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Market Data Snapshot: The Secondary Market Is Becoming a Core Liquidity Channel

  • Axis Group Ventures
  • 52 minutes ago
  • 3 min read

Private market exits have begun to recover, but liquidity remains constrained.


McKinsey's Global Private Markets Report 2026¹ shows that five-year rolling distributions to paid-in capital (DPI) as a share of private equity assets under management fell to their lowest recorded level in 2025. Over the 12 months ended June 2025, distributions represented just 6% of AUM, well below the 16% average recorded between 2015 and 2019. In other words, limited partners are receiving significantly less cash back relative to the size of the private equity market than they did in prior years.



This helps explain why secondary transactions continue to gain momentum.


As traditional exits have taken longer to materialize, sponsors have increasingly turned to continuation funds and other GP-led transactions to provide liquidity without forcing the sale of high-quality assets. Supporting this trend, Evercore estimates that the global secondary market reached $121 billion in transaction volume during the first half of 2026, the strongest first half on record, with GP-led transactions accounting for $65 billion.² Together, these developments suggest that secondaries are evolving from an alternative liquidity solution into a more established portfolio management tool.


What this means

For sponsors, a more active secondary market expands the range of strategic options available at the end of a fund's investment period. Rather than exiting a strong business because of fund timing, sponsors can extend ownership, continue executing their value creation plan, and provide liquidity to existing investors through continuation vehicles.


For lenders and capital providers, the continued growth of GP-led transactions is

increasing demand for specialized financing. Continuation funds, NAV lending, acquisition financing, and other structured capital solutions are becoming more integral to transaction execution as sponsors pursue increasingly sophisticated liquidity strategies.


For investors and limited partners, secondaries offer greater flexibility in managing portfolio exposure. Investors can generate liquidity, rebalance portfolios, or maintain exposure to attractive assets through rollover opportunities instead of relying solely on traditional exit events.


Axis Perspective

The continued expansion of the secondary market reflects the increasing maturity of private capital markets.


As sponsors gain access to more liquidity pathways, capital planning becomes as important as exit planning. Selecting the appropriate combination of debt, equity, and structured capital can help support transaction objectives while balancing liquidity needs, ownership considerations, and long-term value creation.


Rather than replacing traditional exits, secondary transactions are becoming another strategic option within the broader private markets toolkit.


Conclusion

Record secondary market activity suggests that liquidity in private markets is becoming more diversified and more deliberate. As transaction structures continue to evolve, sponsors, investors, and financing partners will likely place greater emphasis on capital strategies that provide flexibility throughout an investment's lifecycle, not just at the point of exit.


As the secondary market continues to mature, how do you see it influencing capital strategy and liquidity planning over the next few years?


About Axis Group Ventures

Axis Group Ventures is a boutique investment banking and strategic advisory firm. We focus on global debt placement and private market secondaries for venture- and private equity-backed companies. Our firm partners with founders, CFOs, and investors to provide customized capital solutions in the private markets. We leverage deep experience in private credit and a global network of capital providers. Axis Group Ventures' mission is to bring greater transparency and alignment to complex financing decisions through disciplined, independent advisory and high-touch execution. For more information, visit www.axisgroupventures.com.


As secondary transactions become a larger part of the private markets ecosystem, how do you see them influencing capital strategy over the next several years?


Sources


Disclosures & Disclaimers

This blog post is provided by Axis Group Ventures for informational and educational purposes only. It does not constitute investment, legal, accounting, or tax advice and should not be relied upon as such. Nothing contained herein should be interpreted as an offer to buy or sell any securities. Any actual offer or solicitation will be made exclusively through formal documentation provided by the relevant issuer or seller.


Axis Group Ventures is not a registered broker-dealer and does not execute, negotiate, or recommend the purchase or sale of securities. Any introductions or private-market support provided by Axis Group Ventures are conducted strictly in an advisory and consulting capacity. Readers should conduct their own due diligence and consult qualified professionals before making any financial decisions.


Investments in private securities involve significant risks, including the potential loss of the entire investment, and are typically illiquid. Past performance does not guarantee future results.


This blog post was developed using Axis Group Ventures’ proprietary market knowledge, professional insights, and years of industry experience, supplemented by large language model technology to assist with drafting and editorial refinement.

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