From surplus to just-in-time capital

For most of the secondary market’s history, the defining feature of buyer capital was its abundance relative to opportunity. Dry powder sat as a static pool, built up over successive fundraising cycles, waiting to be deployed. Evercore’s data shows that dynamic breaking down. At 1.0x overhang, available capital roughly matches one year of volume, enough to sustain today’s pace, but with almost no slack if fundraising falters or deal flow accelerates further. The report is explicit that the $154 billion H2 fundraising target isn’t an ambitious stretch goal; it’s the amount required just to keep the market moving at its current speed.

A “record” quarter of GP-led supply is not simply evidence of a booming, capital-rich market, it is evidence of a market converting capital into deals faster than it is being replenished. The implication cuts both ways. For LPs and family offices allocating to secondary funds, it argues for urgency: capacity is genuinely scarcer than headline dry powder figures suggest, and access to top-tier managers matters more when the buyer base isn’t sitting on excess reserves. For GPs and sellers, it argues the opposite: a tightening capital base gives well-positioned buyers, particularly the roughly ten firms holding the bulk of dedicated capacity, real pricing leverage on anything short of best-in-class.

Where the slack is actually coming from

The market isn’t relying on dedicated secondary funds alone to fill that gap, and this is where the report’s other threads connect back to the capital story. Evergreen vehicles have gone from a niche product to mainstream infrastructure: 53% of buyers now operate one, and secondary-focused evergreen AUM has reached roughly $130 billion, with $11 billion of expected inflows over the next twelve months earmarked specifically for secondaries. These vehicles don’t replace flagship fundraising, they typically finance only a minority of any purchase price, but they smooth the cycle, giving buyers capital in hand between traditional raises exactly when a 1.0x overhang leaves no room for a pause.

Credit and infrastructure secondaries are doing something similar from a different angle: they’re expanding the total addressable pool of dedicated capital rather than recycling the existing one. Credit secondary deal value hit $20 billion in H1 alone, already surpassing all of 2025, with $31 billion of dry powder and 90%+ of buyers planning to raise more within a year. Infrastructure volume rose 33% to $12 billion, backed by $22 billion in dry powder that’s up 10% year-to-date even as overall market dry powder fell. Both are effectively new capital formation, not redeployment of the same $194 billion — which is precisely what a market running at 1.0x overhang needs to keep expanding.

The GP-led side is pricing conviction, not diversification

The other angle worth pulling out is what’s happening to return logic inside GP-led deals. Single-asset continuation vehicles now account for 53% of GP-led volume, up sharply from last year (SACV transaction volume rose 88% YoY), and the majority price at or above NAV. Normally, paying full price or a premium would compress forward returns. Instead, buyers are underwriting SACVs to average gross multiples of ~2.3x over four years, meaningfully higher than the ~1.9x targeted for multi-asset continuation vehicles, ~1.8x for single LP interests, and ~1.7x for diversified LP portfolios.

That is a real inversion of how secondaries traditionally priced risk. Diversified portfolios used to command the premium multiple for the diversification itself; now the highest return targets sit with the most concentrated, single-company bets, because buyers get the deepest diligence access and the clearest view of the exit path. Layer in that more than a third of GP-led deals now include super-carry terms, giving sponsors greater upside participation to win competitive processes, and the picture is a market where capital is being priced less like a portfolio-rebalancing tool and more like direct, high-conviction equity investing with a continuation-vehicle wrapper.

The one segment still waiting

If there’s a counterweight to the “capital is tight” thesis, it’s venture secondaries, where volume has stayed flat at $5 billion for a full year despite $10 billion of dedicated dry powder sitting largely idle: capital that exists but isn’t finding a home. The “SaaSpocalypse” repricing in public software bled into private marks in early 2026, widening bid-ask spreads and pushing buyers out of processes. Buyers there are demanding 20%+ net IRRs and creating what the report calls a K-shaped pricing environment: top-quartile AI-adjacent franchises clearing near par, everything else trading at steep discounts with a hollow middle. Venture is the one part of this market where dry powder abundance, not scarcity, is the live issue, a useful reminder that the capital-tightening story is a private equity, credit and infrastructure phenomenon first, not a universal one.

The takeaway

The headline framing a record first half, on track for a record year is true and worth reporting. But the more durable insight for anyone advising GPs, LPs or startups on secondary-market positioning is that the market has quietly shifted from a capital-surplus business to a capital-velocity business. Growth now depends on continuous, parallel fundraising, recycling and new-entrant capital formation rather than a deep static reserve. That single shift explains why evergreen structures are proliferating, why credit and infrastructure secondaries are scaling so fast, why SACV pricing looks more like direct dealmaking than portfolio liquidity management, and why venture, still sitting on unused dry powder, remains the market’s clearest outlier.

On its own, that’s a fundraising story: a sequel fund more than tripling its predecessor’s size, backed by institutional capital from 26 countries spanning pensions, sovereign wealth funds, insurers, banks, endowments, and family offices.¹ But the more interesting story is what AAF II confirms about how AlpInvest has chosen to organize its entire secondaries business, and what that organization says about where the broader market is heading.

From $500 Million to $1.7 Billion in Four Years

AlpInvest’s first single-asset vehicle, Atom Fund I, launched in late 2022 targeting $500 million, a modest, almost experimental allocation at the time, arriving as the firm was navigating a co-head transition and beginning to rebrand parts of its secondaries platform. AAF II’s $1.7 billion close represents more than a threefold increase in roughly four years, a trajectory that echoes, and arguably outpaces, the doubling the firm’s flagship commingled secondaries fund achieved over the same period.

That parallel is the editorial hook here. AlpInvest isn’t simply raising more capital across its existing secondaries sleeve; it has built a second, structurally distinct vehicle purely for single-company exposure, and that vehicle is now scaling at a faster clip than the diversified flagship. Single-asset CVs were, for years, executed opportunistically out of multi-strategy secondaries pools. A dedicated, repeat, hard-capped fund line is a different signal: it tells GPs that AlpInvest can underwrite and lead the largest, most concentrated continuation deals with capital that was raised specifically for that purpose, not capital being stretched across a diversified secondaries mandate.

“What sets Carlyle AlpInvest apart in this market is not just the dedicated capital, but the platform behind it.”— Julian Rampelmann, Partner, Head of Single-Asset Secondaries and Deputy Head of Secondaries and Portfolio Finance, Carlyle AlpInvest

The Architecture Behind the Announcement

To understand where AAF II sits, it helps to see the full stack. AlpInvest’s Secondaries & Portfolio Finance strategy is now the largest single business line within the platform’s total $106.9 billion in assets under management as of March 31, 2026, ahead of both co-investments and primary fund investments.² That is itself a notable shift for a firm whose roots and brand were built on primary fund commitments.

Reading the Deal, Not Just the Release

The single-asset category deserves scrutiny on its own terms, separate from AlpInvest’s specific fund. Single-asset continuation vehicles concentrate risk on one sponsor’s conviction about one company, which is precisely why dedicated capital pools, rather than allocations carved out of diversified funds, have become the industry’s preferred underwriting structure. A diversified secondaries fund sizing single-asset exposure as one line item among dozens faces a different portfolio construction problem than a fund built to concentrate capital in a handful of the highest-conviction, largest-check transactions in the market.

AlpInvest frames the SACV strategy as a natural extension of sponsor relationships built over 25 years and roughly $7 billion committed across 31 transactions in the strategy since 2018.¹That track record matters for a market where SACV pricing and structuring still varies significantly by lead investor sophistication, and where the largest transactions increasingly require a lead that can write the full check rather than syndicate it down.

_{Editorial note on sourcing: Figures on AAF II and the firm’s $7 billion SACV capacity are drawn from Carlyle AlpInvest’s July 15, 2026 press release. AUM segmentation and individual fund sizes for ASF V through ASF VIII and ASPF II are cross-referenced against Carlyle Group Inc.’s Form 10-Q for the quarter ended March 31, 2026, filed with the SEC — not restated from secondary press coverage. As this announcement originates directly from Carlyle AlpInvest, readers should weigh the framing of its own track record and market positioning accordingly.}

_{Sources: [1] Carlyle AlpInvest press release, July 15, 2026. [2] Carlyle Group Inc. Form 10-Q, quarter ended March 31, 2026, and Q1 2026 earnings supplement, filed with the U.S. Securities and Exchange Commission.}

The number: 5% of mid/large buyout deal flow, gone within a decade

Secondary buyouts, one fund manager selling a portfolio company to another, have averaged 36% of exit value over the past 20 years and sat close to 40% in 2025. Schroders’ base case has continuation investments rising from 9% of total private equity exit value in 2025 to 12.5% by 2035. Critically, the firm models that entire increase as coming directly out of the secondary buyout share, which it forecasts falling from 31% to 27.8% over the same period. Since secondary buyouts have represented roughly half of new deal sourcing for mid and large buyout managers over the past decade, Schroders translates that shift into a headline estimate: about 5% of total mid/large buyout deal flow will be displaced over the next 10 years, relative to where it would otherwise sit.

