Key Takeaways
- • Pension funds are expected to become the largest sellers on the private equity secondary market in H2 2022, representing 38% of total transaction volume, up from their H1 2022 position.
- • The global private equity secondary market has expanded significantly, growing from $40 billion in 2015 to $132 billion in 2021, according to Bain Capital data.
- • Pension funds are projected to overtake general partners (GPs) as the dominant seller cohort, with banks accounting for approximately 14% of sellers in the secondary market.
- • Rising illiquidity pressures and potential over-allocation to private funds—driven by declining public market valuations—are pushing pension funds to accelerate secondary market sales.
Summary
Pension funds are positioned to become the largest sellers on the private equity secondary market during the second half of 2022, commanding an estimated 38% of total transaction volume. This shift represents a significant structural change in the secondaries market, as pension funds are expected to overtake general partners as the primary liquidity providers. Banks rank as the second-largest seller category, representing approximately 14% of market participants.
The expansion of the private equity secondaries market reflects sustained institutional demand for liquidity solutions in private markets. Global interim sales of private equity investments have grown substantially over the past seven years, climbing from $40 billion in 2015 to $132 billion in 2021, according to analysis by Bain Capital. This growth trajectory underscores the maturation and increasing importance of the secondaries channel within the broader alternative asset ecosystem.
Pension fund activity in the secondaries market appears driven by multiple structural factors, including the need to rebalance portfolios amid public market volatility and declining equity valuations. Some institutional investors have found themselves over-allocated to private equity partnerships as public market declines have shifted portfolio weightings. This dynamic is creating compelling opportunities for secondary buyers, as pension funds and other LPs seek efficient exit mechanisms to manage their private market exposures and maintain target allocations across asset classes.
The shift toward pension fund dominance in secondary selling signals a maturing market infrastructure capable of handling large-scale LP portfolio transactions. This development benefits secondary buyers—including specialized secondaries funds, GPs seeking continuation fund opportunities, and cross-over investors—by providing consistent deal flow and reducing liquidity constraints that have historically limited pension fund participation in alternative assets.
The expansion of the private equity secondaries market reflects sustained institutional demand for liquidity solutions in private markets. Global interim sales of private equity investments have grown substantially over the past seven years, climbing from $40 billion in 2015 to $132 billion in 2021, according to analysis by Bain Capital. This growth trajectory underscores the maturation and increasing importance of the secondaries channel within the broader alternative asset ecosystem.
Pension fund activity in the secondaries market appears driven by multiple structural factors, including the need to rebalance portfolios amid public market volatility and declining equity valuations. Some institutional investors have found themselves over-allocated to private equity partnerships as public market declines have shifted portfolio weightings. This dynamic is creating compelling opportunities for secondary buyers, as pension funds and other LPs seek efficient exit mechanisms to manage their private market exposures and maintain target allocations across asset classes.
The shift toward pension fund dominance in secondary selling signals a maturing market infrastructure capable of handling large-scale LP portfolio transactions. This development benefits secondary buyers—including specialized secondaries funds, GPs seeking continuation fund opportunities, and cross-over investors—by providing consistent deal flow and reducing liquidity constraints that have historically limited pension fund participation in alternative assets.
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