Discount Capture Depends on Subscription Flow, Which Is Why Coller Buys Growing Assets

Aug 23

4 min read

What's New

In a perpetual secondaries fund, discount is only captured at the moment of execution, so a strategy built on deeply discounted assets becomes dependent on subscription pace holding up. Jake Elmhirst, Partner and Head of Private Wealth Secondaries Solutions at Coller Capital, argues this in a conversation on Alt Goes Mainstream. When flows slow or turn negative, acquisition pace slows and discount capture slows with it, which makes returns dependent on fundraising conditions. Coller's response is to buy growing assets at fair prices, on the reasoning that growth hedges the timing risk if an expected exit slips by 12 months.

Why It Matters

This puts Coller against groups that treat wide discounts on tail end portfolios as the primary return driver, an approach Elmhirst concedes works acceptably in a closed end structure. His argument is about what happens when that strategy is placed inside a perpetual wrapper sold to wealth investors, where the return engine becomes coupled to subscription conditions the manager does not control. He also identifies a second exposure in deeply discounted assets: if exit timing is wrong, returns impair quickly, because a slow growing asset provides no cushion for a delay.

Big Picture Drivers

Secondaries as a core rather than satellite holding: Elmhirst argues the combination of diversification, visibility into assets being acquired, proximity to exit and purchase below net asset value supports secondaries as a portfolio foundation with satellites arranged around it.
Narrower outcome bands than other private strategies: Over 20 years, median secondaries returns have exceeded buyout, growth and venture funds, with a materially tighter dispersion, which reduces the manager selection burden.
Continuation vehicles as a general partner solution with a ceiling: Limited partners will tolerate roughly a couple of assets per fund moving into continuation structures, since many hold capital that cannot roll for another five years, which prevents these vehicles from substituting for traditional exits.
Asset level underwriting as the required skill set: Coller has only ever done secondaries, which Elmhirst contrasts with competitors that grew out of fund of funds allocation businesses, and describes the resulting orientation as bottom up analysis of what is being bought.
Structural pressure toward scale or specialisation: Elmhirst expects consolidation, with large sellers favouring a single counterparty over assembling a mosaic of buyers, and judges the middle of the market the difficult position.
Portfolio construction blending both secondary types: Coller treats limited partner led exposure as the source of diversification and predictable cash flow, with general partner led allocations supplying a return uplift at higher concentration risk.

By The Numbers

$55 billion: Coller's assets under management as of 31 March 2026, with the firm's first secondaries transaction completed in 1990.
Roughly $200 billion: Total secondaries volume, split between approximately $100 billion in general partner led continuation vehicles and a similar figure in limited partner led transactions.
Five years: The hold period Coller assumes when underwriting a continuation vehicle, with upside surprises treated as unplanned.
20 years: The period over which median secondaries returns have outstripped buyout, growth and venture funds.

Key Trends to Watch

Solutions built for individual sellers, pushed further down market: Elmhirst expects the next phase to be constructing bespoke arrangements for specific limited partner situations, with the size threshold below which this is uneconomic falling over time.
Insurance balance sheet optimisation as a target segment: Capital efficiency and structural requirements make insurers a distinct problem set where Elmhirst sees secondaries playing a role because of the diversification characteristics.
Continuation vehicles forcing active portfolio management on limited partners: Assets that would previously have run off now require a decision, and Elmhirst expects this to push some limited partners toward taking cash simply because they lack the resources to underwrite each asset.
Strategic asset allocation completeness: Coller covers equity and credit secondaries today, and Elmhirst points to real assets as the remaining box in a full allocation framework.

Memorable Quotes

"There's an undue focus on discount." Elmhirst on the first question he typically receives, and the one he regards as least informative.
"in a perpetual fund you can only capture discount when you're executing" The mechanical constraint that shapes the strategy.
"our preference is to buy quality and to buy it at fair prices" The positive statement of what Coller is doing with the alternative available to it.
"are we buying from the GP or are we buying with the GP and we prefer the latter to the former" The test Coller applies to any continuation vehicle it is offered.

The Wrap

The strategy works if perpetual secondaries vehicles experience genuine subscription volatility and managers relying on discount capture see returns degrade when flows slow, while Coller's growth assets continue compounding through the delay. It fails if subscription flows prove stable enough that execution pace never becomes binding, in which case buying wider discounts delivers more return for the same risk. The current wealth channel environment, with redemption pressure visible across semi liquid vehicles, is the first real observation window. The next several quarters of subscription data across perpetual secondaries funds will show whether the coupling Elmhirst describes is material.