: the market for private equity secondaries — both LP-led and GP-led — remains structurally robust, institutional demand is accelerating, and the largest platforms are expanding capacity accordingly.

A wave of secondaries capital approaching activation

StepStone closed its flagship PE secondaries fund at $2.2 billion in initial commitments and its GP-led PE secondaries fund at $200 million in a first close. Together, these two vehicles account for $2.5 billion of the firm’s record $40 billion in undeployed fee-earning capital — and both are expected to activate within the next two quarters.

That activation matters beyond StepStone’s own income statement. When large secondaries funds of this scale move from fundraising into deployment mode, they become active buyers in the market, shaping pricing, deal flow, and the competitive dynamics for other secondaries managers. The infrastructure secondaries fund also saw approximately $300 million of additional closes, with retroactive fees already recognized this quarter.

On the venture side, StepStone’s SPRING fund — a semi-liquid evergreen vehicle giving individual investors access to late-stage venture secondaries — generated $1.2 billion in subscriptions in Q4, making March and April its two best months ever. CEO Scott Hart confirmed that May was tracking similarly.

The VC secondaries thesis: concentration and the AI tailwind

StepStone’s venture secondaries franchise is arguably the most strategically distinctive part of its secondaries business.

Head of Strategy Michael McCabe outlined a thesis built around the power law dynamics of venture capital: the top 100 venture-backed companies have driven close to 50% of total value creation over the past decade. StepStone’s response is to build deliberately concentrated secondaries portfolios targeting those assets — sourcing through LP-leds, GP-leds, and direct secondaries relationships with management teams and lead investors alike.

The portfolio composition reflects this approach. In the SPRING fund, the top 50 positions represent approximately 75% of total fund value. Of those 50 companies, roughly 75% carry direct AI exposure — spanning AI-native businesses, defense technology, space, cybersecurity, and fintech. For European LPs evaluating whether to allocate to US venture secondaries strategies, this concentration profile is both an opportunity and a risk to assess carefully.

The dedicated VC Secondaries Fund — StepStone’s institutional vehicle, which last raised over $3 billion — is returning to market “shortly,” according to the call. Its return will represent one of the larger VC secondaries fundraises in the market this year.

A fee structure change signals LP pricing power

Buried in the financial details was a disclosure worth noting for anyone tracking how secondaries fund terms are evolving. StepStone announced a prospective change to the fee structure of its flagship PE secondaries fund: lower management fees during the investment period, offset by higher fees after deployment is complete. The firm described this as aligning with “recent market practices” and mitigating the J-curve for LPs.

The isolated impact, according to CFO David Park, would be a three-to-four basis point reduction in the firm-wide blended commingled fund fee rate when the fund is fully raised and activated — expected to be offset by continued growth in higher-fee private wealth products. The present value of total fees is structured to be equivalent to the old terms.

The change is a small but meaningful data point. It suggests that LP pressure on fee structures in PE secondaries has reached the point where even the largest and most established managers are making concessions on investment-period economics. Whether this becomes the new market norm is worth watching across the next vintage of funds from peer managers.

The exit environment: secondaries as pressure valve

StepStone’s $936 million in net accrued carry — up 7% in the quarter — sits largely in mature, harvest-ready programs. Approximately 60% is tied to funds older than five years. Yet gross realized performance fees of $46 million were below recent quarterly paces, reflecting the continued drag from depressed M&A and IPO markets.

Management was candid about what is needed for a recovery: full exits, not just continuation vehicles or partial realizations. Both of those structures — which have become increasingly prevalent as GPs manage liquidity in the absence of traditional exit routes — allow capital to stay locked up even as some value is returned. The industry came into 2026 cautiously optimistic, only to face a fresh set of disruptions: AI uncertainty, concerns around private credit, and geopolitical instability. Full exit volume has not yet returned to historic norms.

In that context, StepStone was explicit that secondaries will continue to serve as a primary liquidity mechanism for both GPs and LPs. The logic is straightforward: as long as the exit environment remains constrained and LPs are focused on distributions, the demand side for secondaries transactions does not abate. The question for secondaries managers in 2026 and beyond is less whether deal flow exists and more whether pricing discipline and portfolio construction can hold through a period of macro volatility.

A European story, not just a US one

StepStone’s results are often read through a US lens — and understandably so, given that its private wealth platform and its venture secondaries franchise are predominantly American in character. But the firm’s European presence is substantial enough that its strategic priorities carry direct implications for the continent’s secondaries market.

StepStone has operated in Europe since 2005, and today runs seven offices across the continent — including London, Dublin, Rome, and Milan, which opened in 2025. Its EU-regulated subsidiary, StepStone Group Europe Alternative Investment Limited (SGEAIL), is authorized by the Central Bank of Ireland and manages €29.1 billion in AUM on behalf of European institutional clients, up from €20.6 billion in December 2022. The Dublin office alone employs 110 people — roughly 10% of the firm’s global workforce — and has doubled its headcount since 2021.

That footprint matters in the context of the secondaries pipeline described on the earnings call. When StepStone activates its flagship PE secondaries fund and its GP-led secondaries vehicle over the coming two quarters, SGEAIL will be among the entities through which European pension funds, insurance companies, and family offices gain exposure to those programs. European LPs are not just passive observers of this fundraising cycle — they are a core part of the capital base being assembled.

