What Is a GP-Led Secondary?
A GP-led secondary is a transaction where the general partner (GP) of a fund initiates a liquidity solution for existing investors (limited partners, or LPs) by transferring one or more portfolio assets into a new vehicle. Unlike traditional LP-led secondaries, where investors sell their fund interests to other investors, GP-led deals are sponsor-driven and often designed to extend ownership of high-performing assets beyond the original fund’s term.
These transactions have grown significantly in recent years, driven by the need for flexibility in holding periods and the desire to optimize value creation. In 2024, GP-led deals accounted for nearly half of all secondary market volume, reflecting their mainstream adoption.
Common Structures
GP-led secondaries can take several forms, each tailored to the portfolio and investor objectives:
Single-Asset Continuation Funds - A single portfolio company is moved into a new vehicle, allowing the GP to continue managing it while providing liquidity to existing LPs.
Multi-Asset Continuation Funds - Multiple assets are transferred into a new fund, often when the GP wants to extend the life of a concentrated set of high-performing investments.
Strip Sales - A partial sale of a portfolio (a “strip”) to secondary buyers, providing liquidity without fully exiting the assets.
Strategic Rationale for GPs and LPs
For GPs:
Extend ownership of strong-performing assets beyond the original fund term.
Maintain management fees and carried interest opportunities.
Avoid forced exits in unfavorable market conditions.
For LPs:
Gain optionality: sell for liquidity or roll into the new vehicle.
Potential for continued upside in high-quality assets.
Access to liquidity without waiting for a full fund wind-down.
Governance, Conflicts, and Transparency
GP-led transactions introduce inherent conflicts of interest because the GP is effectively on both sides of the deal. Best practices include:
Independent Fairness Opinions to validate pricing.
LP Advisory Committee (LPAC) Involvement for oversight.
Clear Disclosure of terms, fees, and conflicts.
Regulators have increased scrutiny on these processes, emphasizing transparency and ensuring LPs are presented with a genuine “status quo” option rather than two unfavorable choices.
Administration and Structuring Implications
Continuation funds and complex liquidity solutions require careful planning:
Fund Administration:
New entity setup, capital account rollovers, and waterfall recalculations.
Complex reporting for rolled and selling investors.
Structuring:
Tax considerations for both selling and rolling LPs.
Regulatory compliance across jurisdictions.
Notable Recent GP-Led Transactions
Here are a few recent GP-led continuation fund deals, with specific assets:
Astorg – Normec Group (€1.4B) Astorg launched a €1.4 billion continuation fund to retain its investment in Normec Group, a Netherlands-based testing and certification company. Lead investors included CVC Secondary Partners, Pantheon, Lexington Partners, and Eurazeo.
Insight Partners – Multi-Asset Software Portfolio ($1.5B) Insight Partners closed a $1.5 billion continuation vehicle (Continuation Fund III), led by HarbourVest, to acquire stakes in multiple software companies. While the official announcement did not list specific assets, prior Insight portfolios include names like Checkmarx, iCIMS, and JFrog.
Vista Equity Partners – Cloud Software Group ($5.6B) Vista created a single-asset continuation fund centered on Cloud Software Group (parent of Citrix and Tibco), in a deal valued at approximately $5.6 billion, one of the largest GP-led transactions to date.
KSL Capital Partners – Alterra Mountain Company ($3B) KSL Capital Partners closed a single-asset continuation vehicle of over $3 billion for Alterra Mountain Company, a major ski resort operator.
These transactions underscore the growing size and strategic importance of GP-led secondaries in today’s private equity market.
Closing Thoughts
GP-led secondaries have evolved from niche solutions for underperforming funds into mainstream tools for managing high-quality assets. They offer flexibility for GPs and optionality for LPs, but they also introduce governance challenges and operational complexity. As these transactions continue to grow, success will depend on robust processes, transparent communication, and careful structuring to align interests across all parties.