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Secondaries

Buying maturity, often at a discount.

Acquiring existing interests in private-market funds, where the assets are already visible, the holding period is shorter and the price is frequently below stated value.

Strategy

The same assets, entered later and more cheaply.

When an investor in a private fund needs liquidity before the fund matures, they can sell their interest to another investor. That transaction is the secondary market, and it has grown into a substantial, sophisticated asset class of its own.

For the buyer, secondaries offer three advantages over committing to a new fund: the underlying companies are already known rather than blind, the remaining life is shorter, and the interest is often acquired at a discount to its stated value. Together these can ease the early drag that new private-market commitments impose.

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Visible
The underlying assets are already known
Shorter
A reduced remaining holding period
Discount
Interests often bought below stated value
Smoother
Eases the early drag of the J-curve

Easing the J-curve

A gentler entry into private markets.

New private-market commitments typically fall in value before they rise, the so-called J-curve, as fees are paid before value is created. Because secondaries buy into funds that are already invested and maturing, they can shorten that early dip and bring distributions forward. The comparison below is illustrative.

Illustrative characteristics versus a new primary commitment, not a forecast. Capital remains at risk.

Visibility of underlying assets85%
Speed to first distributions75%
Typical discount to stated value15%
Blind-pool risk versus a new fund20%
Liquidity for sellers, value for buyers.

The market

Two sides of the same opportunity.

01

Investor-led secondaries

Purchasing fund interests from investors who need early liquidity, typically a portfolio of mature holdings acquired at a discount.

02

Manager-led secondaries

Participating as a manager moves prized assets into a new vehicle, giving existing investors an exit and new investors focused exposure.

03

Continuation vehicles

Backing high-quality companies a manager wishes to hold longer, with fresh terms and a clearer view of the assets.

Suitability & risk

What to weigh before allocating.

01

Still illiquid

Secondaries shorten the holding period but do not remove illiquidity. Capital remains committed for years.

02

Pricing skill

The discount reflects risk and must be judged carefully. Mispricing a portfolio is the central danger.

03

Manager quality

You inherit the underlying managers and companies. Their quality determines the outcome.

04

Capital at risk

A discount is not a guarantee. The underlying assets can still fall in value.

Questions

What clients ask us first.

Usually for liquidity rather than distress: an investor may need cash, wish to rebalance, or be winding down a programme. Because private fund interests cannot be sold easily, sellers often accept a discount to stated value in exchange for an early, certain exit. That discount is part of what makes secondaries attractive to buyers.
New private-market commitments tend to fall in value in their early years, as fees are charged before investments create value, before recovering and rising, a shape resembling the letter J. Secondaries buy into funds that are already past this early phase, which can reduce the initial dip and bring returns forward.
They carry different risk. Visibility and shorter duration reduce some uncertainty, but pricing the assets correctly is demanding, and the underlying investments can still lose value. They are a complement to primary commitments, not a risk-free version of them.

Begin the relationship

Explore the secondary market.

Speak with a specialist about a smoother, more visible entry into private markets.