The Milan expansion is also a signal worth noting. Italy has become an increasingly active market for private markets distribution, particularly among private banks and family offices, and StepStone’s decision to establish a second Italian office alongside its Rome presence reflects a deliberate effort to deepen local relationships ahead of what the firm clearly expects to be sustained demand growth. Head of Europe David Jeffrey described it as part of a broader strategy of strengthening presence in Europe’s key financial hubs.

For European secondaries managers and LPs, the trajectory is legible: the largest global platforms are building permanent, regulated infrastructure on the continent, not simply parachuting in for fundraising cycles. The competitive and co-investment landscape in European secondaries will increasingly be shaped by firms operating at this scale.

StepStone’s results suggest the largest global platforms are navigating a difficult macro environment with notable confidence — and are actively expanding the European infrastructure to sustain that growth. The secondaries pipeline it is bringing to market — across PE, GP-led, infrastructure, and venture — represents one of the broadest and most capitalized programs globally. For European managers and LPs, the message is clear: the global secondaries market is entering a deployment cycle, and its gravitational pull will be felt on this side of the Atlantic.

The Market Behind the Move

Switzerland is one of the largest institutional investor markets in Europe relative to its size. Swiss pension funds alone manage over CHF 1.4 trillion in assets, and appetite for private markets is growing globally. According to the Natixis 2026 Institutional Outlook Survey, 39% of institutions plan to increase private equity allocations, 38% infrastructure, and 35% private debt. More broadly, 65% say private assets offer higher return potential than public markets, and 65% project a portfolio diversified with alternatives will outperform the traditional 60:40 mix.

The challenge for an outside manager is access. Swiss pension funds are relationship-driven, move carefully, and prefer counterparts who understand local regulatory and reporting requirements. As Beat Frühauf, Head of Switzerland at Golding, put it: the partnership “allows us to address institutional investors in Switzerland even more precisely and to leverage our strengths in implementation, from structuring to reporting”.

What the Partnership Actually Does

J. Safra Sarasin has been in Switzerland since 1841 and manages over USD 460 billion in client assets across the group. For Golding, which already has a Zurich office but is not yet a household name among Swiss pension allocators, attaching to that network is a meaningful shortcut. Daniel Graf, Head of Institutional Clients Switzerland at the bank, framed it as “opening up access for our clients to a broad spectrum of investment solutions, including selective co-investments and secondary opportunities”.

The Timing

Switzerland’s near-zero interest rate environment is pushing institutional capital further into alternatives. At the same time, the private markets industry is bifurcating between large generalist platforms and focused specialists. Golding, with EUR 15 billion under management across private equity, private credit, infrastructure, and secondaries, sits in an interesting position: large enough for complex mandates, specialized enough to offer genuine expertise. As Hubertus Theile-Ochel, Managing Director at Golding, noted, the partnership “underscores the strategic importance of the Swiss market” for the firm.

The Swiss market rewards exactly that positioning. The J. Safra Sarasin partnership gives Golding the local infrastructure to make the case.

Lindbäck is not a secondaries specialist. He is a direct buyout investor who spent three decades doing what the GPs on the other side of continuation vehicle transactions do. That is a deliberately different profile, and it tells you something about where Pantheon thinks the GP-led market is heading.

The Setup

Pantheon’s CIO Jeffrey Miller flagged in the firm’s January 2026 outlook that GP-led deal volumes were up over 30% in 2025, with the pipeline still strong despite record transaction volumes the two years prior. The firm’s read is structural rather than cyclical: GP-led solutions are becoming a permanent feature of how fund managers handle portfolios and liquidity, not a distress tool.

As that market matures, the transactions get more complex. Buying into a continuation vehicle means genuinely underwriting the underlying business, not just negotiating a NAV discount. Someone who has spent 25 years inside rooms where these decisions are made is more useful than another generalist secondaries buyer.

The TMT Angle

A large portion of European TMT buyouts from the 2019 to 2021 vintage are now aging in portfolios. Software businesses, digital transformation plays, technology-enabled services, many of them bought at elevated multiples with cheap debt and limited exit options today. The IPO window has been narrow. Strategic M&A selective. GPs holding these assets are under real pressure, with LP distributions running well below the ten-year average according to Pantheon’s own data.

The GP-led continuation vehicle is the logical answer for managers who believe in the asset but need a liquidity solution. Pantheon, with fresh capital from the 1.1 billion dollar close of its Secondary Opportunities Fund II in 2025, wants to be the buyer. Having Lindbäck in the room to underwrite the underlying TMT business is the edge.

What It Adds Up To

Pantheon’s January report is candid that the secondaries market is becoming more competitive and that generalist LP portfolio capability is being commoditized. The differentiation will come from sector depth, GP relationships, and the credibility to be a preferred partner in complex processes.

As their own January report puts it, in an increasingly competitive market it comes down to finding “a manager that has strong investment acumen, and the depth of relationships that enables them to source and diligence the best deals available.”

Lindbäck is Pantheon putting its money where its mouth is.

