Key Takeaways
- • Schroders Capital projects the global continuation fund market will exceed $330 billion in annual transaction volume by 2035, representing more than a threefold increase from current levels over the next decade.
- • GP-led continuation transactions are fundamentally reshaping private equity exit dynamics, increasingly displacing traditional sponsor-to-sponsor sales as the preferred exit mechanism for general partners.
- • Structural changes in the PE market are creating favorable conditions for continuation funds, driven by shifts in how investors and managers approach portfolio company transitions and ownership continuity.
- • The research from Schroders Capital indicates that continuation vehicles are becoming a cornerstone strategy within the broader PE landscape rather than a niche alternative exit strategy.
Summary
Schroders Capital has released new research forecasting substantial growth in the global continuation fund market, projecting the sector will reach more than $330 billion in annual transaction volume by 2035. This projection represents more than a tripling of market size over the next decade, reflecting a fundamental shift in how private equity transactions are being structured and executed.
The expansion is being driven by structural changes within the private equity industry that increasingly favor GP-led continuation transactions over traditional sponsor-to-sponsor exits. Continuation funds, which allow general partners to maintain ownership and control of portfolio companies rather than selling to other sponsors, are becoming the dominant exit mechanism in certain market segments. This represents a meaningful departure from historical PE practice, where secondary sales to other sponsors have been the conventional path for realizing returns and transitioning assets.
According to Schroders Capital's analysis, these shifts reflect broader changes in market dynamics, including evolving investor preferences, the maturation of continuation fund strategies, and structural advantages that GP-led vehicles offer in the current environment. The research underscores how continuation funds are transitioning from a specialized alternative to a central feature of the PE ecosystem, reshaping deal flow and exit strategies across the industry. This trend suggests that limited partners and other market participants should anticipate continuation vehicles playing an increasingly material role in portfolio company transitions and fund deployment strategies in coming years.
The expansion is being driven by structural changes within the private equity industry that increasingly favor GP-led continuation transactions over traditional sponsor-to-sponsor exits. Continuation funds, which allow general partners to maintain ownership and control of portfolio companies rather than selling to other sponsors, are becoming the dominant exit mechanism in certain market segments. This represents a meaningful departure from historical PE practice, where secondary sales to other sponsors have been the conventional path for realizing returns and transitioning assets.
According to Schroders Capital's analysis, these shifts reflect broader changes in market dynamics, including evolving investor preferences, the maturation of continuation fund strategies, and structural advantages that GP-led vehicles offer in the current environment. The research underscores how continuation funds are transitioning from a specialized alternative to a central feature of the PE ecosystem, reshaping deal flow and exit strategies across the industry. This trend suggests that limited partners and other market participants should anticipate continuation vehicles playing an increasingly material role in portfolio company transitions and fund deployment strategies in coming years.
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