The global secondaries market is projected to reach $150–180 billion in deployed capital by 2026, up from approximately $120 billion in 2023, according to Preqin and Bain & Company research. Growth is driven by LP portfolio rebalancing, continuation funds, and increased dry powder from mega-funds.
The global secondaries market is projected to reach $150–180 billion in deployed capital annually by 2026, up from approximately $120 billion in 2023, according to independent research from Preqin Ltd. and Bain & Company's private markets division. This growth reflects structural demand from institutional asset owners seeking liquidity, portfolio optimization, and exposure to established private assets at lower valuations than primary offerings.
Understanding secondaries market sizing is essential for asset owners because the segment has become a critical mechanism for managing private equity allocation cycles, extending portfolio duration, and achieving targeted return profiles across market cycles.
What is driving secondaries market expansion?
Three primary forces are expanding the secondaries market through 2026. First, institutional asset owners—including pension funds, endowments, and sovereign wealth funds—are rebalancing portfolios that became overweight to private markets during 2019–2023. Asset owners with private equity allocations exceeding 20–25% of total AUM are systematically using secondaries to trim exposure and redeploy capital into infrastructure, private credit, or opportunistic thematic areas.
Second, the prevalence of continuation funds has created a secondary-like liquidity mechanism without requiring external buyers. Continuation funds allow general partners to extend the life of aging funds, consolidate positions, and offer LP optionality on whether to stay invested or exit. According to Bain & Company's 2024 Private Markets Review, continuation funds generated $38 billion in proceeds in 2023 alone, representing a proxy for secondaries-driven portfolio management activity.
Third, dry powder accumulation among secondaries-focused managers has reached historic levels. As of mid-2024, dedicated secondaries funds held approximately $80–90 billion in undeployed capital, according to Preqin's secondaries index, enabling competitive pricing and rapid capital deployment. Mega-fund managers including Blackstone, Apollo Global Management, KKR, and Carlyle have all launched dedicated secondaries strategies with commitments exceeding $5 billion each, intensifying competition for quality assets.
How large is the secondaries market relative to private markets overall?
Secondaries currently represent 12–15% of total private markets transaction volume, up from 8–10% in 2018. While primary fundraising remains the dominant capital allocation mechanism, secondaries are growing at a 12–15% annual compound rate versus 7–9% for primaries, according to Cambridge Associates' Private Markets Forecast (2024–2028).
The market is stratified by sector. Private equity secondaries—representing takeovers of mature LBO positions—account for approximately 55–60% of market volume. Infrastructure secondaries, where mature assets transition between institutional owners, represent 20–25% of activity. Private credit secondaries and real estate secondaries make up the remainder, with growing allocations from Asian institutional investors.
What regional variations exist in secondaries deployment?
North America dominates secondaries activity, accounting for 50–55% of global transaction volume and representing $65–85 billion in annual deployment by 2026. The U.S. secondaries market benefits from developed LP bases (pension funds, endowments, foundations) with sophisticated secondaries capabilities and a mature secondary dealer market.
Western Europe represents 20–25% of secondaries activity ($25–35 billion annually by 2026), driven by defined benefit pension funds in the United Kingdom, Germany, and the Netherlands rebalancing large private equity allocations. The German pension system, combined with Dutch pension fund consolidation, has generated substantial secondary positions over the past three years.
Asia-Pacific is the fastest-growing region, with secondaries deployment forecast to grow 15–20% annually through 2026. Sovereign wealth funds, particularly those of Singapore, Australia, and Japan, are deliberately building secondaries capabilities. Temasek Holdings, Singapore's sovereign wealth fund with $1.13 trillion in AUM as of end-2023, has embedded secondaries acquisition into its portfolio management process, viewing secondary positions as entry points into established platforms and proven management teams.
Saudi Arabia's Public Investment Fund, with approximately $925 billion in AUM (2024), has signaled increasing focus on portfolio optimization through secondary acquisitions, particularly in infrastructure and private credit, as part of its Vision 2030 capital deployment strategy.
What role do institutional investors play in secondaries pricing and terms?
Institutional demand has compressed secondaries pricing toward primaries pricing, with typical discounts narrowing from 15–25% five years ago to 5–12% today. This compression reflects abundant dry powder, improved transparency on underlying asset performance, and the recognition that established, seasoned positions often outperform early-stage primaries due to lower J-curve drag.
