Key Takeaways
- • Record secondary transaction volumes in global private equity reached $162 billion in 2024, surpassing $200 billion in 2025, reflecting a significant growth trend in this finance sector.
- • Ardian’s Secondary Fund IX, which raised an unprecedented $30 billion, illustrates the increasing prominence of secondaries, positioning it as one of the fastest-growing sectors in global finance.
- • The secondary market includes two key transaction types: investor-led transactions, where institutional investors sell fund interests for liquidity, and fund manager-led transactions, which involve creating continuation funds to hold mature assets longer.
- • Continuation funds, once viewed with skepticism, are gaining acceptance as a viable strategy, allowing existing investors to maintain exposure while preventing forced sales at suboptimal times.
Summary
South Africa's private equity market has faced long-standing liquidity challenges, where extracting capital out of investments has proved more complex than the initial capital inflow. The market's reliance on a supportive stock exchange, willing buyers, and investor patience complicates exit strategies. However, the rise of the secondary market is poised to alleviate some of these issues, providing an alternative pathway for liquidity.
Global secondary transaction volumes have made significant strides, achieving a record of $162 billion in 2024 and exceeding $200 billion the following year, signifying a robust shift in market dynamics. Specifically, by mid-2025, the secondary market saw a 51% year-on-year increase in volume, highlighting the increasing appetite for these types of transactions as a mainstream financing solution. Notably, Ardian's Secondary Fund IX, which closed at $30 billion, represents the largest fund dedicated exclusively to investing in private equity secondaries, reflecting the sector's potential.
The secondary market is primarily characterized by two transactions: investor-led and fund manager-led. In investor-led transactions, institutional investors, such as pension funds reallocating their portfolios, sell their interests to third parties, thus obtaining immediate liquidity while transferring the investment of mature, de-risked assets. Conversely, fund manager-led transactions involve the establishment of continuation funds. These new vehicles allow fund managers to acquire assets from older funds nearing their life cycle, providing existing investors the option to either cash out at fair value or roll into the new structure, thereby maintaining their investment horizon without compulsory exits.
The perception of continuation funds has evolved; once a sign of distress, they are now considered a strategic tool, providing investors with more time to realize the full potential of quality assets while navigating the complexities of the private equity landscape in South Africa. This evolution indicates a maturation of the private equity market, positioning secondary transactions as a cornerstone for addressing liquidity in the region.
Global secondary transaction volumes have made significant strides, achieving a record of $162 billion in 2024 and exceeding $200 billion the following year, signifying a robust shift in market dynamics. Specifically, by mid-2025, the secondary market saw a 51% year-on-year increase in volume, highlighting the increasing appetite for these types of transactions as a mainstream financing solution. Notably, Ardian's Secondary Fund IX, which closed at $30 billion, represents the largest fund dedicated exclusively to investing in private equity secondaries, reflecting the sector's potential.
The secondary market is primarily characterized by two transactions: investor-led and fund manager-led. In investor-led transactions, institutional investors, such as pension funds reallocating their portfolios, sell their interests to third parties, thus obtaining immediate liquidity while transferring the investment of mature, de-risked assets. Conversely, fund manager-led transactions involve the establishment of continuation funds. These new vehicles allow fund managers to acquire assets from older funds nearing their life cycle, providing existing investors the option to either cash out at fair value or roll into the new structure, thereby maintaining their investment horizon without compulsory exits.
The perception of continuation funds has evolved; once a sign of distress, they are now considered a strategic tool, providing investors with more time to realize the full potential of quality assets while navigating the complexities of the private equity landscape in South Africa. This evolution indicates a maturation of the private equity market, positioning secondary transactions as a cornerstone for addressing liquidity in the region.
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