If 2021 was a story of staggering activity for the secondaries market, coloured by a backdrop of impressive growth in GP-led activity over the preceding years, 2022 has been marked as a year for prudence and patience for all market participants.

The 50 firms on this year’s Secondaries Investor 50 – Private Equity International’s exclusive ranking of the biggest secondaries capital-raisers over the last five years – have an impressive $383.45 billion to deploy, up 23 percent compared with last year’s rankings.

But this jump comes with a caveat. The first half of 2022 was a rocky period for global markets broadly: volatile stock valuations, Russia’s invasion of Ukraine, inflation and subsequent interest rates hikes, and slowing economies are all top of mind, not just for financial professionals, but for everyone.

LPs that were already struggling to contend with a swarm of managers back in market now have the denominator effect to contend with. Secondaries fundraising was no safe haven from the phenomenon: commitments dipped 30 percent year-on-year in the first half, with $31.2 billion raised.

“This is a really interesting moment in the secondary market. I think it’s probably having its most relevant moment, but… activity levels are currently less than we had hoped for,” Dushy Sivanithy, managing director and head of secondaries at CPP Investments, tells PEI. “There’s a de facto standoff, if you like, at the moment. We all know a number of people that need liquidity, both LPs and GPs, but there is a reset that is necessary… That just hasn’t happened yet.”

Record-setting capital

There are a number of firms with soaring targets in the market; should they reach those lofty commitment goals, even more records will be hit.

Ardian (2) and Lexington Partners (7) are both out seeking $15 billion for their flagship secondaries funds, Ardian Secondary Fund IX and Lexington Capital Partners X. If they reach their targets, they would tie for the largest standalone funds dedicated to the strategy, beating their respective predecessors, which both collected $14 billion.

Notably, 2022 marks the first year since the SI ranking began that Ardian has not claimed the top spot. It was beaten by Blackstone Strategic Partners, which has been loitering in the top five of the ranking for several years.

Even with its somewhat more modest target of $13.5 billion for Strategic Partners Fund IX, Blackstone is set to surpass all record-defining figures by a considerable amount, according to president and chief operating officer Jon Gray. Having already held a $14 billion first close, according to data from affiliate title Secondaries Investor, Gray has said on recent earnings calls that the vehicle is on track to reach approximately $20 billion.

Against that backdrop, it should come as no surprise that the alternatives giant has raised $52.66 billion over the last five years – a 70.5 percent increase on last year’s figure.

There is no shortage of opportunities for Blackstone, according to Verdun Perry, global head of Blackstone Strategic Partners. Across the lifespan of Blackstone’s secondaries group, the firm has not limited itself on size or type of transaction.

“When you look at the broader market, some people… are frankly quite focused on specific niches – they’re very specialised – and then others have scale,” says Perry. “We believe we have both. We can do large transactions, small transactions, [and] we can focus on real estate secondaries transactions, infrastructure, buyout or credit.”

Looking at opportunities within the primary markets, there are funds being raised focused on Asia leveraged buyouts, healthcare and software, Perry says. On the secondaries side, some funds may focus specifically on credit secondaries or infrastructure secondaries only, he adds. “[We like] to be able to move quickly and buy all of the above. Over the next 24 months, I think you will see sellers entering the market with all of those asset classes for a number of reasons.”

A change of tactic

Partners Group this year moved into the top 10, with figures hopping an impressive 71.6 percent over last year. Capital raised across the last five years sits at $16.13 billion.

The firm has been actively involved in the GP-led secondary world. Extended ownership is something that will “continue to evolve, remaining a meaningful and growing share of the market going forward”, says Ross Hamilton, a member of management in its private equity integrated business.

Partners Group is seeing its pipeline build, and anticipates several more processes to kick off after the summer. Dealflow is also building with regards to diversified LP portfolio activity. This area was quieter in 2021, although the firm closed a number of significant transactions.

Other impressive risers in this year’s SI 50 include StepStone Group, which has risen four places to take the fourth spot on the list. Portfolio Advisors has also jumped four places, now sitting at number 17 on the list. Hollyport Capital has risen an impressive 11 places to 26, and BEX Capital, a newcomer on the list, sits at 43.

HarbourVest Partners, meanwhile, fell out of the top 10 this year, dropping seven places to 11th in the ranking. Neuberger Berman Private Markets also dropped two places to 16, as did Madison International Realty, sliding eight spaces to 24.

