Capital investments' secondary transactions experiencing surge in areas beyond developed nations
The Global Private Capital Association (GPCA) has reported a significant surge in global secondary investment in private capital, with record highs being recorded outside the US and Western Europe. The report, based on data from the GPCA, a membership organization of private capital investors, highlights a trend towards underpenetrated markets beyond Asia.
Asia has been a dominant player in private capital fundraising since 2020, accounting for over 80% of CV fundraising. However, the report indicates that the focus is now shifting to other regions such as India, Southeast Asia, Latin America, Central and Eastern Europe, Africa, and China.
Secondary investors are finding compelling entry points in these underpenetrated markets, driven by several key factors. Emerging markets such as India and Southeast Asia are experiencing significant secondary market growth, supported by robust investor interest and liquidity needs in these regions.
The overall private capital market is moving from a liquidity drought to a selective thaw, with secondaries becoming the primary relief valve for liquidity. This is fueling secondaries activity globally, including outside traditional markets.
Sponsors and investors are also revitalizing aging funds through secondaries, continuation vehicles, dividend recaps, and NAV-based solutions to unlock liquidity and manage holding periods amid high interest rates and uncertain exit environments.
The focus on scaling portfolios, operational improvements, and strategic add-on acquisitions enhances firms' pricing power and competitiveness, encouraging secondary transactions as part of portfolio management and restructuring.
The secondary market reached record size and growth rates globally, with a 45% growth to $162 billion in 2024. This surge in activity is particularly noticeable in regions like India, reflecting increasing demand for secondaries in non-US/Western European markets.
Prominent GPs in Asia have launched continuation vehicles amid a broader wave of exit activity. Development finance institutions in Africa are increasingly deploying LP-led secondary strategies to free up capital, refocus priorities, and attract more private investment.
International private markets solutions providers like HarbourVest and StepStone are building local teams in Asia and emerging as leading backers of CVs in the region. TPG NewQuest, a maturing group of Asia regional secondaries specialists, is also playing a significant role in this growth.
The report also notes that GPs are optimistic about private market fundraising in 2025. This optimism is reflected in the record GP-led activity in growth markets, with $1.3 billion raised across eight continuation vehicle transactions so far.
The report's members manage assets across Asia, Latin America, Africa, Central & Eastern Europe, and the Middle East, indicating a global shift towards these emerging markets. The report, however, does not discuss any potential challenges or risks associated with the record highs in global secondary investment in private capital.
One notable example of LPs taking a more active role is seen in NYC Pensions' USD5 billion sale to Blackstone. This sale underscores the increasing involvement of LPs in the secondary market.
In conclusion, the GPCA's report provides valuable insights into the growing trend of secondary investment in private capital outside the US and Western Europe. The factors driving this growth include emerging market opportunities, liquidity management strategies, and operational execution dynamics, all of which are expanding secondary investment beyond traditional markets.
Finance is a key factor driving the growth of secondary investments in private markets, as investors seek compelling entry points in underpenetrated markets like India, Southeast Asia, Africa, Central and Eastern Europe, and China. The private markets are witnessing a shift towards these regions, and the secondary market has reached record size and growth rates globally, with a 45% growth to $162 billion in 2024, particularly noticeable in regions like India. Global Private Capital Association (GPCA) members are managing assets across these emerging markets, showing a global shift towards these regions.
