South Africa is sitting on a growing backlog of mature private equity assets that managers cannot exit and investors cannot access. The global solution already exists but we are not using it yet. Exits depend on a cooperative stock exchange, willing trade buyers, and investors patient enough to wait out a fund’s full life. In South Africa, none of those conditions are reliably available. The result is a growing backlog of mature assets, mounting pressure on fund managers and investors who cannot access the returns owed. The secondary market is changing that, and the numbers behind it are extraordinary.
Global secondary transaction volumes reportedly hit a record $162 billion in 2024 and exceeded $200 billion in 2025. By mid-2025, volumes were already up 51% year-on-year. Ardian’s Secondary Fund IX, the world’s largest-ever fund established to invest exclusively in private equity secondaries, closed on $30 billion last year alone, showing that this is no longer a niche corner of private markets but one of the fastest-growing areas in global finance.
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The secondary market takes two main forms, either investor led or fund manager led transactions. In an investor-led transaction, an investor – such as a pension fund, that is rebalancing its portfolio – sells its fund interest to a third-party buyer before the fund reaches the end of its life. The buyer acquires a mature, de-risked asset. The seller gets liquidity.
The second form is more impactful. A fund manager creates a continuation vehicle – a new fund designed to acquire assets from an older fund approaching the end of its life. Existing investors choose either to cash out at fair value, or to roll into the new structure and keep participating. There is no forced sale or forced premature exit and it allows more time for quality assets to reach their potential.
Once viewed with suspicion as a sign of distress, continuation funds have been rehabilitated. In the UK and across Europe, they are now often a preferred tool for sophisticated managers looking to hold winning assets for longer. The stigma is largely gone, replaced by a market worth hundreds of billions of dollars annually.
South Africa has one of the continent’s most mature PE industries. What it has lacked is exactly what the secondary market provides – an efficient mechanism to recycle capital and manage fund lifecycle flexibly. The conditions for change are converging now. Many South African funds raised between 2013 and 2018 are at or beyond their natural end-of-life. Managers face pressure to return capital, yet listings are difficult, M&A is slow, and traditional exit routes remain constrained. The secondary market, both investor-led sales and GP-led continuation structures, offers a credible, proven answer.
South Africa’s institutional base is also maturing. Pension funds, insurers, and development finance institutions are growing in private markets sophistication. As they do, secondary sales will shift from an optional to an essential portfolio management tool. Meanwhile, global secondary buyers are actively hunting deal flow beyond North America and Europe. South Africa will be on their radar.
Secondary transactions involve complex issues and require careful implementation.
GP-led continuation funds involve genuine conflicts: the same manager oversees both the fund selling the assets and the fund buying them. That demands independent valuation, real investor choice, and comprehensive disclosure – not just disclosure of transaction terms, but disclosure of fee changes, conflicts, and valuation methodology. Investors must be able to give truly informed consent and not merely rubber-stamp a process.
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Where fund agreements lack a formal advisory committee, best practice is to appoint an independent transaction committee to oversee the process and confirm fairness. The difference between a clean transaction and a contentious one almost always comes down to process rigour and the quality of investor communication.
Secondary markets emerge from maturity. Major private equity centres with developed secondary markets have benefitted greatly from increased liquidity and have attracted new capital as a result.
South Africa’s market is better placed than most to benefit. The institutional sophistication is building. The deal flow is there and global buyers are looking. What remains is for local managers and investors to act, before the opportunity passes.
By Dylan Cunard, Director at Werksmans Attorneys