Originally published in Infrastructure Investor, December 2025/January 2026.

Several factors are underpinning the recent secondaries boom, including a liquidity squeeze and pent-up demand for high-quality GP-led deals, says Pantheon’s Andrea Echberg

When infrastructure investors are assessing which assets to back, one option is to invest directly in a company or fund. However, another is to purchase existing stakes from other investors who may want to exit their positions. Often, investors favour secondaries because the direct market is experiencing a slowdown. This could be due to various factors, such as valuation resets or geopolitical uncertainty.

While LP stakes have undoubtedly dominated the infrastructure investment space over the past five years, there’s growing pent-up demand for GP-led deals to provide liquidity and growth capital, particularly for earlier-in-life assets with strong growth potential. Andrea Echberg, partner and global head of Pantheon’s infrastructure team, explains what success in these secondaries deals depends upon.

Q: What is the current state of the secondaries infrastructure market?

The infrastructure secondaries market has been incredibly buoyant over the last five years. We saw a step-change with the uptick in OECD inflation in summer 2019, followed by changes in the interest rate environment. Initially, this involved a denominator effect, but more recently it’s been driven by the liquidity squeeze resulting from a stalling of the exit and M&A markets. This has caused GPs to look to the secondary market to sell portfolios, which has helped it to truly come of age.

Even so, the market is still quite nascent compared with the 40-year track record of private equity. The infrastructure secondaries market was born around 2010, initially driven by a need to clear out distressed assets following the global financial crisis. We then went through a benign period characterised by low interest rates, where investors increased their infrastructure allocations. This led to more of a GP-led opportunity market, as LP stakes were low in supply and aggressively priced.

The dynamic completely changed about five years ago when the LP stake market went through the roof. We started to see multiple-billion-dollar-plus portfolios of high-quality, diversified infrastructure funds reach the market. The supply-demand dynamic allowed us to acquire high-quality LP stakes at significant discounts. And we’ve been leaning heavily into this opportunity ever since.

Q: What’s particularly attractive to investors about secondaries, as opposed to the primary market?

As I touched upon, the last five years have represented a difficult market. Fundraising has slowed, as well as new deal and exit activity across private markets overall. Infrastructure has proved no exception. This was initially driven by the need to reset valuations following rate changes and later exacerbated by uncertainty stemming from various geopolitical events and their impact on asset prices.

The macroeconomic environment, particularly in terms of liquidity, has also had a major effect. When we consider the broader impacts, our current focus is quite similar to what it was in 2020. Back then, concerns were primarily driven by very high inflation, so we focused our attention on assets with inflation protection as well as reducing exposure to GDP-linked assets.

Today, as we look to the near future, there are renewed concerns about inflationary policies. Infrastructure, as an asset class, is historically positively correlated to inflation, which can be highly beneficial to performance. Nevertheless, in light of potential further economic slowdown, we’re remaining prudent. We’re focusing on contracted or regulated assets rather than, for example, consumer-linked transportation.

Additionally, we’re concerned about supply chain issues. We’re prioritising operational infrastructure and steering clear of developmental/greenfield risk unless the supply chains are fully locked in.

Ultimately, it’s been challenging. And firms have been slow to deploy capital in the direct market. By contrast, secondaries have offered abundant dealflow. It’s been a real buyer’s market, allowing us to find high-quality assets at truly attractive valuations.

Q: To what extent is there pent-up demand for GP-led deals in the infrastructure sector?

Over the last five years, the abundant supply of high-quality LP stakes has led the market to lean into LP stake secondaries. It’s been possible to find significant diversification and buy quality at a discount. This has inadvertently made it difficult to get GP-led deals done, as there are relatively few scale buyers for infrastructure secondaries. While good deals are still completed – about a third of our prior fund’s deals were GP-led – they had to meet a very high bar to stack up against the diversified LP portfolios. This is where the pent-up demand is coming from.