“The most significant disruption is not in the concept of holding companies for longer under private equity ownership, but rather in who retains ownership.”

SCHRODERS CAPITAL, KEY TAKEAWAYS, JUNE 2026

That reframes the competitive stakes considerably. Companies staying in private equity hands for longer isn’t new, sponsor-to-sponsor deals have done that for two decades. What’s being modeled now is a reallocation of control: away from the buyer-side manager who would previously have won the next auction, and toward the incumbent GP working alongside a lead underwriter instead. It is the first time this has been expressed as a number rather than a general trend.

HOW THE ESTIMATE IS BUILT

The 5% figure rests on three assumptions holding simultaneously: that trade sale and IPO share of exits stays roughly flat, that continuation investment share keeps climbing from 9.0% toward 12.5% by 2035, and that secondary buyouts continue to represent about half of mid/large buyout deal sourcing. None of those assumptions are unreasonable on their own, but none are independently stress-tested, worth treating as a modeled estimate rather than an observed trend.

Why the growth looks structural rather than cyclical

Schroders’ own data shows 2025 volumes coming in ahead of what the firm projected a year earlier, $109bn against a revised 2024 base of $76bn, while the cyclical share of that growth actually fell, to 9% in 2025 from 14% in 2024. In other words, even as exit markets show early signs of recovery, continuation investment growth is becoming less dependent on distressed conditions, not more.

That lines up with what limited partners themselves are now saying. Coller Capital’s Summer 2026 Global Private Capital Barometer, surveying 108 LPs overseeing roughly $2 trillion in assets, found that 69% expect CV activity to hold or increase even if traditional exit channels fully recover; only 31% expect a decline. Coller’s data points to a structural mismatch behind that expectation: LPs disagree among themselves about the right holding period for any given asset, with 39% saying GPs aren’t providing liquidity early enough and 22% saying trophy assets are being sold too soon. Continuation vehicles resolve that tension by letting a single GP decision, hold the asset, accommodate LPs who want to exit and LPs who want to keep their exposure, simultaneously.

The “GP-led secondaries” label is a misnomer, Schroders argues

The paper also makes a pointed case against a piece of market shorthand: the term “GP-led secondaries,” often used interchangeably with continuation investments. Schroders argues this creates real confusion, for three reasons: fund managers typically retain (and often increase) their interest in the underlying company rather than crystallizing carry the way a genuine exit would require; these deals usually include a primary component of fresh capital rather than being a pure ownership transfer; and it is the incoming lead underwriter, not the GP, who structures the deal and runs full due diligence.

“When continuation investments are described as ‘private equity selling to itself,’ this is exactly not what these transactions are about,” the paper states. Ares Management has made a related argument in its own recent research, framing GP-led deals as private markets alpha against LP-led “beta,” and pointing to a specific mechanical source of that alpha: continuation vehicle pricing is typically locked at the signing date rather than at closing, so any value the company creates in the months between signing and close, revenue growth, multiple expansion, debt paydown, accrues to the incoming buyer rather than the seller. It’s a structural return enhancement that doesn’t show up in the initial underwriting model.

New data points worth tracking

• 31% of realized buyout portfolio companies are statistical candidates for continuation investments, according to Schroders’ analysis of roughly 2,600 realized deals in its own database, using a return-multiple threshold (2x TVPI) typical of sponsor-to-sponsor and CV target returns.

• $5.7bn in estimated annual fee savings for investors, based on 2025 volumes: continuation vehicle management fees run at roughly half the level of traditional buyouts, with more tiered carried interest.

• A 1.5-year shorter holding period for continuation investments versus traditional buyouts, based on Schroders’ own sample of 91 completed CV exits against 72 buyout co-investment exits. Worth flagging: the paper’s executive summary describes this as “about 25% shorter holding periods,” while the body text calculates a 35% faster time-to-liquidity from the same underlying gap, the two figures aren’t quite consistent with each other.

• A third-party return study from Evercore, covering 387 continuation funds formed between 2018 and 2024, found returns broadly comparable to traditional buyout funds but with lower dispersion, external support for the “more predictable returns” case that doesn’t rely solely on Schroders’ own deal data.

The case for the lower mid-market, updated for a more volatile world

Schroders continues to argue that small and mid-sized buyout companies, those with enterprise values below roughly $1bn, offer the most attractive continuation opportunities, citing lower entry multiples (up to 40% below large-cap buyouts, up to 55% below Russell 2000 peers), a wider set of exit routes, and greater potential for operational transformation. This year’s paper adds a timelier justification: geopolitical insulation. Citing “the latest conflict in the Middle East and related energy price shock,” the firm argues that smaller, more domestically-focused, services-weighted portfolios are less exposed to the trade and geopolitical tensions currently driving market volatility. Private equity-backed companies generate about 90% of revenue domestically compared with 60% for public companies, and PE portfolios run roughly 83% services versus 17% goods, compared with a near-even split for the MSCI index.

A STRUCTURAL IDEA ALREADY TAKING SHAPE ELSEWHERE

Schroders also floats what it calls “hybrid continuation investment” structures, an incumbent GP retaining control of a company’s transformation while a second fund manager takes a partial stake to contribute a specific capability, such as regional expansion or IPO preparation. Jasmin Capital’s most recent market newsletter describes a similar structure already in use, sometimes called a co-control continuation vehicle: 50% of a company is sold to a new sponsor through a competitive M&A process, and the remaining 50% is rolled into a continuation vehicle managed by the incumbent GP at the price set by that process. It’s a genuine innovation worth watching either way, the concept of splitting control between an exiting-price-setting sponsor and a continuing incumbent may be more consequential than either single research note suggests on its own.

_{Sources: Schroders Capital, "Continuation investments continue to grow – and to reshape the buyout market," In Focus, June 2026 (Nils Rode, Petr Poldauf, Eufemiano Fuentes Perez). Coller Capital, Global Private Capital Barometer, 44th Edition, Summer 2026. ILPA, 2026 Continuation Vehicle Guidance (comment period draft). Ares Management, "Why Now for GP-Led Secondaries," June 2026. William Blair Private Capital Advisory, Q2 2026 Quarterly Newsletter. Jasmin Capital, Newsletter N°13/2026. Underlying market data via Preqin, Pitchbook, Jefferies, Greenhill, Evercore, Lazard and PJT.}

The comparison Eurazeo itself draws is the telling one: ESF V’s predecessor closed at €1 billion in 2021. A single vintage more than doubling in five years is not typical growth for a mature strategy; it’s a re-rating. Eurazeo credits “growing investor demand for its disciplined strategy and differentiated market positioning” — read: a European mid-market secondaries book that institutional allocators are increasingly willing to pay up for, at a moment when the largest global platforms (Ardian, Coller, Lexington, AlpInvest) continue to absorb most of the headline fundraising.

Who wrote the checks

The commitment base spans sovereign wealth funds, pension funds, financial institutions, family offices and private wealth clients — a diversification Eurazeo highlights as evidence of broadening secondaries adoption beyond the traditional institutional LP base. Private wealth’s presence on that list is consistent with the broader retailization trend running through the secondaries market over the past two years, as managers built feeder structures to bring evergreen and wealth-channel capital into strategies historically reserved for large institutions.

“The strong increase in commitments reflects the growing recognition of our strategy in the market and the relevance of our differentiated positioning.”

— Christophe Simon, Managing Partner, Secondaries & Mandates, Eurazeo

“Against a volatile market backdrop, we are seeing a record level of opportunities, and ESF V is already well into its deployment phase.”

— Amine Rais, Partner, Secondaries & Mandates, Eurazeo

The platform context

ESF V’s close lifts Eurazeo’s Secondaries & Mandates AUM past €6.4 billion, now 17% of the Group’s roughly €39 billion in total assets under management — a business line built by a dedicated team of more than 30 professionals covering both GP-led and traditional LP secondaries. For a diversified manager whose broader identity is private equity, private debt, real estate and infrastructure, secondaries is becoming a proportionally larger and more strategically load-bearing piece of the platform.

