Secondary market in Asia sees pickup in activity as players search for liquidity

[SINGAPORE] The secondary market in Asia has been picking up as investors and fund managers seek liquidity.

Usually, the general partner (GP) – the fund manager – will have a close-ended fund with a typical 10-year tenure. Limited partners (LP) – investors – will have invested in this fund.

These funds usually have a fixed duration, after which the holdings have to be liquidated and the capital returned to the investors. As the markets have been weak, liquidation would result in the investors recognising a loss.

To hold on to assets past the fund’s tenure, GPs have been selling these assets on to continuation vehicles. This allows for the possibility of a better price in the future.

The LPs may also turn to the secondary market if they want to exit the investment and put their capital into other investments.

Secondary funds do not lack for choice of deals, said a report by alternative asset manager Hamilton Lane, with global demand outstripping supply.

The financial thesis for secondaries is about targeting good assets at a discount, with secondary funds being less sector focused, said Xia Mingchen, co-head of Asia investments at Hamilton Lane.

In the secondary market, investors can snap up a diversified portfolio at a discount and enjoy the immediate mark-up, mitigating the J-curve, which represent early negative returns as the fund deploys capital before positive returns in the longer term.

Global trend

Globally, private credit secondaries volume has grown about 80 per cent between 2024 and 2025, reaching a total volume of US$20 billion, said Josh Shipley, head of European private credit at PGIM.

Since 2020, the market has grown at about 50 per cent per year, reflecting a strong supply and demand for credit portfolios.

“2025 has also seen a shift in transaction types. Whereas the market has historically been dominated by LP-led transactions, GP-leds represented a majority of the deal flow seen in 2025,” he added.

Shirin Tang, head of mergers and acquisitions (M&A) at law firm Baker McKenzie Wong & Leow, noted that as holding periods get longer and with the public markets not as welcoming, the secondary market offers liquidity while allowing fund managers to still hold on to attractive assets.

The most active sectors in Asia have been in healthcare, digital infrastructure, real estate and consumer platforms, said Ang Lip Kian, principal, M&A and private equity at Baker McKenzie Wong & Leow. There have been GP-led transactions for portfolio companies in these sectors.

“We are also seeing meaningful activity in LP stake sales, often driven by institutional investors rebalancing portfolios,” said Ang. Some of these stakes include large portfolios across multiple Asian funds.

“On the fundraising side, global secondary investors have raised significant capital and are increasingly focused on Asian opportunities,” said Tang.

Growth in Asia secondaries has been concentrated in specific markets such as India and Japan, noted Audrey The, partner at investment adviser Cambridge Associates. Secondary funds have also concentrated their capital deployment in higher-quality assets rather than being universally broad, she added.

“The strongest interest has generally been in assets and portfolios where there is a clear path to exit visibility and strong underlying operating performance,” said The.

GP-led secondaries are also seeing growing interest as buyers seek a particular asset or small group of assets rather than a broad portfolio with mixed quality, she added.

“Importantly, GP-led transactions are now more widely understood as a tool for managing high-quality assets over a longer time horizon, particularly when there is strong alignment between all parties,” said Lai Pak-Seng, head of Asia private wealth distribution at secondary fund manager Coller Capital.

The wealthy pile in

In Asia, investors’ interest in secondary funds have been piqued, with high net worth individuals (HNWI) and private wealth clients looking to join institutional investors in this asset class, said Hamilton’s Xia. This is also due to secondary fund managers launching open-ended fund structures that attract more HNWIs and private wealth clients.

“Generally speaking, all those investors are... very interested in the secondary strategy, and they keep allocating some of their portfolio to this asset class,” he added.

For investors looking to get private markets exposure, secondaries can be a valuable tool to “jumpstart” newer allocations, said Cambridge’s The. Investors are increasingly adopting and integrating secondaries into their portfolios, signalling familiarity and comfort with the asset class.

As investors in Asia become more comfortable with secondaries, some are using it as portfolio stabilisers, due its resilience across market cycles, said Coller’s Lai.

“Additionally, secondaries can act as a consistent ‘base layer’ in private market portfolios to offset unexpected primary fund investment return and cash flow volatility like we have recently experienced over the past few years,” said The.

Growth ahead

Secondaries in Asia will likely continue to grow, as private markets in the region continue to mature, creating a larger pool of assets to tap into, said Lai. Offering investors access to more mature portfolios, reducing blind pool risk, where investors commit capital without knowing the specific targets a fund will invest in.

This growth, however, is expected to be uneven across Asia as it is driven by the quality of underlying assets, said Cambridge’s The. As the market expands, it is expected to remain more fragmented than the US or Europe.

As both GPs and LPs search for liquidity amid a maturing private markets ecosystem, there will continue to be a growing need for liquidity mechanisms that do not rely on public market exits or trade sales, said Tang of Baker McKenzie Wong & Leow.

“The structural drivers are clearly there, and we expect secondaries to become a much more significant part of the private capital ecosystem in Asia,” she added.