Why it happens · LPs in venture & PE funds
LP liquidity in fund structures
Limited partners in a venture or private equity fund can't just sell 'the fund' on an exchange. Instead, an LP-led secondary sells their entire limited partnership interest — the remaining, undistributed value across the fund's whole portfolio — to a specialist secondary buyer, typically at a negotiated discount to the fund's reported net asset value. This is the largest single category of the global secondary market by dollar volume.
Worked example
A worked example of an LP-led fund-stake sale (illustrative figures):
- An LP committed $10 million to a venture fund. $6 million has been called and invested so far; the GP's latest marks put the current net asset value of that stake at $9 million, with $4 million still unfunded and subject to future capital calls.
- A dedicated secondary buyer offers 85% of NAV — $7.65 million — for the LP's entire remaining interest, and in doing so also assumes the $4 million unfunded commitment.
- The selling LP receives $7.65 million today instead of waiting years for the fund to distribute proceeds as it exits portfolio companies — and is no longer on the hook for the $4 million in future capital calls.
- The buyer's underwriting case: if the fund's portfolio ultimately returns something close to its current $9 million mark (or more) over the following several years, paying $7.65 million today plus funding the $4 million in future calls can still clear an attractive return relative to a primary fund commitment made from scratch.
See every reason a secondary sale happens, or go back tohow a deal actually works step by step.