Private Equity Secondaries – Everything You Need to Know

How can investors gain exposure to mature private equity portfolios, avoid early-stage risks, and sometimes buy in at a discount? The answer lies in the fast-growing world of private equity secondaries.

In a typical PE investment, LPs make a 10-year “blind” commitment, where the first few years often deliver negative returns. Secondaries provide an alternative: investors purchase existing fund stakes partway through their lifecycle.

Here’s why secondaries are so attractive:

1. Mitigating the J-Curve – By entering mid-cycle, investors can bypass the “dip” of early negative returns. You’re investing when portfolio companies are more seasoned and closer to generating value.

2. Reducing Blind Pool Risk – With a new fund, you’re investing in a blind pool—assets are unknown. In a secondary deal, most companies are already acquired. Investors can conduct detailed due diligence on a known portfolio, turning uncertainty into a more calculated bet.

3. Buying at Discounts to NAV – One of the biggest draws is the chance to acquire fund interests below Net Asset Value (NAV). (Although NAVs are sometimes inflated, which we’ll save for a future video).

An Evolving Market
The secondary market is no longer just about PE funds. A major new wave is emerging in private credit secondaries. As the private credit space matures, it’s creating fresh opportunities for investors looking to diversify exposure and access attractive pricing.

For those seeking a more de-risked, visible, and potentially discounted entry into private markets, PE secondaries offer a compelling strategy. Many leading firms operate in this space, including Harbourvest Partners, Northleaf Capital Partners, and Coller Capital.