LP-Led Secondary
An LP-led secondary is when an LP sells its fund interest to a secondary buyer for liquidity.
Allocator relevance: High — a core portfolio management tool for pacing, concentration control, and liquidity without waiting for fund exits.
Expanded Definition
LP-led transactions involve selling an existing partnership interest, typically priced relative to NAV with discounts or premiums reflecting portfolio quality, fund age, GP reputation, fee load, and market liquidity. LP-led sales can be strategic (rebalancing or pacing) rather than distressed.
Allocators also analyze implications for relationship continuity, reporting access, and any transfer restrictions or GP consent processes.
Decision Authority & Governance
Governance includes transfer restrictions in the LPA, GP consent standards, admin execution quality, confidentiality/data room controls, and fair treatment of sellers. Institutions evaluate whether the GP manages transfers efficiently and without punitive friction.
Common Misconceptions
- LP-led sales always indicate distress.
- NAV equals price in secondaries.
- GP can block transfers arbitrarily.
Key Takeaways
- LP-led secondaries are often portfolio optimization.
- Consent mechanics and execution quality matter.
- Pricing reflects liquidity + GP-quality + asset quality.