Amyn Hassanally, Global Head of Private Equity Secondaries at Pantheon, explores why the private equity secondary market has been growing at such pace. Liquidity pressure tends to get the credit, but Amyn points to a set of structural changes that have been building for years, independent of that market backdrop.

• Portfolio management: LPs are pruning and shaping portfolios to reduce the number of managers they hold, while GPs are packaging assets from older funds into continuation vehicles and using the secondary market as a portfolio management tool in its own right.
• Programmatic selling: funds of funds, secondary funds and asset managers are increasingly using the secondary market every year to sell down older, tail-end portfolios, rather than as a one-off event.
• Broadening asset classes: supply now extends well beyond private equity, with portfolios of private credit, infrastructure, real estate and venture capital assets also coming to market.
• Liquidity-driven selling: market dynamics still play a part, layered on top of these structural drivers rather than explaining them on their own.

It’s this combination, rather than any single factor, that explains the pace at which the secondary market has been growing over the last couple of years.

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