This is not a niche product anymore. CVs have become a structural feature of how private equity manages portfolios and delivers, or defers, liquidity. And yet, the market’s rapid expansion has outpaced the governance frameworks designed to protect the LPs who must decide, repeatedly and under time pressure, whether to sell or roll.

ILPA’s newly released 2026 Continuation Vehicle Guidance (open to comments until August 5th) is the industry’s most serious attempt yet to close that gap. It is also, notably, a document whose timing is not accidental.

Why the Market Got Here

The structural driver is not complicated: too much capital, held too long, generating too little cash. The stock of unrealized assets across global private equity portfolios has reached approximately $3.8 trillion, roughly 32,000 companies. Holding periods at exit are now hovering around seven years, up from five to six years in the prior cycle. For the critical 2018–2021 fund vintages, which should currently be in their peak harvest period, DPI levels are reportedly as low as 0.1x to 0.3x.

“DPI has overtaken IRR as the metric that drives LP re-up decisions. Managers who can’t show progress toward at least 1.5x paid-in capital by year eight face a difficult fundraising conversation, regardless of the unrealized value generated.”

Against that backdrop, the cumulative LP cash flow deficit has reached $260 billion since 2022, according to Carlyle AlpInvest’s analysis. Distributions have recovered somewhat from their 2023 lows but remain roughly half the levels investors became accustomed to in prior cycles. The practical consequence: LPs are capital-constrained precisely as they face a wave of GP fundraising asks and, increasingly, CV sell-or-roll decisions.

GPs, meanwhile, have found CVs to be a genuinely useful tool in this environment. They allow high-conviction assets to be held longer without forcing a distressed sale. They offer LP optionality, cash out or roll, rather than a binary fund liquidation. And, critically, they allow carry to crystallize and be redeployed into succession planning. According to Bain’s 2026 Midyear PE Report, GP-led CVs grew 62% year-over-year, and 37% annually since 2022. Roughly 25% of GPs have recently launched or completed a CV; about 40% expect to explore one in the next one to two years.

The problem is that growth at this speed and scale, in a product that is, by definition, a related-party transaction, has created documented friction between GPs and their LPs.

LP Sentiment: Structural, Not Cyclical

The Coller Capital Summer 2026 Barometer, the 44th edition of the survey, published June 24, provides the clearest read on where LPs actually stand. The findings are striking, and not in the way CV optimists would hope.

The data point that matters most: 69% of LPs expect CV activity to either increase or hold at current levels, even as traditional exits recover. This is not a temporary workaround. It is a permanent feature of the private equity landscape. LPs know this, which is precisely why governance matters so much. CVs are not going away. The question is whether the processes around them will be made fair.

The same Barometer documented mounting LP concerns about process quality: inconsistent and late disclosures, compressed election windows, and transactions initiated without credible commercial rationale. A separate April 2026 ILPA poll found that a majority of LPs begin to lose confidence in a GP when the discount to the last reported mark exceeds 5% on a full exit — a threshold that many CVs have tested. These are not abstract complaints. They are the conditions that created demand for exactly the kind of framework ILPA has now produced.

The ILPA Response: From Principles to Enforcement

ILPA’s 2023 guidance established principles. The 2026 update operationalizes them. The shift in tone is deliberate and significant.

The document opens with a statement that sets the frame for everything that follows: CVs are “perceived overuse or misuse as an exit mechanism, often initiated with little to no disclosed commercial rationale, coupled with inconsistent and late disclosures, and processes that fail to represent a commitment to GP alignment with existing fund limited partners.” This is not a hedged observation. It is an indictment of a pattern of behavior that has become common enough to require a structural response.

The guidance is organized around three non-negotiable principles:

Each of these principles addresses a specific failure mode that has become common in practice. The “deliberate not default” standard targets CVs launched because the exit environment was difficult, not because the GP had a compelling case for continued ownership. The “no worse off” principle targets fee and carry structures that incrementally disadvantaged rolling LPs. The information symmetry standard targets the scenario, frequently reported by LPs, where new CV investors received better diligence access than the existing LP base being asked to make a sell-or-roll decision.

The Conflicts Section Is the Sharpest Part

On conflicts of interest, the guidance takes its clearest stand. The central problem of a CV is structural: the GP is simultaneously the selling agent (representing the existing fund) and the buying agent (managing the new CV). This cannot be eliminated. But, ILPA argues, it can be properly disclosed and managed, and the burden is entirely on the GP to do so.

The guidance’s most consequential line: “GPs should not rely on any pre-clearance conflict waivers in LPAs.” Every conflict must be identified, disclosed, and brought to the LPAC for explicit approval, regardless of what the fund documents technically permit. This is a direct rejection of the practice, increasingly common as CVs proliferated, of GPs treating LPA pre-clearance provisions as a shortcut around substantive conflict management.

“A GP should not assume its LPAC will always waive CV transactional conflicts. If processes are poorly managed, suffer from incomplete or delayed information, or overly compressed timelines, there is a greater risk that an LPAC will reject or condition its clearing of conflicts.”

The guidance also addresses an increasingly common conflict that has received little formal attention: LPAC members whose affiliated secondaries businesses are independently bidding on the CV. These members sit at the intersection of multiple conflicts, as LP fiduciaries, as potential buyers, and as LPAC gatekeepers for the very transaction they’re evaluating commercially. The guidance makes clear this must be managed separately, with full disclosure and appropriate recusal where warranted.

Regulators are watching. The SEC and the UK Financial Conduct Authority have both intensified scrutiny of GP conflicts in GP-led transactions. ILPA’s guidance effectively pre-empts regulatory intervention by setting an industry standard, but that standard now also serves as a reference point for regulatory expectations.

The Companion Documents: Where Principle Becomes Practice

Three supporting documents give the guidance operational weight in ways that prior ILPA publications did not achieve.

The GP Checklist for LPs converts the guidance into a yes/no disclosure framework that GPs are expected to complete at each stage of the CV process-covering commercial rationale, conflicts, pricing methodology, election mechanics, and LP rights. In practice, this is a document LPs can put in front of a GP at the outset of any CV process and request completed answers before the election clock starts.

The LP Evaluation Questionnaire structures the sell-or-roll decision across four dimensions: process integrity (was a competitive bid run? were advisors conflicted?), economics and valuation (does the price reflect a fairness opinion? how has the multiple trended quarter-over-quarter?), structure and terms (do existing side letters transfer? what are the carry and fee implications on an annualized basis?), and alignment (is 100% of crystallized carry rolling? is portfolio company management participating?).

The CV Transaction Timeline maps the ideal process from initial GP portfolio review through LPAC engagement, bid process, election, and closing. It establishes a critical sequencing principle: LP notification must begin at the moment the GP first incurs CV advisory costs, not once the transaction is substantially structured and the timeline is compressed.

LP MINIMUM STANDARDS - KEY TAKEAWAYS FROM THE GUIDANCE

• Require the fully completed ILPA Disclosure Template before the election period begins

• Demand no less than 30 business days for the election window, with unrestricted data room access throughout

• Confirm that existing side letters transfer to the CV on equivalent or better terms

• Verify that management fee and carry structures leave rolling LPs no worse off in absolute terms

• Require an anonymized summary of all final-round bids, including pricing structure and key commercial terms

• Confirm crystallized carry and GP sponsor commitment returns are reinvested in the CV

• Ensure roll elections are not conditioned on minimum commitments or stapled financing

• Request independent third-party price validation and a fairness opinion

What Changes and What Doesn’t

ILPA’s guidance is best practices, not regulation. No GP is legally compelled to follow it. But that framing understates its practical significance in several ways.

First, the document now serves as a reference standard in LPAC negotiations. LPs who arrive at an LPAC meeting with ILPA’s checklist and a list of gaps to fill have a credible, industry-endorsed framework behind them. GPs who deviate from it must explain why, which is a substantially higher bar than the prior norm of simply presenting a CV on whatever terms the GP preferred.

Second, LPAC dynamics have shifted. The guidance explicitly empowers LPACs to condition conflict approval on process remediation, on better information, longer timelines, clearer rationale. An LPAC that uses this authority is not being obstructionist; it is following published best-practice guidance. That changes the politics inside these transactions.

Third, the regulatory environment is moving in the same direction. Both the SEC and the FCA have signaled increased focus on GP-led transaction conflicts. ILPA’s guidance effectively creates an industry compliance baseline that regulators can reference, and that GPs ignore at their own risk.

