The GP evolution: adapting in a changing market
Activity in private equity markets picked up in 2025, with $633bn in global transactions over the first three quarters. But challenges remain as GPs seek to generate liquidity and return cash to investors. Discover how we expect private equity markets to develop in 2026.
GP-led secondary deal value reached
in H1, putting GP-led deal value on track for a record year.*
of GPs see a trend of CVs becoming more specialised.*
of managers who have not used NAV financing say they’re interested.*
General partners (GPs) will continue to use continuation vehicles (CVs) to supplement realisation from improved M&A deal flow and remain invested in trophy assets.
There will be greater specialisation in the CV market as dealmakers seek to differentiate their propositions.
GPs will continue to deploy single-asset and multi-asset CV structures, taking advantage of LPs' ability to handle deals of varying sizes and structures. GPs will increasingly structure CVs with co-lead or syndicate structures.
The net asset value (NAV) finance market will continue to grow as GPs increase exposure to NAV loans to shepherd portfolio companies through extended hold periods and generate liquidity for LPs.
GPs will increasingly use fund finance to improve their balance sheet efficiency and limit capital calls to cash-constrained LPs. It will be more common for subscription line facilities to run to two to three years and to see hybrid fund finance packages combining elements of subscription lines and NAV finance in single facilities.
What can GPs expect in 2026?
After a long wait, green shoots are finally beginning to emerge in M&A markets.
Yet, even as M&A markets reopen, GPs still face the same urgent requirement to generate liquidity from their portfolios and return cash to investors.
Investec analysis shows that unrealised value represented 75% of the $6.15bn in total private equity assets under management at the end of 2024 – higher than any year since at least 2018, and almost a fifth higher than the unrealised value figure recorded in 2021 at the top of the market1.
Bain & Co analysis, meanwhile, shows that the ratio of distributed to paid-in capital for US and Western European private equity funds is lagging historical benchmarks. Distributions to LPs have dropped to 11% of NAV in 2024, down from 12% in 2023 and 15% in 2022 - well below the historical 20–30% range.
This implies a 10-year cash recycling cycle, echoing conditions last seen in 2008, despite no current recession.2
GPs are now consistently using solutions, such as continuation vehicles, to facilitate distributions to LPs and remain invested in crown jewel assets. In the first half of this year, overall secondary market volume was over $102bn, according to Investec data.
Explore your liquidity solutions
Stuart Ingledew
Fund Solutions
Continuation vehicles: here to stay
Our data shows that CV volume as a percentage of private equity exit value increased from just 2.9% in 2018 to 10.1% in 20243. Meanwhile, overall GP-led transaction value through this period has more than tripled from $24bn to $73bn4.
Our research shows that CV volume as a percentage of private equity exit value increased from just 2.9% in 2018 to 10.1% in 20245. Meanwhile, overall GP-led transaction value through this period has more than tripled from $24bn to $73bn6.
At the current run, we forecast that GP-led deal value is on track to reach a record high of $100bn in 2025.
These figures align with our PE Trends survey at the start of 2025, when 46% of GPs said their use of CVs would increase over the next 24 months.
Moving into 2026 and beyond, the rapidly evolving CV market will make CV deals a key strategic pillar of GP portfolio and exit management, and we expect to see GPs taking a proactive approach to identifying the assets that will be a fit for CVs early.
LP perspectives on CVs
Q. What trends do you see for continuation vehicles over the next 24 months?
What’s next for CVs?
Q. What trends do you see for continuation vehicles over the next 24 months?
Fund finance: an operational necessity
GPs had long been able to draw on proceeds from earlier vintages to meet commitments to new fundraises. Realisations backlogs, however, have seen GPs use fund finance to underwrite these commitments, which have also grown as more managers support fundraisings for the next vintage of funds.
The increase in CV volumes has also added to the pressure on GPs to make sizeable commitments to CV funds to align with investor demands. Fund finance has thus also emerged as an invaluable tool to support GP-led deals.
NAV finance: expanding use cases
NAV financing has become established as an essential source of liquidity for sponsors, with increasing use cases.
For example, managers who have made first closes on new funds and then invested the proceeds, but now want to pursue more deals before second close, are using the NAV finance market more frequently. It can also help to accelerate LP distributions, with 37% of GPs in our PE Trends report saying they had used NAV finance in this way. Meanwhile, the product remains an effective tool for financing portfolio companies without having to make capital calls to LPs.
In our PE Trends report, 80% of GPs surveyed said they had used NAV financing in the previous year. Of the respondents who said they had never used the product, almost two thirds (65%) said they were interested. Given the signals of growing interest, it is no surprise that forecasts see potential for the NAV market to expand seven-fold between 2022 and 20305.
2026 will see GPs continue to utilise NAV finance across an ever-widening set of use cases.
Distributions and funding growth drive fund-level finance
Q. How have you used NAV finance?
We are equipped and ready to support managers through this period of evolution for the industry, with our experienced teams able to offer comprehensive fund finance coverage and bespoke advice on how to maximise the liquidity and flexibility available in the secondary market.
Footnotes:
1 Preqin
2 https://www.bain.com/globalassets/noindex/2025/bain-report__midyear-private-equity-2025.pdf. See Fig.3, page 4.
3 Pitchbook
4 Pitchbook
5 NAV Financing - Evolution Within Fund Financing, Pemberton See page 3, col.2, par 1
* Investec PE Trends March 2025
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