Podcast Summary

InsuranceAUM.com Podcast – Episode 303

Title: The State of GP-Led Secondaries
Date: July 7, 2025
Host: Stewart Foley, CFA (Founder, InsuranceAUM.com)
Guest: Matt Jones (Co-Managing Partner, TPG GP Solutions)

Overview

This episode dives deep into the rapidly evolving world of GP-led secondaries in private equity, featuring Matt Jones, a long-time expert and co-managing partner of TPG's North American and European secondaries business. Host Stewart Foley leads a thorough, practical, and strategic conversation that demystifies GP-led secondary transactions, traces their development, explores risk/reward, deal sourcing, and what differentiates top market players. The episode is invaluable for institutional investors, insurance asset managers, and anyone interested in the nuts and bolts of the fastest-growing segment in private equity secondaries.

Key Discussion Points & Insights

Matt Jones’ Background and Warm-Up (03:02–06:10)

• Matt shares his international upbringing (Kent, UK; Detroit; Spain), his early jobs (washing car windshields, farm work), and his passion for the Rolling Stones.
• Quote: “I think those kind of jobs are important. It's important to get experience of a wide variety of jobs when you're younger and actually learn a lesson about the value of hard work.” (05:31, Matt Jones)

GP-Led Secondaries: What Are They and How Have They Evolved? (06:54–13:03)

• Definition: GP-led secondaries are transactions instigated by the general partner (GP) rather than the limited partner (LP). This is in contrast to traditional LP secondaries, where LPs sell their fund positions.
• Origin: Emerged post-financial crisis to solve for "zombie funds"—funds with legacy assets that couldn't sell or raise new capital.
• Evolution:
  • Early stigma: Initially seen as solutions for low-quality managers/assets.
  • 2013–2015: High-quality managers began utilizing these structures to maximize value from strong assets.
  • Shift to single-asset deals: Managers started moving only their best companies into continuation vehicles for further value creation.
  • Growth Stats: GP-leds now account for half of the secondaries market; single-asset deals represent about a quarter and are growing rapidly.
• Quote:
  • “Managers looking at their portfolio and thinking, well, hold on, out of all of my companies, I know that one's got a lot more upside. I don't want to sell it to a competitor. Let's move it into this newly formed vehicle.” (11:21, Matt Jones)
  • “This single asset, GP led market... started to benefit from tremendous positive selection bias.” (11:50, Matt Jones)

SPVs Explained (13:03–14:33)

• SPV (Special Purpose Vehicle): Legal entity, usually a partnership, formed to hold the company involved in the continuation transaction.
• Not just jargon—functionally similar to a private equity fund's structure.

Risk & Reward: GP-Led Secondaries vs. Traditional Buyouts (14:33–21:58)

• The J-Curve: Traditional PE funds show negative returns early on due to management fees before investments yield results; GP-led secondaries do not suffer this because you’re investing in established companies with historical data and usually get uplift from transaction timing and pricing.
• Risk/Return Profile:
  • Lower Risk: Positive selection bias (best-performing assets are chosen), more mature assets, deep sponsor alignment (GPs often reinvest 5–15% of capital), and no big capital structure overhaul.
  • Certainty of Outcome: Extensive knowledge of the company and management, less variability compared to new buyouts.
  • Returns: Comparable to buyouts, but with lower loss risk and narrower return dispersion. Less chance for “home run” 5–6x outcomes, but much more stable.
• Quotes:
  • “We and other market participants would argue that there's much lower risk in the transaction... you are investing in a company that has a demonstrated track record of performance.” (16:14, Matt Jones)
  • “When you invest five years in, you've got much greater knowledge, much greater visibility around the performance of the company and therefore a greater certainty of outcome thereafter.” (19:54, Matt Jones)

Macroeconomic Volatility and Market Impact (21:58–25:53)

• All-Weather Strategy: Secondary markets often perform best during periods of macro volatility (2001–02, GFC, COVID).
• Current Themes:
  • Pricing has become more attractive given market turbulence.
  • Managers under pressure for DPI (distributions to paid-in) due to weaker exit markets.
  • Continuation vehicles provide a solution to holding “best-in-class” assets longer while satisfying LPs’ liquidity needs.
• Quote:
  • “Whenever there's volatility, whenever there's dislocation, it creates opportunity. And the secondary market has always been relatively nimble and able to take advantage.” (22:25, Matt Jones)
  • “The easiest business to sell is always your best business. But of course, a private equity manager doesn't want to sell their best business in a poor market environment.” (24:04, Matt Jones)