For GPs, the practical implication is front-loaded investment. Early LPAC engagement, earlier LP notification, fuller documentation of alternatives considered, and a standing CV policy shared with LPs during fundraising. The guidance signals that the era of launching a CV with limited commercial context and a compressed election window is structurally over, not because it will always be stopped, but because the friction and reputational cost of doing so will increasingly outweigh the convenience.

For LPs, the guidance provides both a minimum standard and a negotiating tool. The side letter implications are particularly important: LPs should now incorporate minimum CV election periods, mirror reporting requirements, information-sharing floors, and mirror tax treatment into their standard side letter templates for future commitments. The time to negotiate these protections is during fundraising, not when the CV process is already underway.

The Structural Bet

The 2026 guidance arrives at a moment when the continuation vehicle market is, by most projections, still in its growth phase. Projections from multiple sources suggest CVs could represent 30% to 40% of all private equity exits within two years. The $3.8 trillion backlog of unrealized assets is not clearing quickly, and for the 2018–2021 vintages under the most LP pressure, CVs remain one of the few mechanisms that can return capital without forced sale conditions.

The Coller Barometer data points to why this matters beyond the immediate cycle: 69% of LPs expect CV activity to hold or increase even as exit markets recover. This is not a market expecting CVs to revert to a niche use case once conditions normalize. It is a market pricing in CVs as a permanent feature of how private equity works, and adjusting its governance expectations accordingly.

ILPA’s 2026 guidance is, in that sense, not just a response to current market conditions. It is the industry’s attempt to build the institutional infrastructure, standards, checklists, templates, timelines, that a permanent, high-volume CV market requires to function with genuine LP-GP alignment rather than the adversarial friction that has characterized too many transactions in the recent cycle.

The comment period closes August 5, 2026. Both LPs and GPs have until then to shape the final version. Given what’s at stake, the participation rate should be high.

_{Sources: ILPA 2026 Continuation Vehicle Guidance (comment period draft); Coller Capital Global Private Capital Barometer, 44th Edition, Summer 2026; Bain & Company Private Equity Midyear Report 2026; Carlyle AlpInvest, Global Private Markets Quarterly; Lazard 2025 Secondary Market Report; Ares Management secondaries research. Market volume data from Jefferies and Lazard annual secondary market reviews. All figures in USD unless otherwise noted. This article reflects analysis and editorial interpretation by Secondary Scoop; it does not constitute investment advice.}

Coller Capital’s Summer 2026 Global Private Capital Barometer offers the clearest LP-level rebuttal of that argument to date. When asked what happens to CV activity when traditional exit channels improve, 40% of LPs said it will continue to increase. Another 29% expect it to stay at current levels. Just 31% anticipate a decline.

That means 69% of LPs expect CV volume to hold or grow regardless of exit conditions. The cyclical thesis is effectively dead.

Why the exit timing gap makes CVs permanent

The structural case for CVs doesn’t rest on market dysfunction. It rests on a more fundamental problem: LPs and GPs have different clocks.

The Barometer makes this tension quantifiable. When asked whether GPs are correctly balancing liquidity needs against portfolio company value creation, only 40% of LPs said the balance is about right. Thirty-nine percent said GPs are not providing liquidity early enough. A further 22% said the best companies are being sold too soon.

Read those numbers carefully. Sixty percent of LPs are dissatisfied with exit timing — but they’re dissatisfied in opposite directions. Nearly two-fifths want liquidity faster. More than a fifth want GPs to hold longer. That’s not a problem with a single solution. That’s a structurally heterogeneous LP base with irreconcilable holding period preferences sitting inside the same fund.

Continuation vehicles are the mechanism that resolves this. By offering LPs the choice of selling for liquidity or rolling to retain exposure, CVs allow a single GP decision — hold the asset — to accommodate both outcomes simultaneously. An LP that needs DPI can exit. An LP that believes in the remaining value creation story can roll. Neither has to override the other.

That logic doesn’t disappear when exit markets improve. If anything, it becomes more relevant when GPs have genuine optionality — when the choice to run a CV reflects conviction about an asset’s trajectory rather than an inability to find a buyer elsewhere.

The normalization of CV acceptance

What’s changed in LP sentiment is not just tolerance for CVs but active expectation of them as a portfolio management tool. The Barometer describes CVs as having “gained acceptance among LPs as an established feature of private markets.” That language matters. Established feature is meaningfully different from necessary evil.

This shift has been gradual but consistent. Early CV transactions — particularly single-asset vehicles in the 2018–2020 period — faced significant LP skepticism around conflicts of interest, valuation integrity, and GP motivations. ILPA guidance, increased use of independent advisors, and more standardized process norms around fairness opinions have progressively addressed those concerns. LPs are better equipped to evaluate CV terms than they were five years ago, and the market infrastructure around these transactions has matured accordingly.

The result is a cohort of LPs who are no longer reacting to CVs defensively but incorporating them into their portfolio planning. When 40% of your LP base expects CV activity to keep growing in a recovered exit environment, you’re no longer looking at a crisis instrument. You’re looking at standard toolkit.

What this means for secondary market structure

The permanence of CV activity has direct implications for how the secondary market develops over the next cycle.

GP-led volume — of which single-asset and multi-asset CVs are the dominant form — has grown from a marginal share of secondary transaction volume to roughly half of total market activity over the past several years. If LP sentiment in the Barometer is directionally correct, that share is unlikely to compress back toward historical norms even as LP-led volume also grows.

That has consequences for secondary fund positioning. Buyers that built capabilities specifically around GP-led transactions during the 2019–2023 buildout are not holding a cyclical skill set. They’re holding infrastructure for a permanent market segment. Conversely, traditional LP-led focused buyers face a secondary market where their historical edge — portfolio pricing, relationship-driven sourcing — is a smaller proportion of available deal flow than it once was.

The Barometer also flags private credit secondaries as the asset class LPs expect to see the greatest proportional growth in the secondary market over the next three years, ahead of private equity. If CV structures migrate into private credit at scale — which the growth of NAV lending and credit fund continuation structures suggests is already beginning — the GP-led market expands further beyond its buyout origins.

The thesis, restated

The argument that CV volume is a distressed-market phenomenon has always been partly wrong. It conflated the conditions that accelerated CV adoption — a closed exit environment from 2022 through much of 2024 — with the underlying structural driver, which is the mismatch between LP holding period heterogeneity and traditional closed-end fund structures.

Coller’s Barometer is the first major LP sentiment survey to capture this distinction cleanly in the data. When 69% of LPs expect CV activity to hold or grow in a recovered market, they’re not describing a temporary accommodation. They’re describing a permanent repricing of how GP-LP relationships manage the end of the investment period.

The cycle argument for CVs is over. The structural argument is just getting started.

Source: Coller Capital Global Private Capital Barometer, Summer 2026 (44th Edition). Survey conducted February 18 – April 21, 2026, across 108 LPs overseeing $2.045 trillion in AUM. Editorial note: Coller Capital is a secondary fund manager with $54 billion in AUM and a direct commercial interest in secondary market growth. Data points are sourced directly from the report; structural interpretations are Secondary Scoop’s editorial framing.

KKR’s mid-year outlook for 2026 — an 89-page macro report — doesn’t mention secondaries once. But buried in its asset allocation calls is one of the cleaner arguments we’ve seen for why GP-led volume should keep growing through 2027.

The setup is the 2021 vintage.

KKR flags it explicitly, and repeatedly, as the market’s most structurally compromised cohort. Deals underwritten at peak multiples, unusually low base rates, loose documentation, and revenue growth assumptions that no longer hold. Their words: transactions “structured for a world that no longer exists.” They expect fewer sponsor-to-sponsor deals from this vintage, and they’re watching defaults in private credit — by Fitch’s definition, which includes PIK and extensions — running around 5% since mid-2024.

This is the feedstock for the GP-led market.

When a GP holds a 2021-era asset that can’t trade at original underwriting assumptions, and traditional exit routes — IPO, strategic sale, sponsor-to-sponsor — are either closed or value-destructive, the continuation vehicle becomes the rational tool. Not distress. Portfolio management. The secondary market’s core thesis, playing out in real time.

KKR adds another layer. Their macro framework — what they call the “Divergence Conundrum” — describes an environment where growth and capital access are increasingly concentrated in fewer sectors. AI, national security, high-end services. Everything else faces what they characterize as rolling recessions. In that environment, a GP with a mixed 2021-era portfolio has a legitimate structural problem: some assets are compounding well, others are stranded. The continuation vehicle lets them separate the two. It’s not a workaround. It’s the correct answer.

