🌟 Editor's Note
We have been off this platform for some time, but working our way back to share good content. Welcome to this month’s deep dive into private credit and secondaries—your guide to understanding the forces reshaping private market liquidity.
🔷Liquidity by Design: How Secondaries Are impacting Private Credit
Private credit secondaries have shifted from being a niche solution to a core component of the market’s architecture. What was once viewed as opportunistic has become integral to the way private credit capital is recycled, portfolios are managed, and liquidity is delivered to investors.
👇 Recent News Highlights
Benefit Street Partners & Coller Capital Close $2.3B Continuation Vehicle
A $2.3 billion private credit continuation vehicle (BSP Debt Fund IV CV) was closed by Benefit Street Partners together with Coller Capital. It acquires a diversified portfolio of senior secured floating-rate loans from BSP’s 2016 direct lending fund.Aperture Investors Expands into Asset-Based Finance (ABF)
Aperture is building out its ABF platform—deploying $1B initially—hiring from peers like Fortress, Antares, etc. This move illustrates how private credit managers are leaning into more secured/structured credit niches amid broader credit market pressures.Nuveen Partners with Hunter Point & Temasek to Boost Private Credit Capabilities
Nuveen entered a deal with Hunter Point Capital and Temasek: minority stake acquisition + long-term capital injections into its private credit strategies. Emphasis is on growth in private credit amid strained bank lending and demand for flexible capital.Coller Capital Leads Record-$3B Credit Continuation Vehicle With TPG Twin Brook
Coller Capital and TPG Twin Brook closed a $3 billion credit-continuation vehicle. It’s among the largest (if not the largest) credit continuation vehicles to date. Underlines how GP-led CVs are becoming bigger and more central.Continued Surge in LP- and GP-Led Secondaries Volumes
According to Evercore’s H1 2025 report, secondary market deal-volume (LP-led + GP-led) hit ~$102 billion in the first half of the year—exceeding prior half-year or many full-year totals. Projections are for further increases.
🔹Structural Overview of the Private Credit Secondaries Ecosystem
LP-led transactions – Limited partners sell fund stakes in direct lending, opportunistic credit, or distressed strategies to access liquidity or rebalance portfolios.
GP-led transactions – Fund managers structure continuation vehicles, tender offers, or preferred equity solutions, allowing LPs to exit early while new investors gain exposure to seasoned portfolios.
Direct loan/portfolio sales – Buyers acquire portfolios of direct loans, CLO tranches, or credit fund exposures. These resemble bulk loan portfolio transfers, often negotiated bilaterally.
Structured solutions – NAV loans, preferred equity, and hybrid facilities provide liquidity backed by fund or portfolio value, blending financing with secondary capital.
The ecosystem is supported by global secondaries specialists (Ardian, Lexington, Coller), private credit managers (Ares, Apollo, Oaktree, HPS), dedicated liquidity providers (17Capital, Whitehorse, Pantheon), and institutional investors (pensions, insurers, sovereign wealth funds).
🔹Why Closed-End Funds Drive Secondary Opportunities
Most private credit is structured in closed-end funds (7–10 years). While the loans themselves may mature in 3–5 years, GPs typically recycle repayments into new originations, delaying distributions. This mismatch creates natural demand for secondary solutions:
LPs may need liquidity sooner (denominator effect, rebalancing, allocation changes).
Closed-end structures do not permit redemptions, making secondaries the only outlet.
Buyers benefit from discounted entry into diversified, seasoned loan portfolios.
🔹Growth Drivers for Private Credit Secondaries
Scale of private credit AUM – Now >$2 trillion globally, projected >$2.5 trillion by 2028.
Liquidity mismatch – Closed-end funds vs. shorter-duration loans create demand for exit options. 2
Institutional adoption – Pensions, insurers, and sovereigns are deploying into secondaries for diversification and discounted entry.
Innovation in liquidity tools – NAV loans, continuation funds, and structured preferred equity solutions are accelerating adoption.
Market acceptance – What began as opportunistic liquidity has become normalized as part of portfolio management.
