Podcast Summary: Exchanges by Goldman Sachs

Episode Title: The Rise of Secondaries: Unlocking Liquidity in Private Markets
Date: October 14, 2025
Host: Allison Nathan
Guests: Harold Hope (Global Head of Vintage Strategies, Asset & Wealth Management), Alex BLAustin (U.S. Asset Managers Research Analyst)

Episode Overview

This episode explores the accelerated growth and evolving role of private equity (PE) secondaries—a previously niche sector now experiencing remarkable expansion within private markets. Host Allison Nathan is joined by Harold Hope and Alex BLAustin, who demystify what secondaries are, analyze their impact on market liquidity, and discuss their growing relevance for both institutional and retail portfolios.

Key Discussion Points & Insights

1. What Are Secondaries and Their Evolution?

• Definition:
  • Secondaries provide liquidity by enabling investors in illiquid private equity funds to sell their positions before maturity (often 10–15 years).
  • Two main types:
    • LP-led secondaries: Buying interests from investors (limited partners) seeking liquidity.
    • GP-led secondaries/continuation vehicles: Helping fund managers (general partners) hold onto high-quality assets past their original fund life.
• Market Evolution:
  • Began as a niche for distressed sellers, now scaled up dramatically, with more players and transaction volume.
  • Quote [01:41]: “The market started really as a handful of small specialist firms…[and] it’s developed into a much larger market, many more players, much higher volumes…” (Harold Hope)

2. Market Size, Growth, and Drivers

• Size & Growth:
  • Current AUM: ~$650 billion, with ~15% annual compound growth over the past decade.
  • Transaction volume in 2025 expected to surpass $200 billion, up dramatically from $40–45 billion a decade ago.
  • Dominated by institutional investors (~90%), but retail participation is rising rapidly.
  • Secondary activity is notably branching out from private equity into private credit, infrastructure, and real estate.
  • Quote [02:27]: “The market today sits at about $650 billion in assets under management…The volumes in the market are on track to be at about $200 billion just this year.” (Alex BLAustin)
• Growth Drivers:
  • Expansion of the private markets (primary market growth 10–15% per year).
  • Limited liquidity and muted PE distributions in recent years, increasing demand for liquidity solutions.
  • Cyclical and structural factors together shaping robust supply and demand.

3. Retailization and Market Structure Changes

• Rise of Retail:
  • Retail NAV in secondaries is about $40 billion but growing ~50% annually.
  • New secondary products are being designed for retail investors, which adds liquidity and further stimulates market development.
  • Quote [04:21]: “One of the biggest changes…is likely the rise of retail…It provides a lot more liquidity to the market. So we do think that this could help enable more transactions.” (Alex BLAustin)

4. Opportunities and Challenges in a Rapidly Growing Market

• Buyer Perspective:
  • Environment presents ample opportunities, especially as high demand for liquidity meets a relatively small number of experienced large-scale buyers.
  • Anticipated outcome: a future with more scale, competition, and improved conditions for sellers.
• Seller Perspective:
  • Sellers must be strategic, as some portfolio assets are still hard to trade (esoteric or lesser-known names).
  • Many new sellers are entering the market for the first time and require education on how deals work.
  • Transactions, especially large portfolios, can take quarters to complete.
  • Quote [06:07]: "If you're a seller today...there are other parts of your portfolio that are very difficult to sell...and there's a lot of education that's happening for them as well." (Harold Hope)

5. Dispelling Myths: Is “Manic Activity” a Concern?

• No Signs of Dysfunction:
  • Despite headlines suggesting “manic activity,” the panelists see only busyness due to growth, not irrational or unsafe market behavior.
  • Valuations range—some areas are fully valued, others offer attractive opportunities—contributing to a healthy market dynamic.
  • Quote [07:09]: "I don't really see any manic behavior out there in the market. I think that it might be manic in the sense that people are super busy." (Harold Hope)

6. Strategic Portfolio Roles and Evolving Use Cases

• Portfolio Construction:
  • Secondaries now used as allocation tools, providing diversification, mitigating vintage and concentration risks, and accelerating deployment.
  • Core part of many investors’ PE allocations, valued for cash flow control and adaptability in all market conditions.
  • Quote [08:54]: "Today, I think many investors are actually having a core allocation to secondaries. They're viewing it as a strategy that has a very good balance between risk and return." (Harold Hope)
• Manager (GP) Perspective:
  • Managers are much more proactive in facilitating secondary transactions and see value in continuation vehicles—often using them to extend the ownership of their best assets and enhance reputation with LPs.