There’s also a rate context worth noting. KKR expects the Fed on hold through 2026, with only one cut in 2027. Higher-for-longer isn’t the crisis scenario anymore — it’s the base case. For any sponsor still waiting for rate normalization to unlock exits or refinancing, the wait is getting longer. That pressure redirects toward solutions that don’t depend on a rate tailwind: NAV facilities, GP-leds, structured equity.

None of this is speculative. The conditions KKR describes — concentrated earnings, stalled exit markets, bifurcated credit, 2021 overhang — are the same conditions secondaries advisors have been navigating for the past 18 months. What the report provides is macro confirmation from one of the largest PE firms in the world, written for LPs and allocators.

The secondaries market doesn’t need KKR to validate it. But when a firm of that caliber publishes a 89-page outlook that inadvertently describes the structural case for GP-led supply growth, it’s worth reading between the lines.

The pipeline isn’t slowing down. The macro is building it.

What is a continuation vehicle?

A continuation vehicle is a new fund a manager creates to buy assets out of one of its existing funds. Investors in the original fund choose to cash out at an agreed price or roll their interest into the new vehicle. The manager keeps running the assets and usually commits fresh capital alongside a lead secondary buyer.

In private credit, the point of the structure is liquidity. A continuation vehicle lets a manager return capital to investors who want it while holding performing loans for longer on behalf of those who stay in. Unlike private equity continuation vehicles, which tend to center on one or a few prized assets, credit continuation vehicles are usually diversified, full-fund pools of loans.

Why continuation vehicles are growing in private credit

The driver is a gap between when loans mature and when investors expect their money back. Private credit funds typically run on an eight-year term with a four-year investment period. Loans written late in that window can outlast the fund, and slower repayment has pushed distributions down. Ares estimates that 2019-vintage private credit funds have returned only about 70 percent of invested capital so far, a DPI of roughly 0.7x.

Private Credit DPI Multiple by Vintage

When distributions slow, managers need another way to deliver liquidity. Continuation vehicles supply it without forcing a sale of good loans into a weak market. The same structure lets managers keep assets they still rate highly, and it can open conversations that feed the next fundraise.

Adoption has been fast. As Luca Salvato, Partner and Co-Portfolio Manager at Ares Credit Secondaries, put it:

“Private credit continuation vehicle transactions have been embraced at a significantly faster pace than we have historically seen in other secondary asset classes. The growth in capital formation now enables GPs to adopt this technology at scale and offer a new and attractive liquidity option to their LPs.”

How big is the credit secondaries market?

Credit secondaries are one of the fastest-growing segments of private markets, though they remain small next to the roughly $2 trillion private credit market behind them. Total credit secondaries volume reached about $20 billion in 2025, close to double the prior year, a figure that McKinsey, Carlyle AlpInvest, Apollo, and Ares all converge on.

GP-led activity, which in credit is mostly continuation vehicles, did most of the work. McKinsey reports GP-led volume tripled year over year to about $12 billion in 2025, or 60 percent of the total. Dedicated capital has followed. Carlyle AlpInvest estimates around $20 billion of dry powder is now committed to credit secondaries, and Ares raised $7.1 billion for its credit secondaries strategy in January 2026, its largest inaugural fund to date.

What LP demand looks like

The clearest signal is deal size, and 2026 has produced a steady run of large closings. The year opened with Crescent Credit Solutions VII CV, a $3.2 billion vehicle led by Pantheon and announced in January 2026, which stands as the largest credit continuation vehicle closed to date. More have followed:

• Carlyle and Content Partners closed a single-asset continuation vehicle on 16 June 2026, giving investors in Carlyle’s Credit Opportunities funds the choice of liquidity or continued exposure to a film and television catalogue.

• Blue Owl led Veld Capital’s 355 million euro credit continuation vehicle, reported on 15 June 2026, one of a growing set of European credit CVs.

• Pantheon led a $1 billion continuation vehicle for Audax Private Debt in May 2026, built around first-lien senior secured loans.

• Ares led Antares Capital’s second continuation vehicle in March 2026, at more than $1.7 billion across 300 first-lien loans.

The European angle is worth watching. Ares has pointed to the activation of the European credit CV market, with several leading managers running scaled processes through 2025 and early 2026. The Blue Owl deal with Veld is a recent example.

Outlook

Forecasts vary but point the same way. Apollo expects credit secondaries to reach $50 billion or more within two to three years. Carlyle AlpInvest projects the market will pass $80 billion by 2030, with GP-centered deals, led by continuation vehicles, making up the larger share at around $55 billion. Every major house expects continuation vehicles to keep gaining ground as more managers treat them as a repeatable tool rather than a one-off fix.

Two things will shape how far the trend runs. The first is capital. At current deployment rates, Carlyle AlpInvest estimates only six to nine months of dry powder runway, so continued fundraising is needed to meet demand. The second is discipline. Because upside on credit is capped, returns are set largely at entry, which puts the weight on pricing and on underwriting the underlying loans rather than on a headline discount.

For now the direction is clear. Continuation vehicles have become the main engine of credit secondaries, and the deal flow of early 2026 suggests the market is still early in its growth.

Frequently asked questions

Are continuation vehicles a sign of distress? Usually not. In credit they are mostly used to manage fund life and provide liquidity around performing loans, not to offload troubled assets.

How is a credit continuation vehicle different from a private equity one? Private equity CVs tend to focus on one or a few assets. Credit CVs are usually diversified, full-fund portfolios of loans.

Who invests in these vehicles? Specialist credit secondaries funds lead most deals, often alongside the original manager, who rolls economics and sometimes commits new capital.

Sources:

• Ares Management, “The Rise of Continuation Vehicle Transactions in Credit Secondaries” (March 2026)

• Carlyle AlpInvest, “Credit Secondaries: Stepping into the Spotlight” (June 2026)

• Apollo, “Private Credit Secondaries” (June 2026)

• McKinsey Global Private Markets Review

• Carlyle and Content Partners press release (16 June 2026)

• Secondaries Investor, “Blue Owl leads Veld Capital’s 355m credit CV” (15 June 2026)

• Audax Private Debt and Pantheon (May 2026)

• Antares and Ares (March 2026); Crescent and Pantheon (January 2026)

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.

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.

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.

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.

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.

What Is Houlihan Lokey?

For readers encountering the firm for the first time: Houlihan Lokey (NYSE: HLI) is a pure advisory investment bank founded in Los Angeles in 1972. Like Moelis, it has no balance sheet deployed in transactions, no proprietary funds, and no AUM. It earns fees exclusively from advice.

The firm went public in 2015 and has grown into one of the most recognizable independent advisory platforms in the world. As of March 31, 2026, it employs 2,776 people across 33 offices worldwide, has 354 Managing Directors, and generated $2.6 billion in revenue for the fiscal year ending that date — growing at an 11% five-year CAGR. In nine of the ten years since its IPO, it has delivered annual revenue growth.

Its three business segments are Corporate Finance (67% of revenue), Financial Restructuring (20%), and Financial and Valuation Advisory (13%). Within Corporate Finance, the two product lines are Mergers & Acquisitions and Capital Solutions — the latter being where the secondaries business lives.

Houlihan Lokey is also the most acquisition-active boutique bank in this peer group, having completed 20 acquisitions over the last 15 years, including Audere Partners (France, February 2026), Mellum Capital (European real estate, January 2026), and Waller Helms Advisors (insurance and wealth management, December 2024).

The Record Year in Numbers

Fiscal year 2026 — April 2025 through March 2026 — was a record by nearly every measure:

• Total revenues: $2.618 billion, up 10% year-over-year

• Adjusted EPS: $7.56, up 20%

• Adjusted pre-tax margin: 25.9%, flat versus FY2025 but among the highest in the peer group

• Adjusted net income: $518 million, up from $434 million the prior year

• Managing Directors: 354, up from 339 in FY2025, growing at an 8% CAGR over 20 years

• Revenue per MD: $7.6 million, up from $7.3 million

Corporate Finance — the segment that contains Capital Solutions and therefore secondaries — grew 14% for the year to $1.745 billion, with a 17% five-year revenue CAGR. That makes it by far the fastest-growing segment, outpacing Financial Restructuring (0% five-year CAGR) and Financial and Valuation Advisory (13% five-year CAGR).

