Co-Heads of Apollo S3 Sponsor & Secondary Solutions Steve Lessar, Veena Isaac, and Konnin Tam break down how the asset class has evolved and why it's become a core allocation for sophisticated private market investors.

With many traditional primary private equity strategies facing extended holding periods, a record exit backlog, and slower distributions, secondaries can serve as a complementary solution, offering an attractive alternative: vintage and manager diversification, and the potential for attractive risk-adjusted returns and more consistent capital distributions.

What Are Private Market Secondaries?

Private market secondaries are transactions in which existing investors buy or sell stakes in private market funds or portfolio companies, providing liquidity in a market that was not originally designed to offer it. Secondary buyers acquire interests in individual assets or funds that are already invested, providing immediate exposure to mature, cash-flowing assets while also offering attractive risk-adjusted return potential.

Why Investors Allocate to Secondaries

We believe secondaries can offer a distinct blend of potential benefits not seen in most private market strategies:

• Dislocation-Oriented
  Secondaries can take advantage of distress and dislocation by investing at attractive valuations
• Growing and Evolving Market
  LPs and GPs are increasingly likely to tap the secondaries market for a growing range of creative liquidity solutions
• Attractive Risk-Adjusted Returns
  The potential for comparable and complementary returns to primary private equity, alongside faster capital return, and a differentiated cash flow profile
• Portfolio Diversification
  Immediate access to a diversified pool of underlying companies and assets across vintages and industries

Two Main Types of Secondary Transactions

The secondary market is broadly divided into two transaction types — LP-led and GP-led — each serving  a distinct purpose, but together forming a complementary toolkit  that supports liquidity generation and portfolio construction across  private markets.

• Limited Partner (LP)-led: LP sells its commitment in a fund to a secondaries buyer, who then takes on the rights and obligations of the selling LP in the existing fund.
• General Partner (GP)-led: GP transfers a single asset or portfolio of companies to a new vehicle, which provides the GP with additional time to execute a value-creation plan.

The Bottom Line: A $200B+ Market, Just Getting Started

Private market secondaries have evolved from a niche liquidity tool into an essential component of the private markets ecosystem. With 2025 volume reaching record highs, secondaries trading still represents only ~2% of overall private market size—pointing to a market with significant room to grow. Average annual growth of ~20% could carry the market to $500 billion or more  by 2030.⁽¹⁾ For investors, secondaries are an increasingly important complement and potential core allocation alongside primary private market strategies.

We believe well-constructed secondaries portfolios can provide investors with the potential for attractive returns and portfolio characteristics:

• Diversification in vintage year, style, sector and manager
• Attractive upside return potential
• Immediate exposure to seasoned assets
• Ability to underwrite known assets and managers
• Targeted portfolio construction across sectors, geographies, and vintages
• Opportunity to access high-quality, hard-to-source assets