Liquidity Under Pressure: How Secondaries, Continuation Funds, and Evergreens Are Reshaping Private Markets

At the end of last year, expectations for improved capital flows for 2025 were high, with a forecasted M&A/IPO renaissance and an easing of regulatory frameworks. The excitement has dwindled as summer begins with market uncertainty lingering over the investment sector.  

With exits slowing and trade tensions resurfacing, investors are seeking new sources of liquidity. Liquidity remains the ultimate buffer to help steer investment portfolios through market downturns. With capital markets liquidity hardening in the face of shifting trade policy, LPs are adopting a risk-management posture and are seeking tactics to keep capital flowing. 

General partners (GPs) are increasingly offering liquidity solutions, designing portfolio strategies for distressed LPs through mechanisms such as secondaries, evergreen funds, and continuation funds. Leading GPs like Goldman Sachs Asset Management, Apollo, and KKR have stepped forward to expand secondaries activity in 2025, resulting in an overall $45 billion first quarter and putting secondaries on pace to eclipse last year’s $160 billion record.  

However, investment firms seeking to operate in this space should proceed with caution, especially as interest in secondary funds keeps expanding. The surge in private markets - a space already known for its data complexities - through new strategies, structures, and vehicles could introduce further data challenges that present risk.  

The strategy: secondary sales to ease denominator effect 

Preqin and S&P Global reported that PE firms recorded 473 exits from portfolio company investments totaling $80.81 billion in Q1, 180 of which were secondary buyouts.ⁱ In mid-June, Wellington Management threw its ante into the secondaries pot to provide liquidity solutions for LPs like pensions funds and endowments facing challenges with deal exits and capital recycling. GPs have been turning to the secondary private market space in order to keep up with demand from institutional investors, which need both access to private markets and a pipeline to liquidity. Good examples of this include Pantheon announcing it is rolling out a $5.2 billion credit secondaries raise that includes evergreen elements and Apollo targeting a $2 billion raise for its second credit secondaries fund.  

Yet, investors find themselves in a peculiar situation. The surge of private markets interest and investment over the last couple of years has triggered a denominator effect where the percentage of a portfolio allocated to private assets has increased.ⁱⁱ A portfolio’s 20% in private allocations now appears more like 30%. They're overallocated, and some LPs that operate in a regimented mandate must make moves to rebalance their public-private mix. 

While most private market investments today are largely Illiquid, secondary strategies enable investors to rebalance portfolios, facilitate exits, and gain the liquidity they are looking for rather than waiting for traditional private credit funds to mature - which typically has a lifecycle of 10 years. 

Private credit secondaries  

While PE languishes, the private credit market has remained the star of the alts show. According to Moody’s private credit outlook, global private credit assets AUM will balloon to $3 trillion by 2028, even greater momentum than in the past two years. As institutional capital flows in, natural demand rises for liquidity solutions, reflecting the evolution of private equity secondaries. It’s the next logical growth driver. It has matured into a nuanced and diversified strategy set.  

Anchored by its income-generating potential, the asset class spans direct lending, structured credit instruments, and a growing secondaries market, including distressed debt and fund interest trades. As the private credit landscape deepens, the tools broaden for extracting differentiated alpha across market cycles. 

Private credit secondaries still represent only a small portion of total private market capital, leaving significant room for growth.   

The vehicle: liquidity through continuation funds 

As traditional exit routes have become less accessible, continuation funds are emerging as another tool to combat this challenge. After IPOs started off strong this year, with the first quarter witnessing 15 traditional IPOs, the excitement deflated as the market climate halted M&A. Recent new funds like Antares Capital’s first private credit continuation vehicle led by Ares Credit Secondaries with over $1.2 billion and Blackrock’s $1.3 billion private credit continuation fund launch signaled greater mainstreaming of continuation funds in private credit.  

If a manager is unable to exit one of their deals and the term is nearing a close, a GP’s continuation fund is an opportunity to control the assets for a longer period. LPs can either roll their interests into the continuation fund or exit, thus evading a fire sale. Continuation vehicles now make up almost half of secondaries, as 44 GP-led continuation vehicles were launched from Q1 2024 to Q1 2025.ⁱⁱⁱ 

The structure: evergreen avenues for liquidity 

Evergreen funds are an attractive strategy for LPs for a variety of reasons, from investment flexibility to diversification. Evergreen funds are intended as long-term investment vehicles, but the structures offer more liquidity drivers through features like monthly subscriptions or redemptions. Evergreens have become increasingly used to attract high-net-worth and retail segments. KKR’s Strategic Income Fund and Coller Capital’s Coller Evergreen Fund offer secondary private equity in a semi-liquid format to private banks and high-net-worth (HNW) clients. Hamilton Lane has built $10 billion AUM in evergreen funds for HNW and institutional investors.  

These funds are open-ended private market investment vehicles with no fixed end date, providing the ability to raise new commitments on a rolling basis. Structured as interval funds, investors can request redemptions on a monthly or quarterly cadence. They can capture new investors in a regulatory-compliant, retail-friendly wrapper, enabling them to purchase at fair value while allowing existing investors to withdraw capital at regular intervals.  

Tech infrastructure to drive scalable secondaries 

Each new investment strategy, structure, or vehicle brings unique factors in valuations, investment lifecycle events, liquidity, and risk. If a GP’s data house and middle- and back-office operational technology is not in order, they may be inviting counterproductive complexity to their operations. The potential of the secondary private markets will continue to mature and expand. As a result, the demand for robust data, analytics, and modern technology infrastructure will become paramount to support this growth and help firms tap the full opportunity of this trend.  

Secondary transactions are inherently complex in nature. For example, the purchase of partial stakes in funds or portfolios midway through their lifecycle presents restricted visibility into underlying assets and performance. In order to provide accurate price discovery data to facilitate liquidity, firms will need access to timely and granular data on performance, fund terms, and more. Reporting and auditability will remain a primary concern for GPs and LPs, emphasizing the need for tech-enabled platforms that can automate complex data-based workflows, harmonize intricate datasets from disparate sources, and power the production of real-time valuations. 

As the private market secondaries segment matures, intelligent analytics and transparent data will play a key role in expanding access to this market. With the right data strategy, firms seeking increasing exposure to secondaries will be able to access the insights to help them assess risk and evaluate pricing, enabling growth in what has traditionally been an opaque market.