The secondary market has become a central tool for managing liquidity in private markets, and GP‑led transactions are now a structural part of that evolution. In this discussion at SuperReturn Secondaries Europe, Patrick Knechtli, Patria Investments, and Maëlle Reichenbach, Montana Capital Partners, explore why continuation funds, rollover options, and pricing discipline matter more than ever for investors allocating to private equity and private credit secondaries. They also examine how secondaries can enhance diversification, improve liquidity outcomes, and deliver attractive risk‑adjusted returns as the market continues to scale globally.
GP‑Led secondaries: From experiment to infrastructure
“GP‑leds have become a structural part of the market. They’re not going to go away,” says Patrick, noting the surge over the last five years and COVID as a key catalyst. Everyone has found value:
• GPs: a tool to provide liquidity while holding high‑conviction assets.
• Buyers: access to top GPs and assets. Intermediaries: an expanded role.
• LPs: needed liquidity in a tight exit environment, now with teams better resourced to assess these deals.
"Everyone sees the benefit of GP‑led deals… and there’s a long way to grow from here,” says Patrick.
Patrick cites reports that continuation funds made up ~15% of PE‑backed exits last year, up significantly, with more runway ahead.
What “good” looks like: Rationale, pricing, and alignment
Patrick’s checklist for a credible continuation fund:
1. Rationale & value creation
• Why this asset? Why now instead of a full M&A?
• What’s the forward plan (and capital required)?
2. Fair pricing
• Has price been tested (e.g., via a process) or validated independently?
• Buyers will verify across their own portfolios.
3. Alignment mechanics
• The GP rolls a substantial, ideally all, of the gains.
• In strong cases, the new fund also invests alongside, signalling fresh capital conviction.
“Ensure the GP is rolling… and, ideally, using their newer fund to invest alongside,” says Patrick.
Let LPs choose: Liquidity or roll over
A central feature for Patrick: existing investors should have the ability to roll. “If you prioritise liquidity, you’ll take the deal. If you feel it’s attractive on the buy side, you should be able to roll over and stay with the asset.”
“Offer liquidity at this price, and the option to roll and stay with the asset,” says Patrick.
This keeps conviction capital in the story and creates clean alignment.
Credit secondaries: Strategic allocation with attractive mechanics
Maëlle sees two strategic angles:
• Active portfolio management for existing private credit investors: Optimising GP relationships, tilting exposures (e.g., senior secured vs junior), and using secondaries to rebalance.
• Allocating to dedicated private credit secondaries funds: With one commitment, LPs gain diversification across many GPs, vintages, and sectors, often with attractive risk‑adjusted returns.
Why returns can be slightly higher than primaries:
• Ability to buy at a discount
• Predictable cash flows make pricing precise
• Seasoned loans mean near‑term liquidity, producing shorter duration.
“The combination of discount and shorter duration typically leads to slightly higher returns than primary.” says Maëlle.
Market structure, selection, and where growth comes from
• The number of credit secondaries players has increased, which Maëlle views as positive given the >50% market growth since 2022 and the need for capital with the right cost of capital for different strategies.
• The space is still dominated by a handful of managers, leaving plenty of room for skilled entrants.
• She expects continued growth in GP‑leds, with LP‑led deal flow also active. Penetration is still low: in private credit, secondaries represent ~1% of AUM vs 2–4% in PE, implying catch‑up potential.
• Anticipate more down‑market activity and increasing European flow over time.
“We can afford to be very selective,” says Maëlle.
Patrick adds that many institutional buyers now use secondaries to achieve liquidity for their own investors, helping maintain strong DPI through slower exit cycles, especially at the smaller end of the market, where he’s seen good exits.
What this means for LPs
Treat GP‑leds as a standing tool, not a last resort. Demand clear rationale, tested pricing, and hard alignment (GP rolls, new fund co‑invest). For credit secondaries allocation: pursue diversification in one line, lean into discount + duration advantages, and back managers with selectivity.
Bottom line: Secondaries aren’t a side street. They’re part of the main road for private markets liquidity and returns.
