Secondaries Jargon, Decoded

As India’s private markets mature, secondaries are transitioning from being a niche corner of the ecosystem to a strategic pillar. What began as a tool for fund-level exits has evolved into a powerful engine for liquidity, portfolio rebalancing, and strategic capital formation. But with that evolution has come a new level of complexity and with it, a flood of unfamiliar language.

For investors entering this space, whether institutional, family office, or sophisticated HNI, understanding the terminology is essential to becoming informed participants in this evolving asset class of private markets.

This article decodes the essential secondaries jargon into an investor-friendly glossary, breaking it down into four key themes: deal types, pricing dynamics, participants, and legal structures.

1. Deal Types and Structures

At their core, secondaries involve ownership changes. But how that ownership shifts, and who initiates it, shapes the transaction.

LP Secondary

This is the most traditional form of a secondaries deal. Here, a Limited Partner (LP), such as a pension fund, endowment, or high-net-worth individual, sells their stake in a private fund to another investor.

Why it happens: Liquidity needs, portfolio rebalancing, or a shift in allocation strategy.

Key takeaway: LP secondaries are about fund-level ownership changes, and not company-level.

GP-led Secondary

In these transactions, the General Partner (GP) initiates the process to generate liquidity or more time for a specific asset or group of assets. Often, this involves creating a new fund to house one or more portfolio companies.

Why it happens: The GP sees long-term upside in an asset and wants to hold it longer. Existing LPs can choose to cash out or roll over into the new vehicle.

Key takeaway: GP-leds represent a shift in power, from passive LP exit to GP-driven continuation.

Continuation Fund

This is the new vehicle created in a GP-led deal. It holds the asset(s) being rolled forward and typically includes both legacy LPs (those who chose to roll) and new secondaries investors.

Why it matters: Continuation funds allow for long-term value creation without forcing a rushed exit, while offering optionality to existing backers.

Single-Asset vs Multi-Asset Deals

• Single-Asset: One portfolio company is moved into a continuation fund. Used when a star performer merits a longer hold.
• Multi-Asset: Multiple assets, often from the same vintage or sector, are grouped into the new vehicle.

Both formats are used to extend holding periods on high-quality assets while giving LPs a liquidity choice. The structure reflects GP conviction and alignment.

2. Pricing and Valuation

Pricing is where secondaries get nuanced. Unlike public markets, where price discovery is immediate and transparent, secondaries require more interpretation.

NAV (Net Asset Value)

The estimated fair value of a fund interest or company stake, usually reported quarterly by the GP. Think of it as the starting point for negotiation.

Discount to NAV

Secondary deals sometimes transact at a discount to NAV, meaning buyers pay less than the reported value. This could reflect:

• Liquidity risk
• Time lag in valuations
• Market volatility
• Uncertainty on fund performance

Typical range: 5-30%, depending on asset quality, fund age, and buyer appetite.

At Par

When a transaction is priced at 100% of NAV, it’s said to be “at par.” Often happens with high-performing or recently valued funds.

Premium

Rare, but not impossible. Happens when:

• Demand outstrips supply
• The asset is a top-tier performer
• The reported NAV is considered conservative

A deal at a premium usually signals strong conviction from the buyer or a bidding war.

3. Players and Roles: Who’s at the Table?

The secondaries market involves a unique constellation of participants. Knowing who does what helps decode incentives.

Sellers

• LPs: Traditional investors like endowments, sovereign funds, insurance companies, and ultra-HNIs.
• GPs: Occasionally sell exposure to free up capital or rebalance across funds.

Buyers

• Specialist secondaries funds: Firms that exclusively or largely focus on secondaries (e.g., Lexington, AlpInvest, TR Capital).
• Institutional entrants: Pension funds, family offices, and even PE funds expanding into secondaries to gain exposure at attractive pricing.

Intermediaries

These are advisory firms or placement agents that manage the sale process. They structure the transaction, run competitive bidding, and ensure compliance. In large GP-leds, intermediaries often help manage fairness opinions and price discovery.

4. Legal & Structural Mechanics

Behind every secondaries deal is a series of legal documents and processes that ensure a clean transfer.

LPA (Limited Partnership Agreement)

The governing document of the fund. During secondaries deals, especially GP-leds, certain LPA terms may need to be amended, such as:

• Duration of the fund
• Fee structure
• Voting thresholds

Transfer Agreement

This contract legally transfers the LP interest from seller to buyer. It outlines:

• Purchase price
• Timing
• Representations and warranties

Consent Process

GPs typically hold veto rights over LP transfers. So even in LP-led secondaries, the GP must approve the buyer. This maintains fund cohesion and protects against hostile actors or misaligned interests.

Rollover Option

In GP-led deals, existing LPs are offered the option to:

• Cash out (sell their stake)
• Roll over into the new continuation fund

This opt-in model ensures alignment and fairness across both legacy and new participants.

Why It All Matters: Secondaries as a Strategic Tool

Secondaries are becoming a foundational tool for sophisticated portfolio management.

Here’s why this market matters more than ever:

1. Liquidity in an Illiquid World

Private markets were long criticized for being “locked up.” Secondaries change that. They allow capital to move without waiting for IPOs or M&A.

2. Opportunistic Entry Points

Secondary buyers come in when the companies are still in their growth phase but have matured enough to show a predictable trajectory of where the next phase of growth will be and how it will look like. In effect, secondaries investors get the upside without taking early-stage risk.

3. Portfolio Construction & Risk Management

For sellers, secondaries providing liquidity as well as the opportunity to rebalance across sectors, vintages, or geographies. For buyers, they offer instant diversification.

4. Signals of Maturity

A thriving secondaries ecosystem signals a maturing private capital market. It encourages longer-term thinking and reduces pressure for short-term exits.

5. Alignment of Interests

Secondaries allow investors to ensure aligned interests with the other party. Well-structured GP-leds, for example, allow GPs to stay invested in high-conviction assets while giving LPs choice, a powerful mix of continuity and flexibility.

The Takeaway

Secondaries may have started as a niche, but today they’re a defining feature of the modern private markets toolkit. And while knowing the jargon is only the beginning, fluency in this language is quickly becoming a baseline requirement for any investor operating at scale.
If India is to fully realize its private market potential, secondaries must play a starring role. And that begins with understanding what’s really being said.

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