Quick Reads

Capitalizing on the Growing GP-Led Secondary Market

March 2022

Share on linkedin
LinkedIn

Past performance is not necessarily indicative of future results. No assurance can be given that any investment will achieve its given objectives or avoid losses. Unless apparent from context, all statements herein represent GCM Grosvenor’s opinion.

 

Select risks include: risks related to the lack of a liquid, transparent market for secondary investments, performance risk, and risks related to sourcing investments.

There has recently been a sharp rise in the number of GP-led private equity secondary market transactions as investors and sponsors alike recognize the benefits of the approach. Here we explore the reasons for the increase and highlight some of the advantages presented to secondary investors who pursue GP-led deals. In doing so, we present the key elements for investors to consider to best capitalize on GP-led secondaries.

 

This excerpt is taken from a paper in the GCM Grosvenor In-Depth series. 

Looking Ahead

The GP-led market has seen tremendous growth in the past five years. Sponsors are increasingly using continuation funds as a mechanism to hold on to their trophy assets while also providing a liquidity option to investors. Given the attractive value proposition, several sponsors have utilized continuation funds as the primary exit path for their portfolio companies. We anticipate this trend will continue and we see buy-side capital as being the main constraint in the market today. As secondary players continue to raise record-level capital, we see a path to the GP-led volume growing another two- or three-fold over the next five years.

Related Insights

Finding Opportunity in the Secondary Market Amid Dislocation

The global COVID-19 pandemic has significantly affected the economy, financial markets and individuals around the world. During and following such market downturns, an increased number of LPs and GPs face pressure to raise liquidity at the same time that traditional avenues tend to freeze up. Here, we review what’s happening in the secondary marketplace in response to the crisis and highlight the compelling secondary opportunities.

Read More »

The Rise of the GP-Led Secondary Investment

We explore the growth and evolution of the secondary market, compare complex non-traditional transactions with traditional secondaries, and discuss the importance of a robust platform of manager relationships to access GP-led deals. Refreshed with 2020 data.

Read More »

All data as of December 31, 2021 unless otherwise noted

 

Important Disclosures

For illustrative and discussion purposes only. The information contained herein is based on information received from third parties. GCM Grosvenor has not independently verified third-party information and makes no representation or warranty as to its accuracy or completeness. The information and opinions expresses are as of the date set forth therein and may not be updated to reflect new information.
 

 
Investments in alternatives are speculative and involve substantial risk, including strategy risks, manager risks, market risks, and structural/operational risks, and may result in the possible loss of your entire investment. Past performance is not necessarily indicative of future results. The views expressed are for informational purposes only and are not intended to serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities by GCM Grosvenor. All expressions of opinion are subject to change without notice in reaction to shifting market, economic, or political conditions. The investment strategies mentioned are not personalized to your financial circumstances or investment objectives, and differences in account size, the timing of transactions and market conditions prevailing at the time of investment may lead to different results. Certain information included herein may have been provided parties not affiliated with GCM Grosvenor. GCM Grosvenor has not independently verified such information and makes no representation or warranty as to its accuracy or completeness.