The Q4, ending March 31, 2026, was more complicated: revenues of $635.6 million were down 5% year-over-year, reflecting two large restructuring transactions that slipped past quarter-end, geopolitical disruption from the Middle East conflict, and software-sector volatility hitting CF deal timing. CEO Scott Adelson was clear-eyed about it — but equally clear that the pipeline heading into fiscal 2027 is at record levels.

Capital Solutions: The Hard Numbers

The Capital Solutions Group comprises 200 dedicated professionals across 18 offices in eight countries as of March 31, 2026. In FY26 - it has raised $36 billion in capital and closed more than 140 transactions. The group explicitly describes itself as one of the largest capital solutions groups at non-balance-sheet banks.

The secondaries piece sits within a sub-group called Secondary Solutions, which covers continuation vehicles, fund tender processes with stapled capital, and sale of LP interests and strip sales. Surrounding it are related capabilities that are highly relevant to secondaries activity: GP Advisory (strategic advisory for asset managers, firm-level equity stake sales, fund-level NAV loans and preferred equity), Directs & Co-Investments (LP-style capital for single-asset transactions, mid-life co-investments), and Primary Capital Advisory (placement for control buyout, growth equity, and alternatives strategies).

The investor presentation also formally lists “Continuation Vehicles and Other Secondaries” as one of the three connecting bridges between its M&A, Capital Solutions, and Financial Restructuring platforms — confirming that HL sees GP-led secondaries as a product that sits at the intersection of all three of its core business lines. That integration is the key differentiator.

On the revenue size question: during the earnings call, CFO Lindsey Alley confirmed that Capital Solutions is 20% of Corporate Finance revenues and that percentage has been growing over the last couple of years. With Corporate Finance at $1.745 billion for the year, that implies Capital Solutions contributed at least $349 million in FY2026 — a nine-figure business growing faster than the M&A segment it sits alongside.

The Pent-Up Demand Chart That Explains Everything

The investor presentation contains a PitchBook chart that Adelson explicitly referenced on the earnings call — and it is arguably the single most important visual for understanding the secondaries opportunity at Houlihan Lokey right now.

The chart shows the inventory of U.S. private-equity-backed companies from 2016 to 2026. The total has grown from 7,821 in 2016 to 13,325 in 2026 — a 70% increase in a decade. More importantly, of those 13,325 companies, 6,790 are now more than five years old. That is over half the entire inventory past a typical hold period, sitting in portfolios waiting for an exit path that traditional channels — IPOs and strategic M&A — have not reliably provided since 2022.

Adelson summarized it directly on the call: there is a lot of pent-up demand. “Over half of them are over five years old. To answer your question with an exclamation point, there is a lot of pent-up demand.” That aging inventory is the structural engine behind the GP-led secondaries market, and Houlihan Lokey, as the most active advisor to private equity globally (286 PE transactions in 2025, per The Deal), is positioned directly in the middle of it.

The firm has 30 senior officers dedicated to the financial sponsor community in North America, Europe, and Japan, covering 1,900 financial sponsor firms across private equity, credit, family offices, and institutional investors. That network is the distribution engine for Capital Solutions mandates — every M&A engagement is a potential introduction to a GP who will eventually need a continuation vehicle.

GP-Led Secondaries and the Restructuring Overlap

One of the most interesting strategic angles from the earnings call is how explicitly Houlihan Lokey’s leadership described the connection between restructuring tailwinds and secondaries opportunity.

Adelson flagged four converging factors driving an improved restructuring outlook for fiscal 2027: widening credit spreads, dislocation in private credit, software sector stress, and energy volatility. He described “several notable recent wins” and used the phrase “elevated levels” — the same language the firm has deployed for three consecutive years of strong restructuring performance.

For secondaries readers, this matters because GP-led secondaries and restructuring increasingly serve adjacent constituencies. A PE firm managing an overleveraged portfolio company in private credit or a repriced software asset may simultaneously need a restructuring advisor for the capital stack and a secondaries advisor to give existing LPs liquidity while bringing in new capital. Houlihan Lokey, with 59 restructuring MDs and one of the largest Capital Solutions teams in the market, is one of the very few advisory firms that can handle both sides of that situation in-house.

The investor presentation formalizes this: “Liability Management” is one of the connecting bridges in the firm’s service diagram between Financial Restructuring and Capital Solutions. GP-led secondaries that involve distressed or out-of-favor assets are precisely the transactions where that integration creates genuine competitive advantage.

The European Buildout

The investor presentation maps Houlihan Lokey’s Capital Solutions team across 18 offices, including London, Paris, and Zurich — the last of which was added with the September 2025 hire of Sandro Galfetti, formerly Head of EMEA Secondary Advisory at UBS Investment Bank. He joined Michael Pilson, who relocated to London, to co-lead GP-led secondary advisory in Europe.

The European expansion matters for three reasons. First, the European GP-led market is at an earlier adoption stage than the U.S. and growing faster. Second, Houlihan Lokey’s acquisition of Audere Partners in France gives the Capital Solutions team direct access to a market where GP-led transactions have historically been underserved by dedicated advisors. Third, EMEA already represents 26% of HL’s total revenue — the largest international region — and CF revenues outside the U.S. grew significantly faster than domestic revenues in both Q4 and the full fiscal year. The infrastructure is there; the Capital Solutions team is now being layered on top of it.

HL’s own research supports the timing. Its LP Compass survey, published in March 2026, found that 86% of active secondary buyers expect 2026 volumes to exceed last year’s record of $225 billion, with European deal flow cited as a meaningful growth contributor. The survey also found that 85% of investors say GP-led deal quality has held firm or improved despite rapid market expansion — an important signal that the market is maturing, not degrading.

The Valuation Advisory Second Derivative

A question on the earnings call surfaced a secondaries angle that is easy to overlook: the connection between Houlihan Lokey’s Financial and Valuation Advisory business and the growing demand for independent marks on private credit and PE portfolios.

Adelson’s response was enthusiastic. The portfolio valuation group, he said, has been growing through all cycles, private credit dislocation is driving more frequent and more rigorous marking, and if private equity exits open up broadly, the Total Addressable Market for valuation services could double.

The investor presentation confirms the scale of this business: 2,500+ annual valuation engagements, the #1 global M&A fairness opinion advisor for 25 consecutive years, and the Best Valuations Firm for Hard to Value Assets globally for seven straight years. As secondary transaction volumes grow — and as buyers and sellers of GP-led and LP-led positions increasingly require independent valuation support — HL’s FVA segment becomes a natural adjacency to the Capital Solutions team. The same firm that advises on the continuation vehicle can provide the independent mark on the underlying assets. That is a meaningful cross-sell and a genuine service differentiation.

What to Watch in Fiscal 2027

Three things to track for Secondary Scoop coverage:

Capital Solutions’ revenue trajectory. With Corporate Finance growing at a 17% five-year CAGR and Capital Solutions above 20% of that — and growing — the absolute revenue figure is likely approaching $400 million or beyond in FY2027 if momentum holds. Watch for any decision by management to break out Capital Solutions as a separately disclosed segment. The business is large enough to warrant it.

The European GP-led pipeline. The Galfetti hire in Zurich, the Audere acquisition in France, and the relocation of Michael Pilson to London all point to a deliberate push to build deal flow in EMEA continuation vehicles. The first marquee European GP-led closes from this team would be a significant signal.

Private credit secondaries. Adelson’s comments on private credit dislocation, combined with the valuation advisory tailwind and the firm’s explicit GP Advisory capabilities (NAV loans, preferred equity, fund-level debt), suggest HL will increasingly be in the room when credit-focused GPs need liquidity solutions. That market is early but directionally important.

Houlihan Lokey enters fiscal 2027 as the #1 global M&A advisor by transaction count, the #1 global restructuring advisor for 11 consecutive years, and — based on the data now available — the operator of what may be the largest secondaries advisory team among non-balance-sheet banks. The record backlog, the aging PE portfolio inventory, the European buildout, and the restructuring tailwinds all point in the same direction.

For GP-led secondaries, the setup has rarely looked better. And Houlihan Lokey is squarely in the middle of it.

What Is Moelis?

Moelis & Company (NYSE: MC) is a pure advisory investment bank. It has no AUM, no balance sheet deployed in transactions, no proprietary funds, and no debt. It earns fees exclusively from advice. Founded in 2007 by Ken Moelis — a veteran of UBS and the late Drexel Burnham Lambert — the firm went public in 2014 and has since grown into one of the most respected independent advisory boutiques globally, with 1,440 employees across 23 offices in 45+ countries and 179 Managing Directors as of March 2026.