🔹Institutional Investors with Private Credit Secondary Strategies
Global Secondaries Platforms: Ardian, Lexington Partners, Coller Capital, HarbourVest, AlpInvest (Carlyle)
Private Credit Specialists: Apollo, Ares, Oaktree, HPS, CVC Credit
Liquidity/Structured Providers: Pantheon, StepStone, 17Capital, Whitehorse Liquidity, SVPGlobal, Dorchester Capital Advisors, Felicitas Global Partners, Star Mountain Capital
Institutional Allocators: CPP Investments, Ontario Teachers’ Pension Plan, CDPQ, CalPERS, CalSTRS, Texas TRS, ADIA, GIC, Allianz, Prudential, MetLife
These institutions are building or expanding dedicated sleeves for private credit secondaries, viewing them as a natural extension of private equity secondaries and NAV financing.
🔹Illustrative Breakdown of Private Credit Fund Structures
Closed-end funds – ~60% (dominant form)
Open-end/evergreen funds – ~20% (growing, but smaller)
SBIC funds – ~10% (important niche in the U.S.)
Other structures (BDCs, hybrids, interval funds, SMAs) – ~10%
Note: This chart is illustrative and directional, not sourced from Preqin or PitchBook. Percentages reflect broad market commentary.
🔹How Private Credit Secondaries Work in Practice
Private credit secondaries typically fall into three forms:
LP stake transfers: LPs sell their commitments in closed-end private credit funds mid-life. Buyers step into existing portfolios, often at a discount to NAV, gaining diversification without blind-pool risk.
Continuation vehicles: GPs transfer select loan portfolios into new vehicles, offering liquidity to existing LPs while extending exposure for those who want to remain invested.
Loan portfolio sales: Funds may sell direct loans in bulk—similar to a portfolio trade—when seeking liquidity, capital recycling, or risk reduction. Buyers acquire seasoned assets with visible performance history.
These structures provide optionality: liquidity for exiting investors, targeted deployment for new entrants, and balance sheet management for GPs.
📂 Case Study Snapshot
Situation
A mid-sized private credit fund (“Fund A”) has reached its fourth year in a 10-year closed-end structure. Some LPs are looking for liquidity due to rebalancing constraints and deteriorating outlooks in certain credit sectors.
Structure Used
The GP of Fund A works with a secondaries specialist to design a continuation vehicle (“Vehicle B”).
Select performing loan portfolios and LP interests are transferred into Vehicle B. Early-exiting LPs receive cash (or near-cash) for their stakes; LPs remaining keep exposure via pro rata interests in Vehicle B or can co-invest.
Key Terms & Trade-Offs
Element | Details |
Discount to NAV | Early LP exit comes at a modest discount to NAV, reflecting transaction costs, market sentiment, and structure of transferred assets. |
Fee Structure | Continuation vehicle may carry similar management fees to original fund, but performance or carried interest may reset or adjust for the new vehicle. |
Investor mix | Involves both existing LPs wanting liquidity and new investors seeking exposure to seasoned assets with known performance history. |
Liquidity/Exit Path | Early LPs exit via sale; others can rely on eventual sales of the portfolio, or distribution as loans mature. |
Outcomes & Learnings
Exiting LPs achieve liquidity while avoiding distressed discounting.
New investors gain exposure with more transparency and shorter remaining duration.
GP preserves ownership/control of performing assets, continues to manage them.
But trade-off: some dilution of return for LPs remaining; complexity and legal structuring costs; valuation and risk of transferred portfolios still need strong due diligence.
Why It Matters
This kind of continuation vehicle case demonstrates many of the themes in private credit secondaries: liquidity by design, balancing the interests of exiting vs. remaining investors, structuring to preserve value, and the increasing prevalence of GP-led solutions.
💡 Closing Thought
Private Credit Secondaries have shown recent growth in market. For investors, they are providing liquidity, enhancing capital efficiency, and reshaping how private credit is managed. With more funds flowing into private credit strategies, this market is likely to continue. We are keeping a close eye on pricing in the secondary market, deal opportunities, and general market news.
Sources:
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Disclosures & Disclaimers
This newsletter is provided for educational and informational purposes only. It does not constitute investment, legal, or tax advice, nor should it be relied upon as such.
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