The secondaries market remains bullish on volume, meaningfully surpassing last year’s record as both LPs and GPs continue to struggle with a lack of liquidity.

Blackstone Strategic Partners’ global head Verdun Perry expects volume to accelerate from the roughly $100 billion seen in the first half of this year to reach $220 billion as activity picks up in the fourth quarter.

Private markets distributions fell dramatically on 2021’s liquidity high by the end of 2023, off by around 80 percent to 90 percent, Perry said on a panel on the long-term growth of the secondaries market moderated by Secondaries Investor at IPEM in Paris this week. By the end of 2024, distributions had increased by 30 percent year-on-year. He anticipates distributions will be up 25 percent in 2025 on the year prior.

Private markets distributions surpassed $700 billion in 2021, representing around 29 percent of private markets net asset value, according to a report from Goldman Sachs. By the first half of 2024, distributions sat at 9 percent of NAV.

In 2025, “a lot of people are selling due to a lack of liquidity”, Perry said. Playing out as a longer-term driver of secondaries market activity, “investors need liquidity, and they’re using it oftentimes to play offence. They want to free up capacity to invest in new managers that they know, respect and like”, he added.

LPs learned valuable lessons in the aftermath of the global financial crisis, where some simply stopped investing to right size their private markets portfolio, missing out on good vintage years in the aftermath, said Gabriel Mollerberg, a managing director at Goldman Sachs. This is spurring on LP-led secondaries transactions today, allowing institutions to unlock liquidity to re-invest.

Additionally, co-investment is “super important” for a lot of large investors, Mollerberg added. “To keep that co-invest relationship with the manager, again, you need to stay invested. If you stop investing to new funds, you’re not going to get your co-invest flow.”

The next record

Secondaries market volume turnover rate as a percentage of overall private markets assets under management has sat at 1.5 percent in recent years, Perry explained. Assuming that turnover rate remains constant, Perry believes secondaries market volume could reach a minimum $400 billion by 2030 as private markets AUM continues to grow.

A doubling of secondaries volume to $400 billion in 2030 represents a 15 percent compound annual growth rate “which is where we’ve been historically”, Mollerberg said. “To me, actually, that’s almost like baked [in] growth because today, yes, private [markets] AUM is [around] $14 trillion. But, if you look at the vintages that we bid on, on average [they are] are probably five or six years old, where private [markets] AUM [at the time of fund launch] was, call it $7 trillion-$8 trillion.”

The turnover rate, however, is increasing, Perry argued, with Mollerberg saying there are “good reasons” why secondaries volume as a percentage of private markets AUM should grow.

“The secondary market is perhaps the most underutilised tool in all of private markets. I think because of awareness… that turnover rate is going to increase at the same time that overall private markets will increase,” Perry said, adding the expectation of $500 billion of secondaries volume in five years’ time “is not unreasonable”.