Private credit secondaries are growing rapidly, with the strategy’s appeal extending beyond discounts, offering investors greater portfolio visibility, faster deployment and reduced J-curve effects.
Private credit secondaries are emerging as one of the fastest-growing segments of the private credit market, and speakers at Private Markets Profile’s Private Credit Forum argued that the strategy’s appeal goes far beyond the opportunity to acquire assets at a discount.
Instead, investors are increasingly turning to secondaries as a way to gain greater visibility into underlying portfolios, accelerate capital deployment and reduce some of the structural challenges associated with traditional private credit investing.
Alexander Schmitt, lead portfolio manager for global private credit at Allianz Global Investors, said the market had expanded rapidly over the past five years as private credit itself has matured.
“The expected transaction volume for this year is $28 billion,” he said. “That is still only a little bit more than 1% of the overall market.”
While growth has been rapid, Schmitt argued that private credit secondaries remain relatively underdeveloped compared with the private equity secondaries market and are still in the process of catching up.
A key attraction, he said, is that investors can analyse an existing portfolio rather than committing capital to a blind-pool strategy. “When you do secondaries, you buy much more deployment,” Schmitt said. “On day one, you start to see your money at work.”
As importantly, investors can assess the underlying loans and portfolio characteristics before committing capital. “You underwrite a real portfolio, and you don’t underwrite a strategy,” he said.
That visibility represents a significant departure from primary fund investing, where investors are often backing a manager and investment process without knowing which assets will ultimately be acquired.
Charities, Endowments & Foundations Investment Forum | 10 September 2026 | London
Secondaries also offer diversification benefits. Schmitt noted that Allianz’s portfolio currently includes exposure to approximately 2,000 underlying loans through around 40 fund interests, providing far broader diversification than a typical direct lending fund.
The market itself is also evolving. Historically, private credit secondaries were dominated by LP-led transactions, where investors sold fund interests for liquidity, regulatory or portfolio management reasons. Increasingly, however, GP-led transactions are becoming a larger part of the market.
Schmitt said GP-led transactions had become increasingly important over the past two years as managers sought liquidity solutions for investors and explored ways to manage mature portfolios.
“Over the last 12 to 24 months, we moved more and more to a market where GP-led solutions have become more dominant,” he said.
Francesco U. Castellani Tarabini, co-portfolio manager for private debt investments at Generali Investments, said the trend reflected broader fundraising challenges across private markets. “A lot of GPs are looking for ways to continue and provide liquidity for their LPs,” he said.
[L-R (chair) Robin Jarratt, Francesco U. Castellani, TarabiniAmy Taylor and Alexander Schmitt]
The rise of secondaries has also attracted a growing number of new managers and substantial amounts of capital, creating fresh opportunities but also new risks.
Amy Taylor, senior research investment specialist at Barnett Waddingham, said investors should pay close attention to competitive dynamics and manager capabilities. “One thing I think about is, are there enough deals?” she said.
Taylor noted that many secondaries vehicles are first-time funds managed by newly assembled teams. As a result, investors need to assess whether managers possess expertise in both secondaries transactions and credit underwriting.
“Do they have the expertise to play the secondaries game but also look at the underlying loans and be able to underwrite and form opinions on those?” she said.
She also highlighted the potential for conflicts of interest, particularly where managers operate both direct lending and secondaries strategies.
Despite those concerns, the panel argued that secondaries can play an increasingly important role in portfolio construction.
Institutional investment Conferences & Summits from Longview Networks
For investors entering private credit for the first time, secondaries can provide broad diversification across managers and assets while reducing the impact of individual investments performing poorly.
“It can help also reduce the J-curve,” Castellani Tarabini said. “So it accelerates the liquidity profile of a private market investment.”
Amy Taylor agreed, noting that secondaries can provide a useful entry point for investors seeking exposure to a new asset class.
Looking ahead, panellists expected the market to continue expanding and becoming more focused. “We will see a specialization, professionalization,” Schmitt said.
As private credit continues to mature, secondaries appear likely to follow a similar path to private equity, evolving from a niche liquidity solution into an increasingly important portfolio construction tool for institutional investors.