Why Now for GP-Led Secondaries

General-partner-led secondaries offer access to high-quality, already-performing private equity assets—combining attractive return potential with greater visibility and downside protection.

What are GP-led secondaries?

• Transactions led by a general partner (GP), or the manager of a private markets fund.
• The GP decides to transfer one or more existing investments from a primary fund into a new fund called a continuation vehicle (CV).
• The CV is funded by:
  • New secondary buyers
  • Investors who roll over their positions from the primary fund.

How much have GP-led secondaries grown over time?

• GP-led secondaries represent the fastest-growing segment of the secondary market, having grown tenfold over the past decade, surpassing $100 billion in 2025.¹
• GP-led secondaries represented ~20% of total secondary volume in 2015 and now account for ~50% of total secondary volume.²
• Despite increased investor attention, the GP-led secondary market remains structurally undercapitalized with around one year of dry powder, or available capital, to cover today’s deal volume. This allows seasoned secondary managers to be very selective and helps to ensure that the attractive opportunities flow into a fund.

Why is now the time for GP-led secondaries?

We believe CVs have become a lasting feature of private markets.

Rising Adoption

CVs act as a structural liquidity tool that allows managers to hold onto their highest-conviction investments. As a result, they are an increasingly important and permanent exit alternative, accounting for a meaningful and growing share of private equity exits in recent years.

• CV fund volume increased to 16% of total private equity exit value in 2025, up from 5% in 2020.³
• ~83% of the top 100 sponsors have accessed the CV market since inception.⁴

CVs have become a structural tool for private equity

Source: Ares, PJT & Evercore. As of May 2026.

Noncyclical Expansion

GP-led secondaries initially gained traction when traditional exit markets slowed in the past few years. Even today, ~$5.7 trillion of unrealized private equity assets (aged 4-10 years old) remain ripe for secondaries investment.⁵

Notably, the use of GP-led secondaries has continued to grow even amid stronger capital-market environments. For example, even as Global M&A topped $5.1 trillion in 2025, the GP-led secondaries market reached an all-time high.⁶

What’s the portfolio benefit for GP-led secondaries investors?

• Return Potential: GP-led secondary deals are often underwritten to higher return targets. In today’s market, we are underwriting to 18%-20%+ gross returns, in line with primary buyout returns.⁷
• Attractive downside protection: The ability to invest in known, de-risked assets has contributed to lower loss ratios and return dispersion compared to primary buyout private equity. For example, Ares CVs have delivered roughly two-thirds fewer losses than the broader buyout market.⁸
• Premium to Public Markets: In general, private equity secondaries have historically outperformed public equities by ~300-500 basis points over the long-term, with milder drawdowns.⁹

How should investors think about LP-led vs. GP-led secondaries?

LP-led and GP-led secondaries serve distinct but complementary roles in a portfolio.

• LP-led deals, which often comprise tens to hundreds of underlying companies, can offer broad diversification exposure, with built-in downside protection¹⁰ because the underlying companies are closer to exit and can provide earlier liquidity. Returns are typically driven by discounts, with go-forward growth in line with the broader market. This broad diversification makes LP-led secondaries analogous to private markets “beta”.
• GP-led deals enable more targeted exposure to specific assets, sectors, or geographies. Returns are driven by long-term compounding of portfolio growth, rather than discounts. This targeted exposure makes GP-led secondaries analogous to private markets “alpha”.

Bottom line: Combining LP- and GP-led secondary transactions offers multiple drivers of return, creating a robust and resilient secondary market portfolio that can opportunistically pivot based on the market environment.

What is a key benefit of GP-led secondaries compared to direct deals and co-investment?

Every private market deal has a gap between signing and closing. During that time, the target company keeps operating and continues to generate earnings and cash flow. But who gets the benefit of that interim extra value? In a traditional M&A deal, the seller typically keeps those interim gains because an M&A deal’s final price is based on the valuation at which the deal closes.

By contrast, in GP-led secondary deals, the buyer benefits from any additional value created after the initial signing date because the purchase price is set to the net asset value at signing. Therefore, any equity value creation between signing and closing accrues to the buyer and effectively becomes extra return—a built-in boost often not fully accounted for at the time of underwriting.

Conclusion

Secondaries have evolved from a niche to a mainstream private market asset class. Indeed, its projected growth to $400 billion by 2029 implies that the GP-led market could exceed $200 billion in the next three years.¹¹ Secondaries now serve as a critical liquidity tool for the entire market. With perpetual secondaries funds enabling continuous compounding, the asset class stands out as a powerful, long-term allocation for investors focused on capital appreciation with built-in downside protection.

Terry Simpson, Senior Investment Strategist, contributed to this piece.

READ MORE FROM ARES MANAGEMENT

1. Evercore Private Capital Advisory—2025 Secondary Market Highlights. As of January 2026.

2. Ibid.

3. Source: (1) Morgan Stanley FY 2025 Investor Survey, Preqin as of February 2026; (2) Sponsor-Backed Exit Value per LSEG. Continuation Funds Exit Volume per Morgan Stanley. As of May 2026.

4. Source: Denotes Top 100 global private equity buyout sponsors ranked by Private Equity International, excluding secondary and fund-of-funds strategies.

5. Source: Preqin. As of May 2026.

6. Source: Ares & PitchBook. As of December 2025.

7. There is no guarantee that past performance will match future performance. There is no guarantee target returns will be achieved. Net returns do not account for fees and expenses.

8. Source: Ares Management and Ares QRG Alpha Toolkit, as of December 2025.

9. Source: Ares Wealth Investment Strategy Team & Venn. Analysis from 1995 to 2025. Secondaries are Burgiss All Secondaries Index, Global Equities are MSCI World Index & U.S. Equities are S&P 500 Index. As of December 2025. There is no guarantee future performance will equal past performance.

10. References to “downside protection” or similar language are not guarantees against loss of investment capital or value.

11. Source: Ares. Projections and forward-looking statements regarding estimated investment outcomes are based on assumptions that we believe are reasonable currently. However, actual results may vary materially from stated expectations, and we make no guarantees of the future performance. There can be no assurance historical trends will continue or lead to profitable outcomes. As of April 2026.

Ares undertakes no duty or obligation to update or revise any information contained herein. Statements including words such as “anticipate,” “believe,” “plan,” “estimate,” “target,” “expect” and “intend” and other similar expressions, constitute “forward-looking statements” within the meaning of U.S. federal securities laws, which are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. All investments involve risk, including possible loss of principal.

DO NOT RELY ON ANY OPINIONS, PREDICTIONS, OR FORWARD-LOOKING STATEMENTS CONTAINED HEREIN. This information is as of the date of the material, may not be updated and certain recent events or factors may influence the views expressed. Certain information contained in this piece may constitute forward-looking statements that are inherently unreliable and actual events or results may differ materially from those reflected or contemplated herein. Ares Management Corporation and its affiliates (“Ares”) expressly disclaims any obligation or undertaking to update or revise any such forward-looking statements.

Past performance is not indicative of future results.