Key Takeaways
- • Secondaries market strengthening amid PE headwinds: Market volatility, evolving investor bases, rapid technological advancement, and persistent liquidity constraints are driving increased activity in the private equity secondaries market, according to Pomona Capital CEO Michael Granoff.
- • Liquidity pressures catalyze both LP and GP participation: Both limited partners and general partners are actively turning to secondaries transactions to address ongoing liquidity challenges, positioning the market as a critical mechanism for capital deployment in constrained conditions.
- • Secular shift in investor comfort: Growing institutional comfort with secondaries transactions reflects a fundamental, long-term evolution in how institutional investors view secondary market participation as a normalized component of PE portfolio management.
- • Pomona Capital's scale and positioning: The firm manages over $18 billion in aggregate capital commitments across its flagship funds, positioning it as a leading secondaries specialist navigating current market dynamics.
- • Selective buying discipline required: As asset supply increases amid liquidity pressures, secondaries buyers must exercise heightened selectivity, balancing opportunity identification with disciplined capital deployment.
Summary
The private equity secondaries market is gaining momentum despite—and partly because of—challenging conditions in the broader PE landscape. According to Pomona Capital CEO Michael Granoff, four structural factors are converging to make secondaries an increasingly attractive investment avenue: market volatility, an evolving investor base, rapid technological change, and ongoing liquidity constraints throughout the institutional investment ecosystem.
Both limited partners and general partners are actively leveraging the secondaries market to address liquidity pressures. LPs facing capital call demands or seeking earlier exit windows are selling secondary positions, while GPs managing portfolio companies or fund-level liquidity needs are participating as both buyers and sellers. This dual participation has expanded transaction flow and created a more diverse ecosystem of buyers and sellers than historically existed in the secondaries space.
A secular shift is underway in institutional investor behavior toward secondaries. Rather than representing niche or opportunistic transactions, secondary market participation is increasingly viewed as a standard portfolio management tool. This shift reflects growing comfort among institutional investors with the mechanics, pricing transparency, and risk-adjusted return profiles of secondaries relative to primary PE commitments. As this comfort level expands over time, it creates a more robust and liquid market structure.
Technological advancement is facilitating this evolution by improving deal sourcing, due diligence capabilities, and portfolio monitoring. These enhancements allow investors to engage with secondaries more efficiently, reducing traditional friction points that once limited participation to specialist operators.
In this environment, selectivity remains paramount. As more assets come to market—driven by liquidity pressures and extended holding periods across vintages—discerning buyers must carefully evaluate opportunity quality, pricing, and alignment with portfolio objectives rather than deploy capital indiscriminately.
Both limited partners and general partners are actively leveraging the secondaries market to address liquidity pressures. LPs facing capital call demands or seeking earlier exit windows are selling secondary positions, while GPs managing portfolio companies or fund-level liquidity needs are participating as both buyers and sellers. This dual participation has expanded transaction flow and created a more diverse ecosystem of buyers and sellers than historically existed in the secondaries space.
A secular shift is underway in institutional investor behavior toward secondaries. Rather than representing niche or opportunistic transactions, secondary market participation is increasingly viewed as a standard portfolio management tool. This shift reflects growing comfort among institutional investors with the mechanics, pricing transparency, and risk-adjusted return profiles of secondaries relative to primary PE commitments. As this comfort level expands over time, it creates a more robust and liquid market structure.
Technological advancement is facilitating this evolution by improving deal sourcing, due diligence capabilities, and portfolio monitoring. These enhancements allow investors to engage with secondaries more efficiently, reducing traditional friction points that once limited participation to specialist operators.
In this environment, selectivity remains paramount. As more assets come to market—driven by liquidity pressures and extended holding periods across vintages—discerning buyers must carefully evaluate opportunity quality, pricing, and alignment with portfolio objectives rather than deploy capital indiscriminately.
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