“”Over the last five years, the abundant supply of high-quality LP stakes has led the market to lean into LP stake secondaries””

“”Over the last five years, the abundant supply of high-quality LP stakes has led the market to lean into LP stake secondaries””

GPs are also experiencing a liquidity squeeze and a difficult exit market. This means that there hasn’t been enough capital available for all the transactions they might have wanted to carry out. This frustration represents a significant opportunity. We can get access to very high-quality assets or platforms alongside strong GPs at attractive entry valuations. As a lead investor, we look to structure any deal around strong alignment with relevant GPs. We’re now starting to find GP-led deals where the risk-adjusted returns stack up with those in the LP stake market.

Of course, the term “GP-led” is very broad, and not all deals appeal to us. In part, there’s a market focus on providing longer-term solutions for funds that have reached the end of their life. But that’s not where we’re directing our attention. Instead, we prioritise earlier-in-life opportunities around assets with a significant future growth profile. This creates a “win-win-win” scenario: we bring secondary capital into a restructured or annex vehicle to allow for the growth of those assets.

Q: The mid-market is proving attractive to investors. What is it about these deals that generates appeal?

The mid-market looks really attractive right now, and we’re seeing increased LP interest in the space generally. Although we do invest across the market, our own proprietary data, covering 2,000 underlying companies, shows that mid-market funds are able to acquire assets at, on average, more attractive entry valuations. They often acquire assets that may be first-time owned by a fund, perhaps from a family-owned business, with substantial opportunity to create value.

Mid-market funds have historically created more value in the actual EBITDA growth of the assets themselves. In contrast, larger-cap funds have typically relied more on multiple expansion and leverage.

In addition, the exit market is just starting to show signs of recovery and it’s being led by the mid-market. Mid-market assets can be exited to a broader universe. Conversely, large-cap funds may have already scaled up and, as such, could find it difficult to find buyers at that end of the spectrum.

Q: What’s particularly important for investors to consider when aiming to make a GP-led deal successful?

First and foremost, it’s about the assets included in the transaction. We must have strong conviction in high-quality, high-performing assets. And we must get involved at an attractive valuation with embedded value. There also needs to be real conviction that the GP has the ability to drive further growth with the new capital.

Another key factor for success is having a clear rationale underpinning the transaction. Is there a genuine need for growth capital that will benefit both new and existing investors? Or is the GP simply looking for “another go” at an asset? Alignment of interest and structuring is also key. This is why it’s so important to have a strong lead investor who understands not only how to underwrite the asset but also how to structure the deal. Since the secondary transaction is carried out at a different valuation than the fund’s original entry, any deal must be structured to ensure strong alignment of interest with the GP at the entry valuation.

Q: Infrastructure covers a broad range of assets. What are some of the most attractive areas today?

We use the term “Infrastructure 1.0” for traditional assets, such as roads or utilities. For the newer sectors, we use the term “Infrastructure 2.0”. One of the biggest successes of Infrastructure 2.0 has been digital infrastructure, encompassing telecom towers, fibre and data centres. We also see continued tailwinds for digital infrastructure driven by market fundamentals. And, more recently, by the rise of artificial intelligence.

“”Over the next two to three years, we expect to see a normalisation of the exit market and new deal activity driven by tailwinds in power distribution and generation, digital and the energy transition, as well as logistics””

“”Over the next two to three years, we expect to see a normalisation of the exit market and new deal activity driven by tailwinds in power distribution and generation, digital and the energy transition, as well as logistics””

Despite the power demands of these Infrastructure 2.0 assets, for me there’s no conflict of interest between the digitalisation and decarbonisation mega-trends. I believe they’re actually very aligned. The massive need for power generation to supply data centres, especially in the US, for example, means there’s a critical need for operational power. Building new fossil fuel-based generation simply takes too long. As a result, we’re seeing a significant trend of corporate-to-corporate transactions where data centre developers are aligning themselves with renewable energy developers to meet their power needs.

Over the next two to three years, we expect to see a normalisation of the exit market and new deal activity driven by tailwinds in power distribution and generation, digital and the energy transition, as well as logistics.

We anticipate a return to the strong growth in fundraising and demand for infrastructure assets that was seen prior to the recent slowdown. Within that, we also expect to see increased appetite for mid-market funds. This continued fundraising will, in turn, support what’s now a more mature and functioning secondary market. Against this backdrop, we’ll continue to see strong dealflow in both LP stake and GP-led opportunities.