Two Continuation Funds, Powerfully Executed

Astorg’s entry into the GP-led secondaries market came from necessity as much as strategy. By 2022, IQ-EQ — a global investor services platform it had backed since 2016 — had become the last remaining asset in its fifth flagship fund, Astorg V. Rather than sell into a tepid exit market or extend the fund beyond its natural life, Astorg structured a €1.3bn continuation vehicle, bringing in AlpInvest Partners and Goldman Sachs Asset Management Vintage Funds as lead anchor investors. The vehicle closed heavily oversubscribed, with commitments from both existing Fund V LPs rolling their positions and new investors entering alongside a meaningful equity contribution from IQ-EQ management.

Two years later, Astorg returned to the continuation vehicle structure for Normec, a pan-European testing, inspection, certification and compliance (TICC) platform that had more than quadrupled in size since its 2020 acquisition, executing over 40 bolt-on deals. The €1.4bn Normec continuation fund — backed by CVC Secondary Partners, Pantheon, Lexington Partners and Eurazeo — was again oversubscribed, with sovereign wealth funds, pension funds and family offices participating alongside rolling Fund VII LPs. The investment thesis was explicit: extend the hold to pursue a US expansion plan that would roughly double the addressable market. By August 2025, Normec had entered the US through three acquisitions.

“Following the €1.3bn continuation fund raised to support IQ-EQ in 2022, establishing our second continuation fund for Normec marks a significant milestone for Astorg.”

François de Mitry, CIO, Astorg, July 2024

Both continuation vehicles demonstrated clear GP-led deal craft: high-quality assets with proven compounders, credible value-creation extensions, well-anchored by institutional secondaries investors and structured with meaningful GP and management co-investment. On paper, Astorg had built two pieces of exemplary GP-led dealmaking.

The Pivot to Buyer — and Its Unravelling

It was against this backdrop that Astorg, in late 2023, disclosed plans to launch GP Equity Solutions: a dedicated continuation fund strategy that would position the firm as a buyer of GP-led transactions, rather than solely a seller. The product was co-led by Sebastiaan Van Den Berg and Michal Lange, with a thesis focused on investing in high-quality global B2B companies held in continuation structures — precisely the type of assets Astorg knew intimately from its own deal history.

The logic was coherent in theory: who better to underwrite GP-led transactions than a firm that had just run two of them? But the market and LP community answered that question differently. By December 2024, Astorg had paused the blind pool fundraise for GP Equity Solutions, pivoting to focus on deploying capital already secured rather than raising more. Two months later, in February 2025, the firm disbanded the GP-led effort entirely. According to the Financial Times, which first reported the broader picture of Astorg’s strategic difficulties, the firm had been unable to raise sufficient capital for the effort and had to let go of the team it had hired to run it — a striking outcome in one of the secondaries market’s most favourable fundraising environments in years.

What the IQ-EQ Sale Now Hangs Over

The irony is that Astorg’s secondaries difficulties now shadow its primary business in a more consequential way. IQ-EQ — the asset at the centre of its first and most celebrated continuation vehicle — remains unsold as of mid-2026. The Financial Times reported that Astorg had been hoping to exit IQ-EQ last year at up to €9bn; that target proved unreachable. As of January 2026, Astorg had formally kicked off a sale process with lenders preparing roughly €2bn in leveraged loan financing for prospective buyers. Blackstone, Permira, Carlyle, EQT and TPG had all circled the asset at various stages. The current valuation expectation has settled around the €5bn mark — a meaningful reset from earlier ambitions.

This matters directly for Astorg’s LP relationships. The FT reported that the firm has been unable to reach first close on its ninth flagship fund — targeting at least €4bn — since launching it in November 2025, with few existing investors willing to re-up. According to the same reporting, the 2019 and 2016 flagship funds were valued at 1.5x and 1.7x net MOIC respectively as of late 2024 — below the 2x threshold the buyout market typically considers strong. The FT also reported that Astorg had appointed Goldman Sachs to explore a sale of the firm itself, though no transaction materialised; newer partners subsequently bought equity from co-founders Thierry Timsit and Xavier Moreno in a restructuring designed to preserve the firm’s independence.

“Fundraising for our latest flagship, launched in November 2025, is progressing in what remains a selective and competitive market environment.”

Astorg — Statement to the Financial Times, May 2026

The Structural Lesson for Secondaries

Astorg’s arc offers a precise illustration of a recurring tension in the GP-led market: the skills required to be a compelling seller of continuation assets — deal structuring, asset selection, LP alignment, GP-co-investment credibility — do not automatically transfer to the buy side of that market. Secondaries LPs are asked to make a fundamentally different underwriting decision than buyout LPs. They are not backing a GP’s forward deal pipeline; they are backing that GP’s judgment about the residual value of existing assets, often at a premium to NAV. The question “do I trust this GP to pick assets worth continuing to hold?” is distinct from, and in some ways harder to answer than, “do I trust this GP to do new deals?”

