Key Takeaways
- • Brazil's private-equity secondary market is emerging as a meaningful asset class, with transactions in Latin America reaching R$4 billion between 2014 and 2022, with Brazil accounting for 88% of regional volume across 86 identified transactions involving 52 funds.
- • Global secondary PE trading surged to $108 billion in 2022 from $37 billion in 2016, with U.S. funds representing 70% of total volume, demonstrating rapid market maturation that Brazil is now beginning to replicate.
- • Secondary market access addresses a critical pain point for risk-averse institutional investors like pension funds by providing pre-maturity exit opportunities, enabling portfolio rebalancing and liquidity without waiting up to a decade for fund termination.
- • The secondary market structure allows investors to manage unforeseen portfolio misalignments and facilitates strategic changes post-investment, reducing perceived illiquidity risk that has historically deterred conservative allocators from PE exposure.
Summary
Brazil is developing a secondary market for private-equity fund stakes, a market structure long established in the United States but only now taking shape in Latin America. This emerging market enables investors and fund managers to exit positions before fund termination—which typically spans a decade—by trading stakes in underlying PE funds rather than holding them to maturity.
An Insper business school study conducted in collaboration with asset manager Spectra quantified the nascent market's scale. Between 2014 and 2022, secondary transactions across Latin America reached R$4 billion, encompassing 86 transactions involving 52 separate funds. Brazil dominated the regional market, accounting for 88% of transaction volume during this period. Globally, the secondary PE market has expanded rapidly: trading volume grew from $37 billion in 2016 to $108 billion in 2022, with U.S. funds representing 70% of total secondary transaction volume.
According to Rafael Bassani, a partner at Spectra, the secondary market addresses a fundamental structural constraint in PE investing. While PE investors traditionally accept the long-term, illiquid nature of fund commitments, secondary transactions create strategic flexibility when portfolio circumstances shift unexpectedly post-investment. This optionality enables investors to rebalance allocations or capitalize on changing market conditions without locked-in capital. More significantly, secondary market access may attract institutional investors—particularly pension funds—that have historically remained distant from private equity due to illiquidity concerns. By providing an intermediate exit mechanism, secondaries reduce perceived risk for liquidity-conscious allocators, potentially broadening the institutional capital base available to Brazilian private equity.
An Insper business school study conducted in collaboration with asset manager Spectra quantified the nascent market's scale. Between 2014 and 2022, secondary transactions across Latin America reached R$4 billion, encompassing 86 transactions involving 52 separate funds. Brazil dominated the regional market, accounting for 88% of transaction volume during this period. Globally, the secondary PE market has expanded rapidly: trading volume grew from $37 billion in 2016 to $108 billion in 2022, with U.S. funds representing 70% of total secondary transaction volume.
According to Rafael Bassani, a partner at Spectra, the secondary market addresses a fundamental structural constraint in PE investing. While PE investors traditionally accept the long-term, illiquid nature of fund commitments, secondary transactions create strategic flexibility when portfolio circumstances shift unexpectedly post-investment. This optionality enables investors to rebalance allocations or capitalize on changing market conditions without locked-in capital. More significantly, secondary market access may attract institutional investors—particularly pension funds—that have historically remained distant from private equity due to illiquidity concerns. By providing an intermediate exit mechanism, secondaries reduce perceived risk for liquidity-conscious allocators, potentially broadening the institutional capital base available to Brazilian private equity.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.