Secondaries Are What Mature Private Markets Build Next

Private markets mature when they stop depending on a single exit door. In early ecosystems, liquidity is treated as a payoff at the end of the journey: wait long enough and an IPO or strategic sale will eventually arrive. In mature ecosystems, liquidity is treated as an operating function. Capital needs to move even when a company is not ready to sell, even when public markets are shut, and even when the best outcome is to keep building rather than force an exit.

That is why the secondaries chapter in No Ifs About AIFs 3.0 matters. The report frames secondaries as market plumbing that becomes necessary once AIF vintages start stacking, NAV accumulates, and investor needs diversify beyond the simple question of eventual exit.

The report’s definition is crisp: secondaries are transactions in which an investor transfers existing fund interests to another party, enabling an early exit prior to scheduled fund maturity, without the fund raising new capital.

As Indian private markets expand, the report notes that exit execution becomes a primary driver of realised outcomes, and demand for mid-cycle liquidity rises. Put those together and you get the real point: secondaries are moving from a side market to an emerging liquidity system.

Why secondaries show up when markets scale

Scale creates its own liquidity requirements. The report’s context numbers set this up plainly: AIF commitments have reached roughly Rs 15.05 lakh crore by September 2025, compounding at around 30.7% CAGR from FY21 to H1FY26, and the number of SEBI-registered AIFs has crossed 1,600, with a large share launched since 2021.

Once vintages accumulate at that pace, a few dynamics become structural. More funds enter the zone where limited partners (LPs) expect visible distribution pathways. More LPs need exposure management that is independent of company-level exits. More GPs face pressure to demonstrate realised track record rather than rely on paper outcomes. In that environment, secondaries emerge because the ecosystem needs a release valve that does not depend on forcing companies to sell at the wrong time.

The global context is useful

The report uses global fundraising as context: secondaries fundraising reached a record $166 billion in 2025 final closes, up 48% from the prior fundraising period. This highlights how secondaries grow when private markets grow faster than traditional exit channels.

That framing matters because it moves secondaries out of the “special situations” corner and into a more normal category: predictable infrastructure that tends to appear when a market reaches a certain density of assets, managers, and vintages.

India’s data suggests secondaries are already thickening

The report anchors the India story in transaction momentum rather than aspiration. Secondary deal values rose to around ₹377 billion in FY25, up 32% from ₹284 billion in FY24. In the first half of FY26, deal value totalled nearly ₹361 billion, almost matching the full-year figure of the previous fiscal. Average deal sizes have also scaled from ₹2.28 billion per deal in FY20 to ₹8.39 billion per deal in H1FY26, a 3.7x increase.

Those numbers suggest secondaries are becoming more institutional in character. Larger average deal sizes usually show that transactions are shifting from scattered one-offs toward more meaningful blocks of exposure. That is how a liquidity mechanism becomes a market.

Why secondaries matter for realised outcomes

The report makes the connection between exits and realised outcomes unusually direct: as the market matures, exit execution becomes a primary driver of realised outcomes. That line is easy to skim, but it captures the core tension in a scaling AIF ecosystem. A market can compound AUM quickly; credibility compounds more slowly, and it is tied to cash flow.

Secondaries make the timing of liquidity less binary. When a meaningful share of investors want flexibility before a fund’s scheduled maturity, a functioning secondaries market can provide a managed pathway for that flexibility without forcing companies into premature liquidity events.

The mechanism still requires price discovery, governance comfort, and buyer conviction. But when those conditions exist, secondaries can reduce the degree to which realised outcomes depend on perfect market windows.

The supply pipeline for secondaries market

One of the more useful parts of the report is that it links secondaries to the company lifecycle rather than treating it as a standalone market. It maps a secondary-market “addressable” set by time-to-growth and notes that 201 companies are reaching growth rounds within 2–5 years of early-stage funding.

The point is not that growth rounds automatically create secondaries. It is that faster time-to-growth creates earlier pricing events, earlier NAV formation, and earlier reasons for some participants to seek liquidity. In other words, liquidity demand can appear well before IPOs and traditional M&A exits become realistic options.

This is exactly the kind of lifecycle-driven condition in which secondaries typically expand: because the ecosystem is active, capitalised, and increasingly multi-participant.

Secondaries are becoming market infrastructure

Secondaries make participation more manageable at scale. As the AIF market expands, secondaries can reduce reliance on rare exit windows, support exposure management across investor types, and create a mechanism for liquidity without forcing company-level decisions on unnatural timelines. That is why the report treats secondaries as essential plumbing rather than a side show.

The clean takeaway is that secondaries are becoming part of India’s private markets operating system. Given the pace of AIF scale and vintage build-up, that direction seems intuitive. The open question is not whether the market needs this plumbing, but how quickly infrastructure, participation depth, and transaction quality keep pace with the size of the ecosystem.

Brand Manager

Aayushi Thakur

Frequently Asked Questions

Q: What are secondaries in private markets?

A: Transactions where an investor sells an existing fund interest or stake to another buyer, providing liquidity without new capital going into the fund.

Q: Why do secondaries grow as markets mature?

A: Because fund vintages stack up, NAV accumulates, and participants need liquidity and exposure management that doesn’t depend on IPOs or M&A alone.

Q: Do secondaries replace traditional exits?

A: No. They complement IPOs and strategic sales by adding another liquidity pathway, especially mid-cycle.

Q: What makes a secondaries market “institutional”?

A: Larger, repeatable transactions supported by credible pricing, governance comfort, and buyer conviction.

Q: How do secondaries relate to realised outcomes?

A: They can support liquidity timing and recycling of capital, which becomes important as markets shift toward full-cycle measurement and distributions.

Sources

No Ifs About AIFs 3.0