Consolidation in the private equity market is heating up along a unifying thread: secondaries.

This week StepStone Group became the latest firm to snap up a specialist to complement an existing alternatives offering, with the firm saying on Wednesday it has agreed to acquire Greenspring Associates to bolster its capabilities in venture, growth, secondaries and directs.

Greenspring, a Baltimore-headquartered fund of funds manager is in market with its fifth secondaries vehicle with an undisclosed target, having raised $800 million for its 2019-vintage Fund IV, Secondaries Investor data shows. It also manages vehicles dedicated to impact, diversity and geographic themes.

StepStone paid $725 million – $185 million in cash and $540 million in equity – plus up to $75 million in a potential earnout payable in 2025 in the transaction. The firm will be entitled to 100 percent of fund management fee-related earnings of all Greenspring fee earning AUM and as well as a portion of carried interest from Greenspring vehicles that begin investing after the close of the deal, according to details disclosed in an investor presentation on Wednesday.

Ashton Newhall, Greenspring’s founder and managing general partner, and Jim Lim, managing general partner, together with rest of their partners will be joining StepStone as partners on its private equity team.

StepStone’s acquisition marks the latest in a string of firms taking advantage of a maturing private equity ecosystem, with secondaries-focused firms the target of many such deals. On Tuesday, Paris-based Tikehau Capital said it had acquired Asia-focused Foundation Private Equity to expand its footprint geographically into Asian secondaries (Tikehau is already active in credit secondaries, it should be noted). Private credit behemoth Ares Management made waves in May when it said it was to acquire Landmark Partners to help it enter the secondaries market. Fort Worth-headquartered TPG expanded its ownership in Asian secondaries firm NewQuest Capital Partners to a majority stake in February, up from an initial minority investment in 2018.

In the advisory world, investment banking giant Raymond James agreed to acquire boutique secondaries advisory and placement agent Cebile Capital in May to deepen its relationships with the private equity community and expand its offerings to include, among other things, GP-led secondaries capabilities and LP-led secondaries advisory.

“It is very difficult to build [a secondaries firm] in this market,” Gerald Cooper, head of secondaries North America at Campbell Lutyens, tells Secondaries Investor. “Human resources are more scarce than capital.”

Experienced market players bring technical expertise as well as the relationships, both of which are critical, he adds.

Despite those difficulties, some brand name firms still prefer to build rather than buy. Apollo Global Management launched its credit secondaries business in April with a senior hire from Goldman Sachs and is filling out its team. Similarly, Brookfield Asset Management chief executive Bruce Flatt said in May that the firm had largely decided to grow its secondaries capability organically.

Continued consolidation in the secondaries market was to be a key future theme, as Glendower Capital managing partner Carlo Pirzio-Biroli predicted to us in late 2019. Now, having weathered what seems to be the worst of pandemic dislocation, that consolidation is back on track. We suspect the acquisitions this week won’t be the last.