Astorg’s GP Equity Solutions faced the additional burden of being a new entrant in a secondaries market already crowded with multi-decadespecialists — Lexington Partners, Pantheon, AlpInvest, Ardian, HarbourVest — who have built allocation relationships, dedicated teams, and LP bases entirely separate from their PE primary businesses. For LPs evaluating a new secondaries fund manager, the presence of a large, established buyout operation on the same platform can raise as many questions as it answers: alignment of interest, capital allocation priority, team retention incentives, and whether the secondaries unit would receive preferential access to Astorg’s own continuation vehicles — a structural conflict that is difficult to resolve cleanly.

The Normec and IQ-EQ continuation funds, in contrast, were unambiguous successes as deal structures: high-quality assets, credible continuation theses, oversubscribed closes backed by the strongest names in secondaries. If IQ-EQ clears at or near €5bn in its current process, the continuation fund LPs will have done well. Normec’s US expansion is live and accelerating. The GP-led track record, taken on its own terms, is strong.

What Astorg discovered is that executing good GP-led deals and running a credible GP-led secondaries fund are related but distinct businesses. The market — specifically the LP community that funds secondaries strategies — draws a hard line between the two.

SOURCES

Reporting draws on Astorg company announcements; Secondaries Investor (Secondaries Investor / PEI Media); Bloomberg News; Reuters; Private Equity Wire; ION Analytics / Mergermarket; and reporting by the Financial Times (”Astorg’s flagship fundraise struggles as private equity braces for shakeout,” May 2026, by Alexandra Heal), which first reported the firm’s flagship fundraising difficulties, the GP Equity Solutions team departure, fund-level MOIC figures, the Goldman Sachs mandate, and the ownership restructuring. MOIC figures and the IQ-EQ exit price aspiration cited in this article are sourced solely from FT reporting and have not been independently verified by Secondary Scoop.

H1 2026 builds directly on that momentum. The deals tracked by Secondary Scoop between January and May 2026 span four distinct asset classes — infrastructure, private credit, growth buyout and mid-market buyout — with disclosed sizes ranging from €155 million to €2.2 billion. What they share is the structural logic: a GP unwilling or unable to force an exit at a suboptimal moment, a high-conviction asset with further runway, and a secondary market with sufficient capital and sophistication to price the transaction fairly.

Critically, two of the five primary H1 2026 deals were first-ever continuation vehicles for their respective GPs — Latour Capital and Alantra Private Equity. That detail is more significant than it might appear. It marks the diffusion of the CV playbook beyond the large-cap buyout firms that pioneered it, into the European mid-market where the opportunity set is vast and the precedent-setting is only beginning.

"Continuation funds captured 24% of the total value of PE-to-PE exit transactions in Europe in 2025 — up from 8% in 2024. Invest Europe dedicated a standalone section to them for the first time."— Invest Europe Private Equity Activity Report 2025, May 2026

Infrastructure

1 deal · €2.2bn

The infrastructure segment produced the single largest transaction of the period, and one of the most structurally distinctive. Meridiam’s Europe Core Fund is not a GP-led CV in the traditional sense — it is a purpose-built liquidity window embedded into the design of a 25-year infrastructure mandate, demonstrating how the asset class is evolving its own variation of the continuation vehicle playbook.

The Meridiam transaction is notable for a second reason: alongside the institutional close, Meridiam launched its first retail-dedicated infrastructure fund, Meridiam Global Infrastructure Strategies, in partnership with Private Corner. The bundling of an institutional CV close with a retail feeder product is a structuring innovation that may become a template for other European infrastructure managers navigating the democratisation of private markets under ELTIF 2.0.

Private credit

2 deals · €480m + >$1bn

Private credit secondaries is the fastest-growing segment of the broader secondaries market — and H1 2026 produced both a GP-led CV and a dedicated secondaries fund close out of European managers. The asset class is maturing rapidly: where credit CV activity was once concentrated in US direct lending, European platforms are now producing their own structures with European collateral, European borrowers, and European institutional anchors.

Growth buyout

1 deal · €635m

The Verdane transaction is the cleanest expression of the canonical European GP-led CV in H1 2026: a Nordic growth specialist, a 10-year-plus relationship with a flagship asset, a sole-lead secondaries buyer with the conviction and mandate to underwrite a full multi-asset portfolio, and a significantly oversubscribed outcome. It also carries a notable structural footnote — Arrive Group is moving into a continuation vehicle for the second time, having previously been held in a prior Verdane structure as EasyPark before the 2025 Flowbird merger.

Mid-market buyout

3 deals · €155m + 2 undisclosed

The mid-market segment produced three of the five primary H1 2026 deals, spanning France, Spain and the UK. Two were first-ever CVs for their GPs — a structural milestone that signals the diffusion of continuation vehicles beyond the large-cap PE world into the heart of European mid-market private equity. The assets involved — a mission-critical Swiss industrial manufacturer, a UK legal services platform, and a Spanish clinical genomics group — reflect the breadth of sectors where GPs are now choosing extension over forced exit.

Prior period reference deals (H2 2025): Two high-profile European CVs closed in the second half of 2025 establish the pipeline context for H1 2026 activity and are included here for market completeness

The data covers PE and VC continuation funds contributing to the European Data Cooperative. Infrastructure funds, private debt funds, real estate funds and secondary funds of funds are explicitly excluded from Invest Europe’s universe. This is a critical methodological note: several of the largest European CV transactions of 2025–2026 — including Meridiam’s €2.2bn infrastructure continuation fund and Eurazeo’s €480m private debt CV — fall entirely outside the Invest Europe perimeter. The actual market is materially larger than the figures below.

