Both LP and GP led transactions are driving total deal volume to new highs in 2025.
Private credit was once the golden goose of investor portfolios, but a multi-year slowdown in M&A is starting to have an impact. Transaction volume is down and many lenders have extended loan terms. Those realities are supporting the rapid expansion of both LP and GP led private credit secondaries. Data from Evercore suggests there is $20.7bn (£15.7bn) in capital available for private credit secondaries through a combination of pooled funds and investor capital that could be deployed into continuation vehicles.
Secondaries firm Coller Capital recently raised $6.8bn for its second private credit secondaries vehicle. Ares Management is currently in market with its debut private credit secondaries fund.
At the end of October, Carlyle AlpInvest was the lead investor on a GP-led $550m private credit continuation fund for AEA Private Debt, the private credit arm of AEA Investors.
Private credit managers expect this trend will continue.
“When it comes to private credit secondaries you can definitely make the argument that the growth of this market raises some red flags because these are supposed to be five year assets plus one – you’re not executing these transactions to get additional upside,” explains Joe Weisglass, managing director at Configure Partners. He spoke with Alternative Credit Investor on the sidelines of the Private Credit Sourcing Conference recently held in New York.
“But what we’re seeing come to market are relatively young portfolios and there’s a broader realisation among LPs and GPs that you can crystallise IRRs and get that liquidity when you need it. I think that’s driving some of the growth that we’re seeing right now. Everyone is focused on liquidity.”
Read more: Growing investor appetite for secondaries
Alexandra Zeizel, a partner in the corporate department and member of the private funds group at law firm Proskauer agrees. She says that if the private credit secondaries market ends 2025 having done $15-20bn in transactions as predicted, that would be a substantial increase over 2024’s $11bn total. “We’re still talking about a market that’s at less than one per cent of total private credit volume,” she says. “If we look at how traditional private equity secondaries have grown there is still significant room for growth.”