Overall, 10 firms saw a decline in the amount of money available to commit year-over-year, with three seeing capital to deploy remaining at the same levels. A total of 74 percent of the firms in the SI 50 saw capital commitments increase compared with last year’s figures.

What’s in store?

There wasn’t a complete dearth of GP-led transactions in the first half. Some managed to transact in resilient sectors – healthcare and package-handling companies were given as an example by one source PEI spoke to – but those managers coming to market with assets in particularly impacted sectors (tech, for example) have faced pricing issues.

“There are some signs of softening in the secondary buyer market,” says James McCredie, a partner at Macfarlanes. “Some might say it only really makes sense in a high-price environment because otherwise [a manager will] just hang on to the asset… People might find other ways to engineer value [like NAV arrangements].”

LP portfolio sales were also subdued as investors chose to pause and take stock before addressing their overallocation problems. This year’s mega-deal – California Public Employees’ Retirement System’s multibillion-dollar sale of a PE portfolio at a double-digit discount – would hardly fill sellers with confidence, although the transaction had its nuances. The $6 billion figure associated with the deal is understood to refer to purchase price plus unfunded commitments.

The problem this year has been one of uncertainty around pricing. “The information that’s disclosed for a buyer and a seller to agree upon pricing in the private markets is set by the sponsor and reacted to by a relatively small secondary community with less than full information,” says Jeff Hammer, global co-head of secondaries at Manulife Investment Management. He adds that upcoming quarterly marks will create a better foundation for pricing transactions that will occur later this year.

For these reasons, there is optimism on the horizon. With further clarity, buyers will be able to offer better prices, giving them – as well as sellers – more confidence to transact.

“June 30 marks will give us a sense for where GPs are thinking about their underlying valuation and how they carry their investments,” says Blackstone’s Perry. “With that said, though, this volatility will encourage sellers to be more reasonable on price expectations. What I would say is, even for high-quality deals [and] high-quality portfolios, they will still command a single-digit discount.”

Secondaries buyers are also watching the LP market closely. They anticipate that portfolio sales will accelerate in the coming months. “With public markets down and interest rates on the rise, we think there will be interesting deals on the LP side. There is a real need for liquidity for LPs right now. I liken it to a treadmill that is only getting faster and faster with each capital call that comes in: this treadmill will only continue to accelerate if these conditions persist. LPs can only hold on for so long,” says Neal Costello, a partner in AlpInvest’s secondaries investment team and a member of the investment committee. The firm sits in sixth position on the SI 50 ranking.

Supply is not the problem secondaries players have at the forefront of their minds, however: the constraint is the amount of capital available to deploy into the burgeoning volume of GP-led transactions. “It is no secret that capital is constrained on the single-asset side, and supply volumes are still very high for these types of deals,” Costello says. He expects competition on high-quality, multi-asset GP-led deals to remain elevated as a result.

Non-traditional buyers are coming in to plug some of the gaps, and in the future, there could well be more secondaries players that are not currently focusing on continuation funds that will spend more of their time on these transactions. “[Right now,] few firms are able to invest at scale,” says Perry. “I believe over time there will be more of those transactions, but [I] don’t know when that capital shortage will be resolved.”


The 2022 SI 50 ranking is based on the amount of dedicated secondaries capital raised for funds that closed between 1 January 2017, and 30 June 2022.

What counts?
Structures: Limited partnerships; co-investment funds; separate accounts; capital raised by secondaries firms that happen to be publicly traded; and seed capital and GP commitments.

Strategies: Private equity secondaries; real estate secondaries; infrastructure secondaries; real assets secondaries; dedicated direct secondaries funds; and secondaries-specific capital raised by funds of funds.

What doesn’t count?
Direct private funds (private equity, real estate or infrastructure); dedicated preferred equity funds; hedge funds; opportunistic capital raises; deal-by-deal capital raises; PIPE investments; debt funds, including mezzanine funds; leverage; and soft-circle commitments.

Secondaries: For purposes of the SI 50, the definition of ‘secondaries capital’ is capital raised for a dedicated programme of investing directly into the secondaries market. This includes equity capital for diversified private equity, real estate, buyout, growth equity, venture capital and turnaround or control-orientated distressed secondaries investment opportunities.

Capital raised: This refers to capital definitively committed to a secondaries investment programme. In the case of a fundraise, it means the fund has had a final or official interim close after 1 January, 2017. You may count the full amount of a fund if it has a close after this date, and you may count the full amount of an interim close (a real one, not a ‘soft circle’) that has occurred recently, even if no official announcement has been made. We also count capital raised through co-investment vehicles.