Fundraising for secondaries funds surged in the first quarter of 2025, as private equity grappled with a frozen exit market and institutional investors sought alternative ways to raise cash.
That’s according to new data from PitchBook and Private Equity International. Secondaries fundraising surged to $52.1 billion in the first quarter, representing nearly half of 2024’s full-year total of $106.5 billion, according to PitchBook’s Q1 2025 Global Private Market Fundraising Report.
Secondaries funds are vehicles that buy stakes in existing private equity funds, typically from pension funds, endowments, or other investors seeking liquidities when the market environment becomes challenging.
“Record-setting fundraising for secondaries in 2024 did not slow going into 2025,” said Hilary Wiek, senior strategist, fund strategies and sustainable investing at PitchBook, in the report. Secondaries fundraising surged 51.6% year-over-year to $122.3 billion in the trailing four quarters ending March 31, the report finds.
However, secondaries deals can expose investors selling their portfolios to markdowns, depending on market conditions and the structure of the deal.
Limited partners, or LPs, are typically institutional investors such as pension funds and endowments that commit capital to funds. General partners, or GPs, manage these funds and control how the capital is deployed.
“We have been told that GP-led secondaries tend to trade at or near NAV,” Wiek told P&I, “some GPs won’t authorize the offer unless this is the case, so as not to look bad that their portfolio companies are worth less on the open market than the GP is holding them at.”
“Whereas LP-led secondaries tend to trade at a discount,” Wiek added.
For buyers, they would accept the GP’s offer only if they really believe there’s additional upside in the companies moving to the continuation vehicle, Wiek said.
She said more asset managers are launching new secondaries strategies, including names like Apollo, Allianz, and Hamilton Lane. “Many big funds came back to market in 2024 and 2025, like Ardian Secondary Fund IX and Apollo’s first secondaries offering.”
The PitchBook report found that European managers dominated the first-quarter activity, with Ardian’s $30 billion Secondary Fund IX leading the charge.
“The rise of GP-led secondaries has expanded the amount of capital that can be put to work in secondaries. Unlike 10 years ago, it’s not just LPs who decide a transaction should happen, often for distress or portfolio management reasons,” Wiek added, “but particularly in the past seven years or so, GPs are arranging for the sale of some or all of a fund’s holdings into continuation vehicles.”
And “expect more continuation vehicle proposals” as funds age and run out of fresh capital, she added.
“This could be because it’s the end of a fund’s life or because the original fund has no more capital to call,” Wiek noted, adding that these deals often bring new money from secondaries buyers, not just cashing out existing investors.
Wiek believes that continued trade wars will freeze deal-making and will add to the pain LPs feel from years of low distributions. As a result they may be tempted to sell fund stakes.
PE downturn, endowment taxes
Traditional exit pathways remained largely frozen during the quarter, according to PitchBook’s Q1 2025 Quantitative Perspectives report, which characterized both IPO and M&A activity as “quiet,” while seeing institutional investors turning to the secondaries market as their liquidity mechanism.
The PitchBook Q1 2025 US Public PE and GP Deal Roundup report found that PE realizations, which represent the gains GPs make on portfolio investments, dropped a collective 50% among the six largest publicly traded alternative asset managers from Q4 2024 to Q1 2025. The six are Blackstone, Apollo, KKR, Carlyle, Ares and TPG, all posted a drop in their realizations.
“A public market downturn” last year lead to the denominator effect, which also fuels selling pressure, the Private Equity International’s June report found, as some investors rebalance their portfolios toward alternative assets.
Despite a drop in PE realizations in Q1 2025 compared to the previous quarter, the performance year-over-year stood stronger.
Carlyle’s PE realizations dropped 60% from the previous quarter but rose 76.4% compared to the same period last year. Blackstone also saw a 52.9% quarterly decline, yet posted a 43.9% increase year-over-year, seen in the PitchBook Q1 2025 US Public PE and GP Deal Roundup report.
Nonetheless, “if LPs can’t get distributions naturally, some must more actively transact to free up capital to fund new commitments,” Wiek said.
Potential new tax rules for endowments could bring some LPs to market with private fund stakes.
Yale University, Harvard University, Kaiser Permanente, and the New York City Retirement Systems have all increased secondaries activity, PEI finds in its June report.
Yale University, widely seen as a pioneer of the “endowment model,” is finalizing the sale of as much as $2.5 billion of its private equity and venture capital holdings ahead of potential tax changes. The university had earlier indicated it was considering selling up to $6 billion of its $41.4 billion endowment’s private equity portfolio.
Harvard University Endowment was also in talks to sell $1 billion worth of private equity on its portfolio.
Structural governance could also be driving the sell-offs, Wiek said.
“Some LPs have felt forced out of their funds because their governance structure requires that they approve any new investment (which a continuation vehicle would constitute) through a full diligence process,” Wiek explained. “When only given something like 20 business days to decide whether to sell or roll into the new fund, that often does not provide enough time when the board that must approve all new investments only meets quarterly, for example.”
“LPs forced to sell because of their governance structure may be missing the upside that a good sale may bring,” Wiek said. “In order to participate in that, they may feel that they need to invest in GP-led secondaries in an ‘if you can’t beat ‘em, join ‘em’ scenario.”
Other than prominent endowments, pension funds and other institutional investors have also emerged as active sellers.
The New York City Retirement Systems recently sold $5 billion of private equity assets on the secondary market.
The shift in capital allocation patterns became more pronounced when compared to traditional private equity fundraising, which declined to $115.5 billion across 131 funds in the first quarter from $178.8 billion in the same period last year, PitchBook’s Q1 2025 Global Private Market Fundraising Report found.
Looking forward, “PE is going to play this year tactically with a contrarian approach,” Garrett Hinds, senior PE research analyst at PitchBook, commented in an analysis. “If we get certainty on trade, macro conditions improve and valuations increase, they’ll ramp up exits. If growth slows further and there are dislocations in markets, they’re going to deploy more capital while delaying exits.”