01- Fundraising: €19.8 billion and +113%

European PE/VC continuation funds raised €19.8 billion in 2025 — more than double the €9.3 billion recorded in 2024, and representing the strongest year on record by a significant margin. The number of funds completing a capital raise rose to 48, up from 28 the year prior. The increase was not concentrated in a single segment: buyout, growth and generalist continuation funds all expanded, while venture-backed CVs contracted slightly.

CV Fundraising by region: France & Benelux leads

Geographic concentration is striking. France & Benelux accounted for €8.6 billion — 43% of all European CV fundraising in 2025 — more than the entire market raised just two years prior. UK & Ireland followed at €6.5 billion, with the Nordics at €3.2 billion, Southern Europe at €0.8 billion and DACH at €0.7 billion. CEE recorded no material CV fundraising.

France & Benelux’s dominance reflects the depth and maturity of the French mid-market buyout ecosystem — the same ecosystem that produced the Seven2 and Latour Capital continuation vehicles tracked in our H1 2026 deal log, which will be released tomorrow. UK & Ireland’s position in second place, at €6.5bn, is consistent with the UK’s role as the historic home of European large-cap buyout, where continuation vehicles have been used for longer and at larger scale. The Nordics at €3.2bn — led largely by growth equity managers in Sweden, Norway and Denmark — is proportionally the most striking figure: Nordic managers produce a share of CV fundraising roughly double their share of overall European PE fundraising.

DACH’s apparent contraction (from €1.0bn to €0.7bn) is worth monitoring, though caution is warranted: the DACH market is historically less transparent in its reporting, and the category may be undercounted.

"France & Benelux accounted for 43% of all European continuation fund capital raised in 2025 — more than the entire European market raised in any prior year."— Invest Europe / EDC, Private Equity Activity 2025

02- Investments: €9.9 billion into 69 companies

Continuation funds deployed €9.9 billion into 69 portfolio companies in 2025 — more than doubling the €4.7 billion invested across 32 companies in 2024. The buyout segment drove the expansion, with €9.3 billion deployed (94% of total) into 36 companies, up 19 companies from the prior year. Growth continuation fund investments reached €0.5 billion across 12 companies, and venture-backed CVs invested a negligible amount across 21 companies — declining slightly in company count but consistent with the very early stage of venture CV development in Europe.

03- Divestments: the 8% to 24% shift

The divestment data is the most structurally significant section in the Invest Europe CV report, and the one most likely to reshape how institutional LPs think about private equity exit modeling. In 2025, European private equity firms divested €19.7 billion worth of assets through sales to another PE firm. Of that total, 24% was sold to a continuation fund — up from 8% in 2024. By number of companies, 17% of PE-to-PE exits went via a continuation fund, up from 6%.

The 8%-to-24% move in a single year is not a rounding error or a statistical outlier. It is the result of a structural pipeline maturing simultaneously across three generations of European buyout funds: the 2012–2015 vintages nearing or exceeding their natural hold periods, traditional exit routes remaining subdued, and a secondary buyer universe that has spent two years accumulating dry powder and developing underwriting infrastructure for complex GP-led transactions.

The simultaneous fall in “sale to same PE firm / partnership fund” (from 18% to 12% of value) is also meaningful. It suggests that internal recycling of assets — transfers between an old fund and a successor fund managed by the same GP — is being replaced by properly structured, third-party-anchored continuation vehicles, which offer genuine LP optionality, independent pricing, and a clean governance process. The market is maturing in exactly the direction ILPA guidance anticipated.

Importantly, this data covers only exits classified as “sale to a PE firm” in Invest Europe’s taxonomy. Continuation fund activity embedded in other exit categories — for example, recapitalisations, partial realisations, or structures involving both debt and equity — would sit elsewhere in the data. The 24% figure is almost certainly an undercount of the true share of European PE exits involving CV mechanics.

04 How CVs fit into the broader 2025 picture

European private equity and venture capital raised a record-adjacent €147 billion in 2025 — the second-best year on record, behind only 2022’s €195 billion peak. Investments reached €135 billion into 8,457 companies, and divestments came in at €45 billion at historic cost across 3,324 companies. Buyout dominated as usual: €103 billion raised, €90 billion invested, €32.5 billion divested.

Within this overall picture, continuation funds represented 13.5% of total European PE/VC fundraising in 2025 — up from roughly 7% in 2024. On the investment side, the €9.9 billion deployed by CVs represented 7.3% of total PE/VC investment volume. These are not marginal percentages. CVs are now a double-digit line item in the European private capital budget.

What the 2026 data will tell us

Will growth CVs sustain the surge? The 750% increase in growth CV fundraising (€0.4bn → €3.4bn) and the addition of 12 new fund closes in a single year is either the start of a durable structural trend or a one-year catch-up from a cohort of overdue vintage funds. If the 2018–2021 European growth equity vintage is as large as it appears, there is a three-to-five-year pipeline of potential growth CVs still to come.

