Key Takeaways
- • Global secondary market volume reached $103 billion USD in H1 2025, a 51% increase from the prior record of $68 billion in H1 2024, positioning 2025 as a landmark year for secondaries according to Jefferies' latest report.
- • Northleaf Capital raised $908 million CAD for its fourth secondary fund, capitalizing on heightened demand driven by a prolonged exit bottleneck in venture capital and traditional M&A/IPO channels.
- • The secondary market surge is directly attributable to the lack of IPO and M&A activity, which has created liquidity constraints for general partners unable to return capital to limited partners through conventional exit mechanisms.
- • Institutional investors, including Canadian pension funds, are increasingly using secondary transactions to rebalance portfolio liquidity and manage cash flow amid a venture capital environment characterized by extended holding periods and "zombie assets."
- • Tough VC fundraising conditions and macroeconomic uncertainty have intensified pressure on fund managers to explore secondary transactions as an alternative liquidity tool.
Summary
The global secondary market has reached unprecedented growth levels in 2025, driven primarily by a critical shortage of traditional exit opportunities. According to Jefferies' semi-annual review, global secondary volume hit $103 billion USD in the first half of 2025—an "unprecedented" 51% surge above the prior record of $68 billion achieved in H1 2024. This trajectory positions 2025 as a landmark year for the asset class and reflects a fundamental structural shift in how institutional investors and fund managers are addressing liquidity needs.
The primary catalyst for this explosive growth is the persistent drought in IPOs and M&A activity. With fewer traditional exit channels available, general partners have become constrained in their ability to return capital to limited partners, creating mounting pressure on fund portfolios and forcing investors to seek alternative liquidity mechanisms. John Ruffolo, founder and managing partner of Maverix Private Equity, characterized this dynamic bluntly on the Tank Talks podcast, stating that "the lack of IPOs and the lack of M&A is really triggering" the lack of market liquidity. Ruffolo further noted that Canadian pension funds are actively using secondaries to rebalance their liquidity positions on a regular basis, underscoring how secondary transactions have evolved from a niche strategy to a core portfolio management tool.
The structural headwinds facing venture capital have intensified this trend. Macroeconomic and geopolitical uncertainty continues to hamper exit environments, leaving significant amounts of capital trapped in extended fund timelines. Ruffolo warned that as long as venture capital firms remain unable to achieve exits, "you're going to see more and more pressure on these secondary transactions," with substantial numbers of "zombie assets" remaining lodged within venture funds. This dynamic has created ideal conditions for secondary specialists: Northleaf Capital's successful $908 million CAD fundraise for its fourth secondary fund exemplifies investor appetite for vehicles positioned to capitalize on the liquidity gap.
Secondary investments—which include purchases of equity stakes from existing shareholders and fund interests from GPs or LPs—have transitioned from a complementary strategy to an essential component of the private markets infrastructure. The record volumes and robust investor demand signal that secondaries are now functioning as a fully operational liquidity layer for institutional investors navigating a prolonged period of constrained traditional exits.
The primary catalyst for this explosive growth is the persistent drought in IPOs and M&A activity. With fewer traditional exit channels available, general partners have become constrained in their ability to return capital to limited partners, creating mounting pressure on fund portfolios and forcing investors to seek alternative liquidity mechanisms. John Ruffolo, founder and managing partner of Maverix Private Equity, characterized this dynamic bluntly on the Tank Talks podcast, stating that "the lack of IPOs and the lack of M&A is really triggering" the lack of market liquidity. Ruffolo further noted that Canadian pension funds are actively using secondaries to rebalance their liquidity positions on a regular basis, underscoring how secondary transactions have evolved from a niche strategy to a core portfolio management tool.
The structural headwinds facing venture capital have intensified this trend. Macroeconomic and geopolitical uncertainty continues to hamper exit environments, leaving significant amounts of capital trapped in extended fund timelines. Ruffolo warned that as long as venture capital firms remain unable to achieve exits, "you're going to see more and more pressure on these secondary transactions," with substantial numbers of "zombie assets" remaining lodged within venture funds. This dynamic has created ideal conditions for secondary specialists: Northleaf Capital's successful $908 million CAD fundraise for its fourth secondary fund exemplifies investor appetite for vehicles positioned to capitalize on the liquidity gap.
Secondary investments—which include purchases of equity stakes from existing shareholders and fund interests from GPs or LPs—have transitioned from a complementary strategy to an essential component of the private markets infrastructure. The record volumes and robust investor demand signal that secondaries are now functioning as a fully operational liquidity layer for institutional investors navigating a prolonged period of constrained traditional exits.
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