The evolution of private equity secondaries

Secondaries are now a strategic asset class, offering reduced blind-pool risk, accelerated cash flows and diversification.

Ana Puric Aug. 03, 2026 3-minute read

Key takeaways

Private equity secondaries have evolved from a niche liquidity solution into a strategic asset class, providing investors with access to mature private market investments and enhanced portfolio flexibility.
Secondary investments provide exposure to portfolios that are already partially or substantially invested, offering greater visibility into underlying assets and potentially reducing blind-pool risk.
For many investors, a combination of primary and secondary private equity strategies may provide a more balanced approach to achieving long-term private market exposure while improving diversification and portfolio resilience.

Private equity secondaries have transitioned from a niche liquidity solution to a strategic asset class, offering investors enhanced access, flexibility and diversification within private markets. As the private equity landscape matures and companies remain private for longer, secondary transactions — both LP-led and GP-led — are increasingly integral to portfolio construction.

What are private equity secondaries?

Secondaries involve the purchase and sale of existing interests in private market investments. Unlike primary investments, where capital is committed to new funds, secondaries allow investors to acquire stakes in funds or portfolios that are already partially or fully invested. This provides immediate exposure to mature assets and reduces blind-pool risk. There are two kinds of secondaries:

LP-led secondaries

LP-led transactions involve limited partners selling their fund stakes, often for portfolio rebalancing, liquidity needs or strategic changes. Buyers gain visibility into underlying assets and may benefit from immediate distributions and reduced risk.

GP-led secondaries

GP-led transactions are initiated by general partners, transferring assets into continuation vehicles. This enables GPs to extend ownership of high-quality assets beyond typical fund lifecycles, offering liquidity options to existing investors while maximizing value creation.

Rapid growth of the secondary market

Drivers of growth

Several structural trends underpin the growth of secondaries:

Expanded private markets: With trillions invested across diverse strategies, the pool of eligible assets for secondary transactions has grown.

Longer holding periods: Companies stay private longer, requiring extended value creation initiatives. Continuation vehicles allow GPs to realize full asset potential.

Liquidity constraints: Market volatility, slower exits, and reduced Initial Public Offering — IPO — activity have increased demand for liquidity solutions. Secondaries offer practical mechanisms for managing exposure and generating liquidity.

Institutional acceptance: Secondaries are now seen as proactive portfolio management tools, used for rebalancing, optimizing sector allocations, and managing vintage-year exposure.

Investor benefits

Secondaries offer several advantages:

Earlier distributions — mitigates the J-curve effect: By acquiring mature portfolios, investors experience earlier distributions and improved cash flow predictability, avoiding the negative returns of early-stage primary investments.

Reduced blind-pool risk: Secondary investors have greater transparency into portfolio companies, performance and sector exposures, enabling informed risk assessment.

Faster capital deployment: Immediate exposure to invested assets reduces cash drag and allows efficient capital utilization.

Attractive risk-adjusted returns: Secondary interests are often acquired at discounts during market dislocations, enhancing return potential.

Enhanced diversification: Single secondary transactions provide access across managers, sectors, geographies, and vintage years, supporting robust portfolio construction.

Portfolio construction: Primaries and secondaries

Combining primary and secondary investments delivers a balanced approach:

Portfolio Impact	Primaries	Secondaries
Diversification	New opportunities, long-term exposure	Adds diversification, reduces vintage concentration
Return profile	Higher upside, higher risk	Predictable returns, reduced downside
Cash flow management	J-curve effect	Mitigates J-curve, quicker distributions
Liquidity and duration	Long duration (10 to 12 years)	Shorter duration (4 to 7 years)
Market opportunities	Access to new managers/strategies	Discounted entry points
Portfolio resilience	Growth engine	Shock absorber, quicker cash back

Looking ahead

Secondaries are now a strategic asset class, offering reduced blind-pool risk, accelerated cash flows and diversification. As private markets expand and liquidity becomes increasingly valuable, secondaries will remain a compelling opportunity for investors seeking resilience, flexibility and enhanced return profiles within their portfolios.

To learn more about the potential role secondaries can play in your investment portfolio, contact your advisor or CIBC representative today.

Read Secondaries: The evolution of private equity’s most compelling opportunity set (PDF, 1.6 MB) Opens a new window.

Written by

Ana Puric

Vice-President, Private Markets
CIBC Global Asset Management

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