PE Secondary Market Hits Record $160B as Liquidity Drought Persists, StepStone Says

What's New

The private equity secondary market shattered records in 2024, reaching $160 billion in transaction volume as limited partners and general partners turned to alternative liquidity solutions amid a prolonged distribution drought. According to StepStone Group's August 2025 report, the first half of 2025 has already seen $102 billion in transactions, putting the market on track to break last year's record again.

Why It Matters

This surge represents a fundamental shift in how private equity participants manage portfolios and generate liquidity. With traditional exit channels severely constrained for three consecutive years—the longest drought on record—secondaries have evolved from a niche solution into a mainstream portfolio management tool that's reshaping the entire PE ecosystem.

Big Picture Drivers

• Liquidity Crisis: Distribution yields have fallen dramatically below the 20%+ long-term average, forcing investors to seek alternative liquidity sources

• NAV Mountain: Private equity fund net asset value reached $8.7 trillion in 2024, creating massive secondary buying opportunities despite only 1% market penetration

• Extended Holdings: Median age of unrealized investments has risen steadily since 2021, with approximately half of portfolio companies now held for more than five years

• Structural Shift: GP-led transactions have evolved from distressed situations to strategic portfolio management tools, representing 44% of total secondary activity

• Repeat Participation: LPs are increasingly becoming serial secondary market participants, using it as an active liquidity generation strategy

By The Numbers

• $8.7 trillion: Total private equity fund NAV in 2024, up from $2 trillion in 2013

• $89 billion: LP-led secondary volume in 2024, with $54 billion already transacted in first half of 2025

• $71 billion: GP-led secondary transactions in 2024, representing 40% year-over-year growth

• 10%: GP-led secondaries as percentage of total sponsor-backed exits in 2024

• $350 billion: Projected secondary market size by 2030 under conservative growth assumptions

Key Trends to Watch

• Market Penetration Growth: Secondary penetration could increase from current 1% to 1.5% as adoption accelerates across institutional investors.

• GP-Led Mainstreaming: General partner-led transactions will continue expanding as sponsors use them to retain trophy assets while providing liquidity to investors.

• Holding Period Extension: Longer asset holding periods will drive increased secondary activity as both LPs and GPs seek liquidity solutions.

• First-Time Seller Expansion: More institutions are entering the secondary market for the first time, broadening the seller base significantly.

The Wrap

Despite record-breaking volumes, the secondary market remains structurally undercapitalized with significant room for expansion. As traditional exit channels face continued headwinds and private equity NAV keeps growing, secondaries are positioned to become an increasingly critical component of portfolio management strategy rather than just a temporary solution to current market conditions.