7. Investment Process Insights

• Micro vs. Macro Approaches:
  • On the micro level: intensive company-level valuation of underlying assets, requiring expertise and scalability.
  • On the macro level: set targets for geography, strategy, and asset type to achieve balanced risk-return.
  • Quote [11:07]: “The micro work…isn't that hard in theory. What makes it hard is…to do it among private companies, often [with] not a lot of information, and to do it in scale.” (Harold Hope)

8. What Does Secondaries Growth Signal for Alternatives as a Whole?

• Healthy Indicator, Not Red Flag:
  • Increased secondary activity creates beneficial liquidity and is a healthy sign of maturing markets—does not signal distress.
  • As turnover rates in other asset classes rise, secondaries will provide a “liquidity wrap” and further enable sector expansion.
  • Stat: Private equity turnover still just ~2–2.5% (even lower in private credit and infrastructure).
  • Noted risk: Secondaries can't solve poor underlying investments—quality still matters.
  • Quote [12:41]: “That's really not what we're seeing as a reality on the ground. We do think ultimately that's a net positive for the space because it's going to create more liquidity.” (Alex BLAustin)
  • Quote [14:26]: "You can't solve a bad investment with a different wrapper, right?... That's certainly not going to solve a bad investment problem." (Alex BLAustin)

9. Outlook: Market Size & Acceleration

• Growth Projections:
  • Secondary market expected to sustain or accelerate current 15% growth rate due to increasing private assets, higher turnover, and an ongoing supply-demand imbalance ("not enough dry powder to meet supply").
  • Opportunity: Market is set for substantial growth as more sellers and capital enter.
  • Quote [15:34]: "We’re pretty bullish...the size of the market is probably going to see an accelerating growth..." (Alex BLAustin)
  • Quote [16:12]: "As discounts narrow a little bit, as the navs become more reasonable, that brings more sellers in and if we can get some more capital on the buy side, I think there's definitely the opportunity for the market to grow pretty substantially." (Harold Hope)

Memorable Quotes & Timestamps

• On Market Evolution:
  • "The market started really as a handful of small specialist firms...it's developed into a much larger market, many more players, much higher volumes." — Harold Hope [01:41]
• On Market Size:
  • "The market today sits at about $650 billion in assets under management...volumes in the market are on track to be at about $200 billion just this year." — Alex BLAustin [02:27]
• On Retail Growth:
  • "Retail space...about $40 billion in NAV today, but it's growing almost at a 50% organic growth." — Alex BLAustin [04:19]
• On Buy-Side Opportunity:
  • "I think it's a pretty interesting investment environment. Right now we've got record demand for liquidity..." — Harold Hope [05:18]
• On “Manic Activity” Claims:
  • "I don't really see any manic behavior out there in the market. I think that it might be manic in the sense that people are super busy." — Harold Hope [07:09]
• On Portfolio Role Evolution:
  • "Today...many investors are actually having a core allocation to secondaries. They're viewing it as a strategy that has a very good balance between risk and return." — Harold Hope [08:54]
• On the Limits of Secondaries:
  • "You can't solve a bad investment with a different wrapper, right? ...That's certainly not going to solve a bad investment problem." — Alex BLAustin [14:26]
• On the Bullish Outlook:
  • “We’re pretty bullish...the size of the market is probably going to see an accelerating growth...” — Alex BLAustin [15:34]

Timeline of Important Segments

• [00:52–02:14] — Secondaries explained and historical context (Harold Hope)
• [02:14–05:01] — Market size, growth, drivers, and retail trends (Alex BLAustin)
• [05:01–06:58] — Opportunities, challenges, and new entrants’ learning curves (Harold Hope)
• [06:58–07:39] — Debunking “manic activity” headlines (Harold Hope)
• [07:39–10:53] — How investors and managers are using secondaries (Alex/Harold)
• [11:04–12:18] — Investment process: micro and macro considerations (Harold Hope)
• [12:18–15:21] — What secondaries say about the alternative asset market, growth, and risk (Alex/Harold)
• [15:21–16:32] — Future growth trajectory and market implications (Alex/Harold)

Conclusion

This episode provides a comprehensive snapshot of private market secondaries' explosive growth and rising influence. Once a niche transaction tool, secondaries now serve a central role in portfolio strategy, offering liquidity, flexibility, and risk management in a world dominated by long-term private investments. The hosts and guests agree: as private markets expand and mature, the demand for secondary liquidity will only accelerate, bringing new opportunities and considerations for investors and managers alike.