Although private equity should always be regarded as a long-term investment, some investors, for a variety of strategic reasons, wish to dispose of their interests in a private equity fund before the end of the fund's life. As a result of recent growth in primary private equity fund raising, the number of such "secondary" fund interests offered for sale is expected to continue to increase. Historically, the majority of such sales have been effected through private negotiation, although a number are now subject to restricted or full auctions. Typically fund interests acquired in the secondary market are between three to six years of age.

PIP and Pantheon are among the longest established purchasers of secondary investments, with more than 20 years’ experience of successful secondary investing. Pantheon has committed more than $6 billion in the secondary market globally across more than 280 transactions, including more than 80 portfolio transactions and more than 180 single fund secondaries.

Benefits of Secondary Investing

Potential for acquiring secondary assets at a discount to their net asset value.

Assets acquired in the secondary market tend to be more mature and as a result return cash to investors more quickly than investments into new private equity funds.

Fees and expenses from the early years of the private equity fund will not be payable by the secondary investor.

Secondary investments tend to avoid the drag to performance from young and immature private equity funds, known as the “j-curve” effect.

Secondary investments tend to have lower undrawn commitments attached to them. This allows private equity funds-of-funds to invest capital whilst controlling the build-up of undrawn commitments to underlying private equity funds.