Secondary Fundraising

Secondary fundraising occurs when existing LP interests in funds are sold to new investors, providing liquidity to original investors before fund maturity.

Secondary MarketCharacteristics
Seller motivationLiquidity needs, portfolio rebalancing, manager concerns
Buyer motivationAvoid J-curve, immediate cash flow, diversification
PricingTypically 10% to 25% discount to NAV
Transfer approvalGP and sometimes LP approval required
Due diligenceReview fund performance, portfolio, GP quality
Market sizeGrowing, institutional secondary funds emerging
Transaction ProcessTimeline
MarketingSeller engages broker or direct approach
Buyer identification2 to 6 weeks
Due diligence4 to 8 weeks
Negotiation and documentation2 to 4 weeks
GP approval1 to 2 weeks
ClosingTotal 3 to 5 months typical

Related Terms

LP InterestNAV DiscountLiquidityFund Secondary MarketGP Approval

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