Private Credit Secondaries: A New Frontier for Institutional Investors

The partnership between Partners Group and Generali Investments to launch a private credit secondaries fund in April 2025 marks a significant milestone in the evolution of institutional investing. With a target fundraising goal of $1 billion, the Luxembourg-based fund aims to capitalize on a market segment expected to grow alongside the $1.6 trillion private credit industry. This collaboration combines Generali’s asset management expertise with Partners Group’s secondaries prowess, positioning the fund to address a growing demand for liquidity solutions in an increasingly complex investment landscape.

The Rise of Private Credit Secondaries

Private credit secondaries—transactions where investors buy existing stakes in private credit funds or portfolios—are emerging as a critical tool for portfolio diversification. Unlike traditional primary investments, secondaries offer immediate exposure to cash flows, reducing the risk of the “J-curve effect,” where returns lag behind capital calls in the early years of an investment. According to Preqin, the private credit secondaries market has surged in recent years, driven by institutional investors seeking to rebalance portfolios, exit underperforming positions, or gain access to illiquidity premiums without committing to long lock-up periods.

The fund’s structure as a Luxembourg Reserved Alternative Investment Fund (RAIF) reflects its focus on European, Middle Eastern, and Asian investors, regions where institutional demand for alternatives is outpacing traditional asset classes. Its classification under the EU’s SFDR Article 8—emphasizing environmental or social objectives—also underscores a strategic alignment with evolving ESG regulations and investor preferences.

A Strategic Marriage of Expertise

The partnership merges two complementary strengths: Generali’s $645.2 billion asset management platform and Partners Group’s two-decade track record in secondaries. Generali brings deep expertise in fund origination and underwriting, while Partners Group contributes its network of LP and GP-led deals. This synergy aims to enhance the fund’s ability to source deals, execute transactions, and deliver risk-adjusted returns.

Why Now? The Case for Secondaries

The timing of the fund’s launch is no accident. The $1.6 trillion private credit market is becoming increasingly crowded, with primary funds facing rising competition for deals and higher valuations. Secondary transactions, by contrast, allow investors to acquire existing portfolios at more attractive pricing, often from sellers seeking liquidity. Partners Group’s Enrico Pinelli noted the parallels to private equity and infrastructure markets, where secondary transactions now account for roughly one-third of total capital flows.

The fund’s focus on both LP-led (investors selling stakes in existing funds) and GP-led (general partners restructuring portfolios) transactions further widens its opportunity set. LP-led deals, which account for about 60% of secondary volume, offer exposure to mature portfolios with predictable cash flows. GP-led secondaries, meanwhile, enable investors to participate in restructured deals that extend the life of underperforming assets or monetize undervalued holdings.

Mitigating Risk, Accelerating Returns

The fund’s marketing materials highlight three key advantages:
1. Immediate Cash Flow: Acquiring stakes in mature portfolios shortens the path to returns, bypassing the J-curve.
2. Diversification: Secondary buyers gain access to a broad range of underlying assets, from middle-market loans to real estate debt, without the commitment to a single fund.
3. Supply-Demand Dynamics: As the volume of secondary transactions grows—driven by aging private credit funds and investor liquidity needs—the market’s liquidity is improving, reducing the risk of fire sales.

Generali’s Marco Zanuso emphasized that the fund’s structure “delivers the illiquidity premium without the full illiquidity penalty,” a compelling proposition for pension funds and endowments seeking yield without overexposure to new, unproven deals.

Looking Ahead: A $1 Billion Test of Market Appetite

The $1 billion target reflects cautious optimism about the market’s readiness. While secondary transactions have long been a niche activity, their share of total private credit capital is still small compared to private equity. However, with institutional investors increasingly using secondaries for portfolio management, the fund’s success could signal a broader shift.

The partnership’s scale is also notable: Partners Group’s $150 billion in assets under management and Generali’s pan-European distribution network provide a platform to attract both new and existing investors. The fund’s SFDR Article 8 classification adds another layer of appeal, as ESG considerations become a non-negotiable component of institutional mandates.

Conclusion: A Strategic Bet on Market Evolution

The launch of this fund underscores a tectonic shift in private credit investing. With the global private credit market projected to surpass $2 trillion by 2026 (according to Preqin), secondary transactions will likely grow into a $500 billion+ subsector by the end of the decade. The Partners-Generali fund, with its $1 billion target, is a modest step in this trajectory—but one that highlights the industry’s maturation.

By combining institutional-grade due diligence with the agility to capitalize on secondary opportunities, the fund positions itself to deliver on its promise of superior risk-adjusted returns. As Partners Group’s Henri Lusa observed, “The private credit secondaries market is where private equity was 20 years ago—a space ripe for innovation and scale.” With $1.6 trillion in assets and a growing need for liquidity solutions, this partnership is betting big on a future where secondaries are no longer the exception but the rule.