Will the 24% divestment share hold or accelerate? The jump from 8% to 24% in a single year is historically unprecedented in any segment of European PE exit data. Whether this normalizes at a new structural level around 20–25% or continues rising toward 30%+ will define how mainstream continuation vehicles become as a primary exit mechanism — and whether LPs begin discounting GP fundraising by the expected CV overhang.

Will Invest Europe expand the perimeter? The decision to exclude infrastructure and private debt from the CV data creates a growing blind spot as those asset classes increasingly use CV-style structures. Watch for whether the 2026 edition expands the methodology, which would produce an immediate and significant upward revision to European CV market size estimates.

Southern Europe watch. Southern Europe raised €0.8bn in CV capital in 2025 and received €0.6bn in CV investments — the smallest allocation of any major European region. With Alantra PE (Spain) completing its first CV in H1 2026, and several Italian and Portuguese growth managers approaching the end of their first fund generations, this may be the region with the largest relative catch-up potential heading into 2026–2027.

DACH contraction warrants explanation. DACH is the only European region to show a nominal decline in CV fundraising between 2024 and 2025 (€1.0bn → €0.7bn). The German, Austrian and Swiss mid-market is large and structurally underserved by continuation vehicle structures. Whether this is a data anomaly, a vintage timing issue, or a genuine structural lag will be important to assess as 2026 data accumulates.

It is Lexington Partners — and the booming global market for secondary private equity that surrounds it.

Franklin Templeton’s Q2 2026 earnings call, held on April 28, painted the picture of an asset manager that is firing on all cylinders. But look closely at the numbers and the narrative, and one theme keeps surfacing: the secondaries business is becoming the firm’s most powerful long-term growth driver, and the best may still be ahead.

A Fundraising Machine in Full Swing

Start with the headline numbers. Franklin Templeton raised $13.2 billion in private market assets during the quarter alone, diversified across alternative credit, secondary private equity, real estate, and venture strategies. Fiscal year-to-date private markets fundraising has already reached $22.7 billion — matching the entire fiscal year 2025 total with two quarters still to go.

The firm entered fiscal 2026 with an annual fundraising target of $25-30 billion, already an upward revision from the prior year’s goal. By the second quarter, CEO Jenny Johnson was signaling they expect to come in above $30 billion for the full year. That would represent a new record for the platform.

Secondaries is at the center of that story.

Lexington: On Track for a Generational Raise

Lexington Partners, the secondaries giant Franklin Templeton acquired in 2022, is currently in the market with its next flagship fund. Management declined to disclose specific figures ahead of an expected regulatory filing later in the fiscal year, but the signals from the earnings call were unambiguous.

Lexington contributed “meaningfully” to the quarter’s fundraising. It is “right on track.” Demand for the strategy is strong. And when an analyst asked point-blank whether there was any reason the new flagship could not match or exceed the size of its predecessor — Lexington X, which closed at $22 billion — Johnson did not hesitate: there is no reason to think otherwise.

For context, a fund that matches or beats that figure would make it one of the largest secondaries vehicles ever raised. The secondaries market has been on a structural growth trajectory for years, but the current environment — marked by a massive overhang of unrealized private equity value, LP pressure for liquidity, and a slowdown in traditional exit activity — has created what many practitioners describe as a golden moment for secondary buyers.

Franklin Templeton is not just observing that trend. Through Lexington, it is one of the primary beneficiaries of it.

Lexington Partners' Secondaries Business: Key Figures

Why Secondaries? The Macro Case Has Never Been Stronger

Johnson articulated the investment thesis clearly during the call. Investors are increasingly focused on three things: liquidity solutions, portfolio rebalancing, and access to high-quality assets at more attractive entry points. That is a near-perfect description of what the secondaries market offers.

After years of record primary fundraising and limited distributions from private equity managers, LPs across the globe are sitting on large, illiquid portfolios and facing mounting pressure to generate cash for new commitments, rebalance their allocations, or simply right-size their private equity exposure. The secondary market is the mechanism through which that happens — and Lexington, with data on 55,000 private companies and decades of underwriting expertise, is positioned as a premier buyer in that process.

The firm’s secondaries strategy is not just about capturing discounts at entry. As Johnson explained on the call, the initial discount at close has historically represented between 20% and 25% of total return over the life of a secondaries fund. The majority of value creation still comes from the underlying assets — which means selectivity and underwriting quality matter enormously. Lexington’s edge, in management’s view, is the depth of its information advantage and its ability to be selective in a market where not all sellers are equal.

The Evergreen Bridge to Wealth Management

Beyond the institutional flagship, Franklin Templeton is building a parallel secondaries distribution channel through its evergreen product suite — and the traction is notable.

The Lexington-managed evergreen vehicle, designed for the wealth management channel and offered alongside similar structures from Benefit Street Partners (private credit) and Clarion Partners (real estate), is part of a combined platform that has reached $8 billion in AUM across the three strategies. Together, these vehicles are raising approximately $200 million per month — a pace that has remained consistent in recent quarters with no signs of slowing.