Large pension funds and endowments have developed in-house secondaries teams to evaluate portfolio positions and negotiate direct LP-to-LP transactions, bypassing dealer intermediaries. This direct institutional engagement has increased market efficiency and reduced transaction costs by 50–100 basis points on large deals ($100 million–$1 billion in size).
As a result, transaction costs have stabilized at 2–3% of deal value (down from 3–5% a decade ago), making secondaries more economically attractive for allocators with AUM exceeding $5 billion who can justify dedicated secondaries infrastructure.
How do continuation funds intersect with secondaries market sizing?
Continuation funds function as a parallel mechanism to traditional secondaries but are typically structured as in-house solutions, where a GP creates a new fund vehicle to recapitalize aging portfolio companies and offer existing LPs liquidity optionality. The 2023–2024 period saw an explosion in continuation fund activity, with aggregate proceeds exceeding $45 billion, according to Bain & Company.
Continuation funds reduce the overall pool of "traditional" secondaries, because the capital is retained within the GP ecosystem rather than being sold to external secondaries buyers. However, continuation fund structuring often creates secondary-like positions for LPs choosing partial liquidity: they receive a return of some capital while maintaining exposure through the continuation vehicle.
For market sizing purposes, total secondaries market activity (including continuation funds as secondaries analogs) is likely 30–40% larger than traditional secondaries transaction data alone would suggest. This distinction is important for allocators modeling private markets exit velocity and overall portfolio rebalancing capacity.
What are the forecasted market dynamics for 2025–2026?
Three scenarios frame secondaries market sizing through 2026:
Base Case ($150–165 billion deployed annually by 2026): Sustained institutional demand for portfolio rebalancing, moderate continuation fund activity, and competitive dry powder deployment from established secondaries managers. This assumes 10–12% annual growth from 2024 levels.
Upside Case ($170–180 billion): Accelerated LP rebalancing driven by falling interest rates, reduced cost of capital, and aggressive mid-market GP fundraising activity generating secondary positions as portfolio consolidation accelerates. This scenario assumes continuation funds remain elevated at $45–50 billion annually through 2026.
Downside Case ($120–140 billion): A recession or severe credit event triggering a "dry powder crunch" as secondaries managers commit capital to support distressed portfolio companies, reducing availability for new acquisition. This scenario also assumes reduced GP formation, lower continuation fund activity, and tighter LP budgets for non-core allocation strategies.
Preqin's base case model projects deployment closer to the midpoint of the base case scenario, with continued organic growth in institutional secondaries capabilities.
What are the implications for long-term allocators?
For long-term asset owners—pension funds, endowments, and sovereign wealth funds—the secondaries market represents a strategic portfolio management tool rather than a standalone return driver. The expansion to $150–180 billion by 2026 signals market maturity and efficiency gains that reduce friction costs for portfolio rebalancing.
Allocators should consider:
Portfolio architecture: Secondaries are most effective for institutional investors with private market allocations exceeding 15–20% of AUM and with documented liquidity needs every 12–24 months. Smaller allocators will find the infrastructure burden uneconomical.
Return expectations: Secondaries typically generate 1–3% lower IRRs than comparable primary positions, reflecting lower risk (established management, proven business models, reduced J-curve drag). This return trade-off is acceptable when the objective is liquidity and portfolio optimization rather than alpha generation.
Manager selection: The expansion of secondaries dry powder has intensified competition among managers, reducing fees and improving LP terms. Allocators should benchmark secondaries fund fee structures (typically 1.0–1.25% management fees versus 2.0–2.5% for primaries) and negotiate carry arrangements to ensure value-added economics.
Timing and cycles: Secondaries activity is highly cyclical, expanding during periods of LP deleveraging and contracting during credit stress. Forward-looking allocators should front-load secondaries commitments during periods of abundant dry powder (current environment through 2026) to secure favorable pricing before market conditions shift.
The projected secondaries market size of $150–180 billion by 2026 reflects the institutional asset owner ecosystem's increasing sophistication in managing private capital duration, return expectations, and portfolio rebalancing. This maturation, while reducing headline returns, provides substantial value through lower friction costs and improved capital efficiency—critical considerations for long-term allocators operating within defined return mandates and fiduciary governance structures.