Dry Powder: The Private Equity Podcast The Rise and Rise of the Secondary Market w/ Lexington Partners’ Wilson Warren
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Apr 29, 2025 Will Warren, President of Lexington Partners and a private equity expert since 1994, shares fascinating insights on the booming secondary market. He discusses how the market's growth has exceeded expectations and the evolving strategies of Limited and General Partners. Warren emphasizes the rise of GP-led transactions and retail investor participation, alongside innovations in technology and data analysis. He also forecasts a transformative decade ahead, highlighting the potential for enhanced transparency and new trading platforms in private investments.
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Secondary Market's Massive Growth
- The secondary market's transaction volume has grown astonishingly from about $1 billion yearly 25 years ago to $150 billion recently.
- The increase is fueled by private equity's growth and a jump in investors selling interests from under 1% to approximately 12%.
Liquidity Needs Drive Market Innovation
- Low current yields in private equity create need for liquidity when distributions don't cover capital calls.
- This demand pressures both LPs needing cash and GPs to offer liquidity solutions or extend holding periods on assets.
Evolution of GP-Led Secondaries
- GP-led secondary transactions now often involve high-quality assets and are done near NAV.
- These transactions help GPs hold winners longer and provide LPs flexible liquidity options, differing from older distressed deals.