This matters for two reasons. First, it represents a structural expansion of the secondaries investor base beyond institutional LPs into the wealth channel — a democratization trend that is still in its early innings across the industry. Second, it provides Franklin Templeton with a recurring, diversified fundraising stream that complements the lumpy, flagship-driven cycle of traditional closed-end funds.

Critically, management noted they have seen zero pressure from redemptions across the evergreen suite. In a market where some managers have faced redemption queues on similar products, that is a meaningful data point.

The Markup Controversy: Lexington’s Clean Record

No conversation about the secondaries market in 2026 can avoid the regulatory and reputational scrutiny that has emerged around valuation practices — specifically, the practice of marking up assets immediately upon close based on the implied discount to NAV.

An analyst raised the question directly during the call. Johnson’s response was measured and instructive. She acknowledged that a specific competitor’s decision to change its valuation policy — and the lack of clarity around how that change was communicated — generated significant market noise. But she was clear that this was not a Lexington issue.

The framing she offered is worth understanding: in a well-run secondaries fund, the discount negotiated at entry is just one component of returns, and not the dominant one. Over the life of a fund, asset appreciation in the underlying portfolio drives the majority of value. A manager that tries to front-load returns through aggressive mark-ups at close is, in effect, borrowing from future performance — and sophisticated LPs know it.

For Lexington, management’s position is that their valuation approach has been consistent and transparent, and the current regulatory attention on competitors does not change their underwriting or reporting framework. On the question of whether the scrutiny is dampening LP demand for the asset class broadly, Johnson was dismissive: the structural drivers of secondaries demand are independent of short-term valuation controversies.

The Numbers Behind the Narrative

The secondaries momentum is showing up clearly in Franklin Templeton’s financial results. Overall alternatives AUM hit a record $282.8 billion in Q2 2026. The alternatives segment generated $12.4 billion in net inflows for the quarter — the largest contributor to the firm’s total $16.9 billion in long-term net inflows.

Adjusted operating income reached $474.6 million, up 8.5% from Q1 and 25.8% year-over-year. Adjusted operating margin expanded to 27.1%, up from 25.0% the prior quarter and 23.4% a year ago. Management is guiding toward margins in the high 29s by Q4 fiscal 2026, with a path to 30%+ in 2027 — ahead of their own plan.

The institutional pipeline of won but unfunded mandates remained strong at $20.2 billion, consistent with the prior quarter, suggesting the fundraising momentum visible in current results has a runway behind it.

What the Rest of 2026 Looks Like

The second half of Franklin Templeton’s fiscal year 2026 sets up as a potential landmark period for the secondaries business. Lexington’s flagship fund filing is expected sometime in the second half — likely the fiscal fourth quarter ending September 2026 — and will give the market its first formal look at the fundraise’s size and progress.

In the meantime, the evergreen channel continues to compound. The institutional pipeline continues to refill. And the macro environment for secondaries — elevated dry powder, limited distributions, LP liquidity needs, and a growing appetite among non-U.S. investors for the asset class — shows no signs of reversing. Management noted that 40% of alternatives fundraising now comes from outside the United States, with APAC at 23% and EMEA at 16%, and that demand for secondaries specifically is part of that international growth story.

Franklin Templeton entered the secondaries market in a meaningful way with the Lexington acquisition in 2022. Three years later, that bet is paying off in ways that are showing up not just in AUM and flow figures, but in the firm’s margin expansion, its competitive positioning in the wealth channel, and its ability to tell a coherent growth story to investors and analysts alike.

The question heading into the back half of 2026 is not whether secondaries will be a record year for Franklin Templeton. Based on what the numbers are showing, it already is. The question is by how much.

This article was written based on Franklin Templeton’s Q2 2026 earnings call transcript and investor presentation dated April 28, 2026. All figures are non-GAAP unless otherwise noted.

Global VC investment reached $330.9 billion in Q1 2026, but most of that came from a small number of big AI rounds, including OpenAI, Anthropic, xAI, Waymo, and Databricks. KPMG reports just five US companies accounted for $188.6 billion of total global VC investment during the quarter.

This also impacts secondaries, as private company valuations are rising much faster than liquidity. AI companies are raising huge rounds, staying private longer, and pulling in more and more capital.

In Europe, PitchBook reports that AI accounted for 61.3% of all VC deal value in Q1 2026, with €13.4 billion invested in AI deals in a single quarter.

The problem is not that AI companies cannot raise money. The problem is that many investors still cannot exit. The IPO market was expected to improve in 2026, but the latest market reports show that the US IPO market came to a “grinding halt” after the conflict in the Middle East began. J.P. Morgan also noted that market volatility and concerns around AI disruption have made the IPO environment more difficult again.

This is where venture secondaries start to show their value.

PitchBook also shows that global institutional VC direct secondary deal value stayed strong at $15.9 billion in 2025, even while broader exit markets remained uncertain. Europe accounted for about 15% of that activity.

The logic is simple. If the biggest AI companies keep raising private money and delay going public, early employees, angel investors, seed funds, and early VCs still need ways to turn paper gains into real cash. And if IPOs and M&A remain slow, LPs also need ways to rebalance portfolios without forcing companies to sell too early.

The next wave of venture secondaries won’t just happen because struggling investors need cash. It’ll also happen because some startups are doing so well that they’ve stayed private for a very long time and become extremely valuable.