That capital-light, conflict-free model is not incidental to its secondaries ambitions — it’s the whole point. When a GP selects an advisor for a continuation vehicle, they need someone who can credibly represent their interests to LP voters and secondary buyers without any competing agenda. Moelis has no fund on the buy side. No balance sheet taking a position. No asset management arm with its own carry dynamics. Just advice.

Its four business lines are:

• M&A and Strategic Advisory — its largest product, covering sell-side, buy-side, divestitures, carve-outs, special committee advisory, and fairness opinions. Over $2.6 trillion in transaction volume and 1,500+ deals since IPO.

• Capital Structure Advisory (CSA) — restructuring, liability management, debt exchanges, and balance sheet optimization. Ranked top 3 globally for completed restructurings between 2021–2025, with roughly $1 trillion in liabilities restructured since IPO.

• Capital Markets — equity and debt capital raising, IPOs, PIPEs, convertibles, private placements, and direct lending advisory. Approximately $230bn raised for clients since IPO.

• Private Capital Advisory (PCA) — the newest and fastest-growing unit, covering GP-led secondaries, LP liquidity solutions, tailored capital raise (co-investments, NAV loans, preferred equity), and primary fund placement.

In Q1 2026, the firm posted total revenues of $319.8 million — a record for any first quarter in its history. The business mix was approximately two-thirds M&A and one-third non-M&A, with that non-M&A third shared between CSA, Capital Markets, and PCA. Moelis does not break out revenue by product line, so the exact contribution of PCA — let alone secondaries specifically — is not publicly disclosed. What is clear is that secondaries represents a growing fraction of that non-M&A third, and management’s commentary suggests it’s punching above its weight in terms of strategic priority and pipeline momentum.

Last Twelve Months revenue through Q1 2026 stands at $1.53 billion, and the firm has returned approximately $3.2 billion to shareholders since its IPO through dividends and buybacks — all of it generated from fees, with no balance sheet risk.

Q1 2026: Private Capital Advisory as a Growth Driver

Moelis posted record Q1 2026 revenues of $319.8 million, up 4% year-over-year — and if you read between the lines of the earnings call and the investor presentation published alongside the results, the secondaries business had a lot to do with it.

CFO Christopher Callesano attributed the revenue increase to higher M&A and Private Capital Advisory revenue, partially offset by declines in capital structure advisory and capital markets. In a quarter where two of four product lines declined, PCA pulling in the same direction as M&A is a meaningful signal about where the firm’s growth is coming from.

GP-Leds at the Center

CEO Navid Mahmoodzadegan was explicit on the earnings call: the GP-led secondaries market is hitting record levels, driven by demand for liquidity solutions, the growing adoption of continuation vehicles, and an expanding base of institutional investors seeking exposure to seasoned assets. He said Moelis’s PCA “thesis is playing out as expected,” with live mandates and a rapidly building pipeline.

That thesis has been years in the making. The investor presentation shows the PCA team now maintains over 1,500 global LP relationships and has advised on more than $75 billion in private capital — a figure that includes experience at prior firms but reflects the caliber and network of the senior team. Average experience per Managing Director in PCA exceeds 20 years.

The recent deal track record in secondaries skews heavily toward GP-led structures, specifically continuation vehicles:

Every one of these is a GP-led, and several are single-asset or concentrated structures — the most complex and highest-fee end of the secondaries spectrum. Notably absent from the list: LP-led portfolio sales. Moelis is not positioning itself as a portfolio brokerage shop. Its secondaries identity is firmly in the GP-led, structurally complex, advisor-as-fiduciary lane.

How Big Is the Secondaries Business at Moelis?

The honest answer: we don’t know precisely, and Moelis doesn’t tell us.

The firm reports a single consolidated revenue line with no product-level breakdown. In Q1 2026, total non-M&A revenue was approximately $106 million (one-third of $319.8mm). That bucket is shared by Capital Structure Advisory, Capital Markets, and PCA. Within PCA, secondaries competes for revenue with primary fundraising and tailored capital solutions like co-investments and NAV loans. So secondaries is a fraction of a third — real and growing, but not yet a standalone reportable segment.

What we can infer from the hiring data is instructive. Mahmoodzadegan confirmed on the earnings call that Moelis is building toward seven senior bankers dedicated specifically to GP-led secondaries — with a recent MD hire focused on private credit secondaries and another expected to join later in 2026. For context, the investor presentation shows that PCA led all product categories in recent MD additions: six new managing directors between 2023 and year-to-date 2026, ahead of M&A (six), Capital Markets (five), and Capital Structure Advisory (four).

Building Into Private Credit Secondaries

The expansion into private credit secondaries deserves its own paragraph. Moelis’s PCA platform already covers GP-led equity continuation vehicles across buyout, growth equity, and real assets strategies. Adding a dedicated MD for credit secondaries signals that the firm sees the next wave of secondary activity moving beyond PE portfolio management and into credit portfolios — direct lending books, CLO equity, private credit fund stakes — a market that remains earlier-stage but is attracting serious capital from buyers globally.

The timing makes sense. As direct lenders face increasing pressure from portfolio concentration, vintage clustering, and the AI-driven repricing of software credit (a theme Mahmoodzadegan discussed at length on the call), the secondaries market for credit assets is likely to deepen. Having a dedicated banker in place before that wave fully arrives is a classic Moelis move — patient, talent-forward, organic.

The Macro Backdrop Is Working in Their Favor

The conditions Mahmoodzadegan described on the earnings call are essentially a structural tailwind for GP-led secondaries advisory. Sponsors are sitting on a large backlog of investments that need to be monetized, but the traditional exit channels — IPOs and strategic M&A — remain partially constrained by macro uncertainty, public equity volatility, and geopolitical friction. When the exit window is partially closed, continuation vehicles become the liquidity mechanism of choice for GPs who believe in their assets but need to give LPs an off-ramp.

Mahmoodzadegan also flagged that disruptions in private credit and AI-driven sector dislocation are creating near-term headwinds in parts of the market — while simultaneously noting that these forces “create new opportunities.” For secondaries advisors, that’s not spin. Dislocated GPs managing overlevered software portfolios, navigating lender selectivity, or simply trying to buy time for value creation need creative liquidity solutions, and Moelis is positioning itself as the firm that can structure them — especially when the same transaction might involve elements of capital structure advisory, a NAV facility, and a GP-led secondary all at once.

Why Independent Advisory Wins in GP-Led Secondaries

There’s a structural reason why a pure-play advisory firm is well-positioned to win in GP-led secondaries, and it comes back to Moelis’s fundamental business model.

Unlike bulge-bracket banks that might have asset management arms or proprietary funds competing for the same assets, and unlike secondary funds that are on the buy side, Moelis sits exclusively on the advisory side. Its PCA offering spans Secondary Market Advisory (continuation funds, LP liquidity, equity recaps, NAV loans and preferred equity), Tailored Capital Raise (co-investments, managed accounts, seeded fundraises, stapled primaries), and Primary Fundraise placement. The breadth of that platform means Moelis can advise a GP across the full capital lifecycle — not just when they need a continuation fund, but when they’re raising their next primary too. That continuity of relationship is where advisory firms build durable competitive moats.

The firm ended Q1 2026 with $354 million in cash, no debt, and a strong balance sheet. It returned approximately $171 million to shareholders in the quarter — $0.65 per share in regular dividend plus open-market buybacks. That capital discipline, combined with 400%+ total shareholder return since IPO, suggests the firm has the financial stability to continue investing patiently in PCA without needing the business to immediately carry its own weight.

What to Watch

The pipeline is near all-time highs across the firm, according to Mahmoodzadegan. If a meaningful portion of that pipeline reflects GP-led secondary mandates — and the hiring trajectory suggests it does — then Q2 and Q3 2026 could be the quarters where Moelis’s PCA bet starts showing up more visibly in the revenue line.

The private credit secondaries buildout is the longer-dated but potentially larger opportunity to track. And the question of whether Moelis will eventually break out PCA as a disclosed revenue segment — giving the market a clearer view of the business — is worth watching as the unit scales.

For those tracking the secondaries advisory landscape, Moelis is no longer a peripheral player experimenting with the product. With seven dedicated senior bankers in GP-led secondaries, a string of marquee continuation vehicle closes, an expansion into private credit secondaries, a $75bn+ advisory track record in PCA, and explicit CEO commentary that the thesis is playing out — Moelis has made its position clear.

The question now is execution at scale. And the ingredients — talent, relationships, platform, and conflict-free positioning — are all in place.

