Secondaries and continuation vehicles: a route back to the next raise

For most of the history of private equity, the secondary market was where investors went to sell a position they no longer wanted. It is now a regular part of how capital moves through the asset class. For a manager planning its next fund, that matters in two ways. It affects what existing investors expect before they re-up, and it affects how much room new investors have to commit.

The size of the market in 2026

PitchBook, citing Evercore's review of the first half, reports secondary transaction volume of $121 billion in H1 2026, a record. GP-led deals made up $65 billion of that and LP-led deals $56 billion. In PitchBook's words, "sponsors are using continuation vehicles to retain high-conviction assets longer, while some LPs are cashing out when the offers come to rebalance portfolios and make room for new commitments."

The buyers are well funded. PitchBook counts $28.6 billion raised by secondaries funds across 32 vehicles in the first half, and $95.1 billion on a rolling 12-month basis. In October, DealStreetAsia reported that Pantheon closed its eighth global secondaries fund and related vehicles at $6 billion, against a $3.5 billion target. In August, EQT completed its acquisition of Coller Capital, adding €34 billion of fee-generating assets, according to EQT's third-quarter announcement. Large allocators are taking part directly as well. ADIA's 2025 Review, as reported by Enterprise, notes that its private equity unit participated in GP-led secondaries and single-asset continuation vehicles.

Why it matters for a primary raise

The backdrop is a shortage of cash coming back to investors. PitchBook estimates that almost $5 trillion of private capital sits in funds seven years or older, 39% of total net asset value at the end of 2025, and it describes "disappointing distributions" as one cause of the multi-year fundraising slowdown.

An allocator that has not received distributions from its existing funds has less capacity for new ones, and is less inclined to back a manager whose earlier funds have not yet returned capital. The secondary market eases both problems. LP-led sales let an allocator free up room in its private markets allocation. GP-led transactions let a manager return cash to existing investors on assets it still wants to hold.

Liquidity returned to investors is read as a track record of its own. It is also the money that funds the next commitment.

What a continuation vehicle asks of a manager

A continuation vehicle moves one or more assets from an existing fund into a new vehicle managed by the same sponsor. Existing investors can sell for cash or roll their interest into the new vehicle, and new secondary investors provide the capital for those who sell. Done well, it gives investors a choice and gives a strong asset more time.

It also places the manager on both sides of the transaction, and allocators know it. ILPA's 2023 guidance on continuation funds sets out the expectations most institutional investors now bring to these deals. Its stated principles include that a transaction "should maximize value for existing investors" and that rolling investors "should be no worse off than if a transaction had not occurred." It calls for a status quo option with no change in management fees or carried interest, a rationale presented to the advisory committee, and all conflicts brought to that committee. ILPA also recorded investor frustration with "unrealistic timeframes" for deciding whether to roll or sell.

How a manager has run a continuation vehicle is now part of diligence for its next fund. An allocator reviewing a new commitment will ask how the price was set on earlier transactions and whether existing investors had enough time to decide.

Four points for a manager planning its next raise

Know the distribution record before the allocator asks. Allocators separate realised from unrealised value. A manager should be able to show what has been returned, from which assets and by what route, including any secondary transaction.

Treat a continuation vehicle as a governance exercise as well as a liquidity one. A process that gives existing investors full information and adequate time to decide is much easier to defend in the next round of diligence.

Read the allocator's own position. An allocator over its target for private markets may need to sell before it can buy. Understanding where each allocator stands on its allocation helps a manager sequence the raise and judge when a commitment is realistic.

Expect secondaries buyers among the investors. Many of the largest secondaries buyers also commit to primary funds, and some allocators now run primary and secondary programmes side by side. They will review a new fund with detailed knowledge of how the manager's earlier assets have been priced in the secondary market.

Our view

The secondary market has become part of the fundraising cycle. Cash returned to investors, by whatever route, is what allows them to commit again, and the way a manager treats existing investors in a GP-led transaction is visible to every allocator that reviews the next fund. A manager that plans its secondary activity with the next raise in mind gives itself a clearer record and a wider set of investors to approach.

Figures are as stated by the sources listed, at the dates given. Secondary volume figures are as cited by PitchBook from Evercore. Inaya Advisory is not affiliated with any firm named in this article. For information only. Nothing here constitutes an offer or solicitation to buy or sell any security.