Secondaries before primaries: Tailoring private markets for wealth clients

There is a quiet revolution under way in private markets, and it has private wealth investors sitting up. For decades, access to the alpha-generating engine of private equity was limited to long lock-ups, blind pools, and a tolerance for the infamous J-curve. But that orthodoxy is being challenged by the rapid rise of the secondary market. Iyobosa Adeghe, a partner at global secondaries specialist Coller Capital, is one of its most compelling advocates. “At its core, the secondaries market exists to provide liquidity to investors in long-term illiquid structures,” he told The Inside Network’s recent INASIA: Investment Leaders Forum in Singapore.

The transformation is structural and swift. From a niche US$25 billion segment in 2012, the secondaries market is expected to hit US$200 billion ($303 billion) in 2025. As high-net-worth clients seek alternatives to increasingly volatile public markets, the secondary market’s diversification, liquidity, and reduced risk profile is resonating.

For the uninitiated, private equity secondaries allow investors to buy into existing private equity funds or portfolios, often years after their inception, thereby sidestepping blind pool risk. The result is immediate visibility into the underlying assets and a shorter duration to liquidity. “You’re buying a portfolio that is in year four, five, or six of its life,” says Adeghe. “You’re generally stepping into a fund at a point where it’s net distributed immediately post-closing”.

This late-stage entry effectively flattens the J-curve, the typical early-period dip in private equity returns due to fees and initial underperformance. For private wealth clients, many of whom are sensitive to liquidity constraints and return timing, this represents a significant structural advantage. The appeal is not only defensive. “This can be  very risk-advantaged way of securing a mid to mid-high double-digit net IRR,” Adeghe says. “And with pretty high conviction”.

Unlike primary commitments, which often lock investors into a decade-plus cycle, secondaries are a tool for dynamic portfolio management. “It doesn’t make sense to make a commitment on day one and do nothing for the next 10 to 12 years,” Adeghe notes. The secondary market introduces flexibility, allowing investors to reallocate between geographies, strategies or risk exposures with far greater agility. This adaptability has become a defining feature of sophisticated private wealth portfolios, especially in volatile macroeconomic environments.

Secondaries are also distinguished by their diversification. Adeghe highlights that a typical Coller fund has exposure to hundreds of funds, managers and thousands of underlying companies. “There’s a high level of diversification that comes with a secondary offering,” he says. This mitigates idiosyncratic risk and creates a more consistent return profile, particularly important for private clients who may not have the breadth of exposure institutional investors enjoy.

A crucial consideration is pricing. Adeghe is pragmatic: secondaries typically trade at a discount, often between 90–95 percent of NAV for high-quality portfolios. “We are providing liquidity in a way that would otherwise come over a window of five-plus years,” he explains. That illiquidity discount is not a flaw, but a mechanism that generates alpha in itself. In volatile periods, discounts widen, sometimes dramatically, but for savvy buyers, these windows create rare buying opportunities.

An increasingly important segment within the secondaries space is GP-led transactions, where general partners roll existing high-performing assets into new vehicles they continue to manage. The rationale? Quality assets are hard to find and expensive to replace. “It doesn’t make sense to sell your best assets to someone else,” says Adeghe. “The secondaries market is a way of allowing that to happen while preserving upside and manager alignment”.

This alignment between investor and manager is precisely why many private wealth advisers are starting to include secondaries as a core allocation. Whether for first-time private equity entrants or seasoned LPs, secondaries offer both a fast-track into the asset class and a lower-risk method of capturing mid-teens returns. “We’ve seen it be really interesting to those who are very comfortable with private equity already,” Adeghe notes. “Secondaries are a core part of their strategy going forward”.

Another driver of secondaries’ relevance is the structural gridlock in exit markets. Traditional routes, M&A, IPOs, have slowed considerably, yet GPs remain under pressure to return capital. “This is an environment where managers want to return cash to LPs,” Adeghe says. “The secondaries market becomes a release valve. And it’s not just an opportunistic tool, it’s a structural solution”.

Despite its growth, the secondaries market remains nascent. According to research firm Preqin, there was about US$12 trillion ($18.2) in assets under management in PE as at the end of December 2024, but the secondaries market is only about US$200 billion ($303 billion) in size. “Small increases in that penetration rate are a huge driver of volume growth,” Adeghe points out. That means this market still has significant room to expand, and with it, more accessible opportunities for private wealth clients.

This brings us to the most underappreciated virtue of the secondaries market: consistency. In a primary private equity fund, performance can swing wildly between top and bottom quartiles. In contrast, secondary funds often deliver “mid-teens net IRRs with significantly less variance and significantly less risk,” Adeghe says. That is a compelling value proposition for private clients, many of whom are less tolerant of capital impairment.

Looking ahead, the outlook remains bullish. Coller forecasts the secondaries market could hit $500 billion between 2030 and 2035. Importantly, this growth hasn’t come at the expense of returns. “There’s been no adverse impact on pricing or returns,” Adeghe insists. “We think increasing supply is going to lead to really interesting opportunities for investors”.

As HNW and ultra-high-net-worth individuals increasingly demand institutional-grade alternative exposure, the role of secondaries will only become more central. Liquidity, diversification and J-curve mitigation make them more than just an alternative to primaries; they are, in many cases, a superior route into private equity. For advisers, this means rethinking how private equity fits into a modern portfolio. In a world where access and agility matter more than ever, secondaries may be chosen before primaries as a more apt match for the investor profile found across private wealth.

Laurence Parker-Brown

Laurence Parker-Brown is head of content at The Inside Network and managing editor of The Inside Adviser and Investor Strategy News.