A revolution worth billions of dollars in global private capital could be coming to South Africa.
South Africa's private equity industry has long had a latent problem: getting capital out can be more difficult than getting it in. Exit depends on a cooperative stock exchange, willing trade buyers and investors who are patient enough to wait for the full life of the fund. When any of these conditions are not met, the options become weak.
The secondary market is changing that – and the numbers behind it are extraordinary.
Global secondary transaction volume is reportedly set to reach a record $162 billion in 2024 and exceed $200 billion in 2025. By mid-2025, volumes had already increased by 51% year-on-year. The world's largest fund by far, set up by French-founded Ardian (Ardian Secondary Fund IX) specifically to invest in private equity secondaries, closed on $30 billion last year alone, showing that it is no longer a niche sector, but one of the fastest growing sectors in global finance.
Investor led or manager led
The secondary market takes two main forms, either investor-led or fund manager-led transactions.
When investor-led, an investor – such as a pension fund that is rebalancing, sells its fund interest to a third-party buyer before the fund reaches the end of its life. The buyer receives a mature, risk-free asset. The seller receives liquidity.
The second form is more effective. A fund manager creates a continuation vehicle – a new fund designed to acquire assets from an older fund nearing the end of its life. Existing investors either choose to cash out at a fair price, or join the new structure and continue participating. There are no forced sales or forced early exits and this gives quality assets more time to reach their potential.
Once viewed with suspicion as a sign of crisis, the sustainability fund has been rehabilitated. In the UK and across Europe, they are now often a preferred tool for sophisticated managers who want to hold on to winning assets for the long term. This stigma has largely disappeared and has been replaced by a market worth hundreds of billions of dollars annually.
south african opportunity
South Africa has one of the most mature PE industries on the continent. What it lacks is exactly what the secondary market provides: an efficient mechanism to recycle capital and flexibly manage the fund lifecycle.
Now conditions for change are being created. Many South African funds raised between 2013 and 2018 are at or beyond the end of their natural lives. Managers face pressure to return capital, yet listings are difficult, M&A is slow, and traditional exit routes are constrained. The secondary markets – both investor-led sales and GP-based continuation structures – provide a reliable, proven answer.
South Africa's institutional base is also maturing. Pension funds, insurers and development finance institutions are growing in private markets. As they do, secondary sales will move from an optional to an essential portfolio management tool. Meanwhile, global secondary buyers are actively looking for deal flow beyond North America and Europe. South Africa will be on their radar.
careful implementation
Secondary transactions involve complex issues and require careful implementation.
GP-led continuity funds involve real conflicts: the same manager oversees both the fund selling assets and the fund buying them. It calls for independent valuation, genuine investor choice and comprehensive disclosure – not just disclosure of transaction terms, but also disclosure of fee changes, conflicts and valuation methodology. Investors must be able to truly give informed consent and not just rubber-stamp the process.
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 controversial transaction almost always depends on the rigor of the process and the quality of investor communications.
bottom line
Secondary markets emerge with maturity. Major PE centers with developed secondary markets have benefited significantly from this, increasing liquidity and as a result they have managed to attract new capital.
The South African market is in good shape and institutional sophistication is building. What remains is the confidence to act.
Secondary people are ready to make a big impact.
The author advises on private equity fund structuring, secondary transactions and continuity vehicles.
Written by Dylan Cunard, Director of Werxmans