Secondary Scoop covers the global market for private equity, venture capital, and private credit secondaries, including GP-led transactions, LP portfolio sales, and fund restructurings.

Let’s put a number on it: GP-led transaction volume in private credit secondaries grew nearly 300% year-over-year in 2025. Not 30%. Not 50%. Three hundred percent.

That figure, from Evercore’s annual secondaries market report, is the kind of stat that makes you stop and ask whether you’re reading it correctly. You are. And it reflects something deeper than a hot market — it reflects a structural shift in how credit managers think about portfolio construction, capital recycling, and liquidity.

How we got here:

The private credit market grew explosively between 2018 and 2024. Direct lending AUM roughly tripled. The number of BDCs, separately managed accounts, and closed-end credit vehicles multiplied. As those portfolios matured, a natural secondary market began to form — GPs looking to clean up older vintages, recycle capital into higher-yielding opportunities, and provide liquidity to LPs without waiting for natural loan payoffs.

What accelerated the GP-led side specifically was the same dynamic reshaping PE secondaries: continuation vehicles. In credit, that looks slightly different. Instead of moving a prized software company into a new vehicle, a credit GP might create a continuation fund around a portfolio of performing direct loans managed by a blue-chip sponsor. The economics are attractive for buyers — seasoned cash-flowing assets, predictable returns, and insulation from interest rate volatility.

Some of the landmark deals from 2025 illustrate the scale: Benefit Street Partners’ $2.3B continuation vehicle, TPG Twin Brook’s $3B deal, and Crescent Capital’s record $3.2B CV — the largest private credit secondaries transaction ever completed. These are no longer niche deals. They are institutional-grade transactions that belong in the same conversation as the biggest PE continuation vehicles.

The fundraising side is just as telling:

Ares raised $7.1B for its credit secondaries strategy. Coller Capital closed $6.8B last year. These aren’t opportunistic vehicles — they’re permanent capital allocations to a segment that buyers believe is durable. The Ropes & Gray Q1 2026 update projects that overall secondaries fundraising could top $200B raised over the next 12 months, with private credit strategies among the key drivers.

What changes now that everyone is paying attention:

The risk of success in any secondaries sub-market is the same: competition compresses returns. When a segment is niche, information advantages are wide, pricing is inefficient, and disciplined buyers can generate outsized risk-adjusted returns. When Goldman Sachs, Ares, Coller, and Blackstone are all building dedicated credit secondaries platforms, the information edge narrows.

That said, private credit secondaries remain structurally more complex to underwrite than PE secondaries. Loan portfolios require credit analysis at the underlying borrower level. GP relationships, covenant structures, and documentation quality vary enormously. The buyers who built genuine credit underwriting capabilities early — not just repurposed PE secondaries teams — will have a durable advantage as the market matures.

For LPs considering allocations: private credit secondaries now offer something rare — yield-oriented returns with a secondaries premium and a structural discount available at the time of purchase. The J-curve is minimal. The entry point into seasoned assets removes early-life uncertainty. For allocation committees still sitting on the sidelines, the 2025 data is now hard to argue with.

The number to watch in 2026: Whether GP-led credit secondaries volume doubles again, or whether the 300% YoY growth normalizes as the market catches up to itself. Either answer is informative.

Sources: Evercore 2025 Annual Secondaries Report, Ropes & Gray Q1 2026 Secondaries Update, PitchBook

When Kline Hill and Cendana closed their second joint VC secondaries fund at $400M — blowing past a $300M target to hit the hard cap — the headline number was notable. But what it signals is more interesting than what it raised.

This isn’t a mega-fund play. This is a bet on the most illiquid, least intermediated corner of the secondaries market: early-stage VC fund stakes. The kind of positions that are too small for Lexington, too messy for Blackstone Strategic Partners, and too idiosyncratic for most buyers to underwrite with confidence. Kline Hill has been fishing in this pond since 2015. Cendana, one of the most active seed fund-of-funds in the US, brings the relationship network and information edge that turns these deals from a headache into an opportunity.

The JV works precisely because of what each firm brings that the other can’t replicate. Cendana’s portfolio funds — including names like Lerer Hippeau, Forerunner Ventures, and Bowery Capital — surface sellers organically. Family offices and early LPs looking to exit a $2M commitment don’t run a formal process. They call someone they already trust. Cendana fields those calls. Kline Hill prices, underwrites, and closes.

The new fund, structured as KHC Partners Fund II, will deploy across LP position transfers, GP-led transactions, direct company deals, and structured solutions. That last category is worth watching — structured solutions in VC secondaries often means synthetic secondaries, NAV-backed facilities, or preferred equity in aging portfolios that haven’t produced distributions. In a venture market where DPI remains stubbornly low, the demand side of that trade is only growing.

Why this matters for the broader market:

The success of this raise isn’t just about Kline Hill and Cendana. It’s a data point in a larger story about the institutionalization of VC secondaries as a standalone asset class. Five years ago, LP stakes in seed-stage funds were a footnote in secondaries databases. Today, they have dedicated capital, specialist buyers, and — increasingly — motivated sellers.

The structural reasons are well understood: venture funds raised in 2017–2021 are deep in their hold periods. Many have star assets that are still private and show no sign of IPO-ing soon. LPs who committed to those funds expected a 10-year cycle. Some are now in year eight or nine with minimal distributions and no clear exit horizon. For them, selling at a discount isn’t a failure — it’s portfolio management.

For buyers like KHC, that combination of motivated sellers, thin competition, and information advantage is exactly the setup they’re looking for.

The question going forward:

With $400M raised, what does Fund II do differently from Fund I ($105M)? Scale alone changes the dynamics of a market that has historically rewarded patience and selectivity over firepower. Watch how they balance the original thesis — small, relationship-driven, lower-end deals — against the pressure that comes with managing a larger pool. If they stay disciplined, this could be one of the most interesting vehicles in venture secondaries to track over the next three years.

Sources: Secondaries Investor, SecondaryLink, Kline Hill Partners

Photo: Vinted

Vinted, the C2C second-hand marketplace, has completed a €880 million secondary share transaction at an €8 billion equity valuation — one of the most notable secondary deals in the European tech ecosystem so far in 2026.

The transaction was led by EQT — an existing investor doubling down on its position — alongside two new shareholders: Teachers’ Venture Growth (TVG), the late-stage venture investment platform of Ontario Teachers’ Pension Plan, and Schroders Capital. Additional new investors include funds managed by BlackRock, Lombard Odier Investment Managers, and Pinegrove Opportunity Partners. Among existing shareholders, Baillie Gifford chose to increase its stake.

The deal was significantly oversubscribed.

Why This Deal Matters for the Secondary Market

This transaction is a textbook example of secondaries doing exactly what they’re designed to do: providing liquidity to existing shareholders and employees without the company needing to raise primary capital or pursue an IPO.

Vinted is not raising new money here. The company has been cash flow positive for several years, posted €62M in net profit in 2025, and has ample balance sheet capacity to self-fund growth. The secondary serves as a cap table rebalancing tool and a meaningful liquidity event for the team — reinforcing its value as a retention and reward mechanism.

The Financial Profile Driving Institutional Appetite

Vinted’s numbers speak for themselves:

• 2025 GMV: €10.8B (+47% YoY)

• 2025 Revenue: €1.1B

• 2025 Net Profit: €62M

• Markets: 26 countries

The combination of high-growth at scale with sustained profitability is precisely what secondary investors look for in an asset: audited metrics, business visibility, and a credible liquidity horizon — whether via IPO or a future secondary round.

A Shareholder Base Built for the Long Game

One of the most telling aspects of this deal is the profile of the incoming investors. TVG and Schroders Capital are institutional platforms designed to hold positions across both private and public markets — exactly the type of investor a pre-IPO company wants on its cap table to smooth the eventual transition to public markets.

Goldman Sachs International acted as sole placement agent. Cooley provided legal counsel to Vinted.

The Secondary Market Takeaway

This deal reinforces several trends we’ve been tracking at Secondary Scoop:

1. Secondary transactions are no longer a distress signal. Vinted has used them as a deliberate cap table management tool in every funding round since 2015.

2. Institutional LPs — especially pension funds — are increasingly active in growth-stage secondaries. TVG (Ontario Teachers’) is the clearest proof point.

3. Oversubscription signals that demand for quality secondary assets continues to outpace supply, particularly in companies with strong fundamentals and demonstrated profitability.

Full Vinted Press Release: https://company.vinted.com/newsroom/secondary-share-transaction-at-€8B%20equity%20valuation