Illiquid Insights
Private equity's recent struggles have reshaped private markets.
As the industry strains for liquidity, new strategies are gaining momentum.
How Private Markets Are Evolving:
Secondary market volume is hitting record highs
Opportunistic credit funds are ready to capitalize on growing distress
Read the full breakdown below.
Follow the Liquidity
In the wake of the financial crisis, private equity flourished, buoyed by low rates, steady growth, and massive capital inflows.
But the industry now faces an unfamiliar problem: liquidity.
Since the Fed began hiking rates in 2022, the industry has been frozen.
Multiple expansion has stalled. Borrowing costs have surged. M&A activity remains soft.
Together, these factors have driven a record backlog of unsold portfolio companies and pushed distributions to historic lows.
But PE's pain has created opportunities in other areas of the market.
The Golden Age… of Liquidity Solutions
The clearest winner of the liquidity shortage is the secondary market.
On the GP side, PE managers are increasingly turning to continuation vehicles, holding assets longer while giving LPs the option to cash out.
They now account for 14% of PE exits, nearly triple their share in 2021.
On the LP side, investors are offloading fund stakes early, selling to third parties rather than waiting for distributions to rebound.
Together, the two trends have pushed secondaries volume to record highs.
