Secondaries Market Soars as Investors Seek 'Free Money' and Liquidity

The demand for secondary funds focused on private markets is soaring, driven in part by an accounting quirk that allows investors to buy assets at a discount and revalue them at par. This has created a "sense of people picking up free money" and a "mania." The secondary market has become increasingly popular as investors seek liquidity in a market where dealmaking has stalled, forcing private company owners to hold on to assets longer. The strategy has proven fruitful recently, with Blackstone reporting it was the best performing in Q2.

The demand for secondary funds focused on private markets is surging, driven in part by an accounting quirk that allows investors to buy assets at a discount and revalue them at par. This practice has created a "sense of people picking up free money," according to Marc Lipschultz, Co-Chief Executive Officer of Blue Owl Capital, who recently described it as a "mania" [1].

The secondary market enables investors to buy or sell stakes in private-asset funds, often at a discount. This has become increasingly popular as investors seek liquidity in a market where dealmaking has stalled, forcing private company owners to hold on to assets longer. The strategy has proven fruitful recently, with Blackstone reporting it was the best performing in the second quarter [1].

Credit is expected to be the fastest-growing part of secondaries for years to come, according to Jefferies Financial Group Inc. The number of transactions in the space is forecast to grow to more than $17 billion this year from $10 billion last year [1]. The marketplace for fund stakes is drawing more sellers than ever before, pushing up prices and tempting more investors to look at disposals.

One benefit for some buyers is the accounting treatment which allows them to mark up the acquisitions, bolstering the value of the assets. "It’s true that secondary transactions are often completed at a discount to NAV, and yes, that can create an initial unrealized gain for the buyer. But this isn’t artificial. It represents real value and can enhance returns for the fund," wrote private capital investor Hamilton Lane on its website last month [1].

Other signs of appetite for the strategy include Coller Capital Ltd. closing a deal for a $3 billion continuation fund with direct lender TPG Twin Brook Capital Partners, and Ares Management Corp. raising more than $3.5 billion for its debut credit secondaries fund [1].

References:
[1] https://www.bloomberg.com/news/articles/2025-08-16/lure-of-free-money-in-secondaries-nears-a-mania-credit-weekly