Sourcing and Diligence in GP-Led Secondaries (25:53–29:55)

• Heavily Advised Market: Due to inherent conflicts (GP is both seller and buyer), most deals have third-party advisors to ensure arm’s length pricing and limited partner committee approval.
• Deal Sourcing Channels:
  • Collaborations with buyout teams (“integrated platforms”)—sector experts spot deals early.
  • GPs often engage secondary buyers as leads before formally hiring advisors.
  • Market remains undercapitalized; relatively few lead buyers compared to opportunity.
• Quote:
  • “There aren't that many lead buyers relative to the opportunity… To counter that risk, what you see is fund managers putting feelers out early.” (28:36, Matt Jones)

What Makes a High-Quality GP-Led Investor? (29:55–33:29)

• Market Landscape:
  • Traditional secondary buyers: Index-like, highly diversified, less sector depth.
  • Emerging players: Integrated with buyout platforms, direct investment and sector expertise.
• Key Differentiators:
  • Sector specialization and buyout experience are crucial for success in single-asset deals.
  • Market is maturing towards “conviction strategies” rather than diversification.
• Quote:
  • “If you're going to put your money into a transaction, into a company, who do you want making that decision? Someone with many, many years of direct investment experience, sector expertise that operates every day of the week in that space…” (32:17, Matt Jones)

Takeaways & Closing Thoughts (33:29–36:30)

Key Takeaways for Investors

• GP-led single-asset secondaries unlock direct access to PE’s best-performing underlying companies—a unique, proven route previously unavailable.
• The incentive to keep best assets longer, and the ability to supplement LP needs with ongoing GP support, is reshaping private markets.
• Strong growth is likely to continue as LPs and GPs alike recognize these benefits.
• Quote:
  • “This market, for the first time now, you have the ability to access the best company with a proven track record… as selected by the manager themselves.” (34:32, Matt Jones)

Talent and Team Building at TPG

• Seeks not just technical skills, but enthusiasm, a passion for investing, curiosity, and a desire to prove oneself.
• “Attitude and interest” trump pedigree.
• Quote:
  • “I want to work with people who on their holidays are picking up investment books because they're interested in it... If you got someone like that, even if they don't have quite as much experience as the next guy, they'll learn quickly.” (35:47, Matt Jones)

Fun Segment: Dream Dinner Guests

• Matt’s picks: Margaret Thatcher, Karl Marx, Adam Smith, Milton Friedman—a dinner of big thinkers in economics and politics.

Notable Quotes & Timestamps

• On GP-Led Evolution:
  “The single asset, GP led market's been the fastest growing part of the secondary market for the last four to five years.” (12:07, Matt Jones)

• On Alignment:
  “In continuation vehicles, typically it's 5 to 15% of the capital has come from the fund manager investing into that company. So they've got a lot of skin in the game.” (18:51, Matt Jones)

• On Market Opportunity:
  “The desire for a private equity manager to own their best asset for longer rather than sell it onto a competitor, is not going to go away.” (34:52, Matt Jones)

Timestamps for Key Segments

• 03:02–06:10 — Matt Jones’ Background and Early Career
• 06:54–13:03 — Explanation and History of GP-Led Secondaries
• 13:03–14:33 — What is an SPV?
• 14:33–21:58 — Risk/Reward vs. Traditional PE, J-Curve Explained
• 21:58–25:53 — Macro Trends, Volatility, and Market Structure
• 25:53–29:55 — Sourcing and Diligence Process
• 29:55–33:29 — What Makes a Top Investor in Single-Asset GP-Leds
• 33:29–34:55 — Big Takeaways from the GP-Led Space
• 35:15–36:30 — Recruiting and Team Culture at TPG GP Solutions
• 36:48–37:48 — Dream Dinner Guests

Overall Tone & Language

The conversation is in-depth, candid, accessible, and pragmatic. Matt combines technical expertise with plain language, making the complexities of GP-led secondaries understandable and actionable for a professional audience. Stewart Foley keeps a friendly, questioning tone, encouraging real-world examples and practical takeaways.

Summary

This episode provides a masterclass on the emergence, mechanics, and nuances of GP-led secondaries, particularly single-asset continuation vehicles. Matt Jones draws on two decades of experience to chart how the market shifted from a solution for distressed funds to a vital tool for quality managers looking to maximize value and liquidity. Investors will emerge with a clear understanding of structural risks, returns, sourcing, and the evolving competitive landscape, as well as the traits that matter most in building a team for this dynamic space.