AI companies are making this even more common. The hottest companies are raising huge amounts of private money, so they don’t feel pressure to go public anytime soon. But investors still want a chance to own part of them.

So instead of waiting for an IPO, people buy and sell existing shares privately through “secondaries.”

Europe Offers A Preview of Where the Market May Go

PitchBook estimates that the European institutional VC direct secondaries market could reach $47.5 billion in its base-case scenario. There are still obstacles around governance, transfer approvals, and pricing transparency, but the market direction is becoming clearer.

Another important piece of the story is venture debt.

The New Liquidity Mix: Equity, Debt, and Secondaries

European venture debt reached €5.9 billion in Q1 2026, while average deal sizes jumped from €35.9 million in 2025 to €90.5 million this year. AI companies represented 56.9% of total venture debt deal value.

Venture-backed companies are no longer depending on one liquidity path. They are raising mega-rounds, adding venture debt, delaying IPOs, and creating greater demand for partial-liquidity solutions along the way. Direct secondaries are becoming the pressure-release valve for the venture market.

The bottom line is that AI is not only changing how venture capital is invested. It is also changing how venture investors eventually get liquidity. The more money flows into a small number of private AI leaders, the more important secondaries become for founders, employees, early investors, and LPs.

In the past, when people sold shares in private startups, it often looked like they were losing confidence and wanted to leave.

Now it often means the opposite: they invested early in a company that became very successful, and their shares are valuable enough that others want to buy them.

That is not a line from a fundraising deck. It is what Connor Teskey, CEO of Brookfield Asset Management, said during the firm’s Q1 2026 earnings call. His reasoning is straightforward: AI adoption, digitalization, rising energy demand, and deglobalization are all creating sustained, simultaneous demand for capital. Data centers, power generation, transmission networks, fiber, cooling systems — the physical backbone of the modern economy needs to be built, and it needs to be built now.

The numbers back him up. According to McKinsey’s Global Private Markets Report 2026, global infrastructure fundraising hit a record of nearly $200 billion in 2025, up 58% over 2024. In Europe alone, €491 billion has been raised across 679 funds since 2017, according to PitchBook. LP appetite is not slowing: 51% of LPs surveyed by McKinsey plan to increase infrastructure allocations over the next three years, more than any other asset class, ahead of buyout at 35% and real estate at 30%.

The primary market story is well documented. What is less discussed is what all that vintage capital means for the secondary market over the next five years.

The mismatch

Infrastructure funds run on a 10-year clock. The assets inside them do not.

Toll roads, energy grids, renewables, fiber networks, data centers — these are projects where large upfront capital takes 20 to 30 years to fully recover. Much of the value creation happens well after year ten. As Faraz Qureshi, head of infrastructure secondaries at BNP Paribas Asset Management, told PitchBook in May 2026: these assets have 10 to 15 more years of value creation ahead of them once a typical fund reaches maturity.

The funds raised in the 2017 to 2020 boom are hitting that wall now. And unlike software or buyout assets, you cannot simply sell a half-built renewable energy platform or a data center three years into a 20-year development cycle at a price that makes sense. Traditional exit routes are not designed for this.

Why continuation vehicles make sense here

A GP-led continuation vehicle lets a manager move assets from a maturing fund into a new structure. Existing LPs can cash out or roll their exposure. New capital comes in to support the asset through the rest of its development cycle.

The market is already reflecting that logic. According to PitchBook, infrastructure secondary deal volume hit $25 billion in 2025, more than double the $11 billion transacted in 2023. GP-led deals reached a record $14.6 billion in 2025, with EMEA accounting for roughly 30% of flow, according to Campbell Lutyens in its Q4 2025 Infrastructure Market Report. Dedicated infrastructure secondaries fundraising more than doubled to $11.5 billion globally last year. PJT Partners, in its FY 2025 Secondary Market Insight, projects the market will reach $45 billion by 2030.

Worth noting: the motivation behind GP-leds is also shifting. According to Qureshi, portfolio rebalancing is largely done. What is driving continuation vehicles now is portfolio growth.

The demand side

Pressure is building from both directions.

GPs with maturing funds need structures that fit assets with long development cycles. On the buy side, appetite is growing for different reasons. As Qureshi told PitchBook, investors still ramping up their infrastructure portfolios are turning to secondaries to deploy capital, access distributions, and build diversified exposure that is simply not available on day one in the primary market.

With primary fundraising at record levels and LP appetite still growing, the pipeline of funds that will eventually need secondary solutions is only expanding. The 2017 to 2020 vintage wave is the first chapter. Funds raised in 2021, 2022, and 2023 have not arrived yet.

What to watch in 2026

That gap between asset life and fund life is not going away. If anything, as infrastructure mandates expand into more complex, capital-intensive verticals, it is getting wider.

$25 billion in infrastructure secondaries in 2025 looks less like a ceiling and more like a starting point. 2026 is shaping up to be a significant year for GP-leds, with strong appetite from both GPs needing liquidity solutions and LPs looking to build infrastructure exposure through the secondary market. And the funds from the next wave of vintages have not even arrived yet.