Selling a fund stake on the secondary market: what a small LP can do

In the first half of 2025, fund stakes and fund assets worth USD 103 billion changed hands on the secondary market, more than in any six months before, according to Jefferies' half-year review. Portfolios sold by limited partners fetched 90% of NAV on average. A private investor with EUR 250,000 in a single fund can sell as well, but under different terms: the manager has to consent, few buyers look at a stake that size, and the price is usually well below the averages in the reports. For most small LPs selling is the last of several options, and the more useful thing the secondary market offers is a price to plan with.

What happened on the secondary market in the first half of 2025?

Jefferies puts the volume at USD 103 billion, 51% more than the USD 68 billion of the first half of 2024, which was itself a record. USD 56 billion came from limited partners selling stakes in funds, USD 47 billion from transactions led by fund managers, 87% of those through continuation vehicles. Dedicated capital waiting to buy reached USD 302 billion, fed in part by evergreen vehicles sold to private clients. Some of the money that goes into the semi-liquid funds we described in ELTIF 2.0 or a classic fund commitment ends up on the buying side of this market.

The sellers were not in distress. The report states that there were effectively no forced sellers; pension funds accounted for 48% of LP volume and sold mainly to rebalance and to bring money back that their funds were not distributing. That is the same shortage we wrote about in the distribution drought, solved by those large enough to solve it.

Prices by strategy, as a share of NAV:

These are averages over portfolios that institutional buyers competed for. Funds from North America and western Europe often traded at single-digit discounts, Asian funds at discounts of 30% and more.

What exactly is sold when an LP sells?

The buyer takes over the whole position: the share in the fund's assets and the obligation to pay the remaining capital calls. The price is quoted as a percentage of NAV on a reference date, normally the last quarter-end with a report, and then adjusted for the cash that has moved since. Calls the seller paid after the reference date are added, distributions received are deducted.

Say you committed EUR 250,000 to a venture fund. EUR 200,000 has been called, EUR 40,000 distributed, and the report for 31 March shows a NAV of EUR 190,000 for your stake. EUR 50,000 is unfunded. A buyer offers 80% with 31 March as reference date. In May you paid a call of EUR 10,000 and received a distribution of EUR 5,000.

The price is 80% of EUR 190,000, which is EUR 152,000, plus 10,000, less 5,000: EUR 157,000. The buyer also takes on the remaining EUR 40,000 of calls.

Your account for the fund then closes like this. Paid in: EUR 210,000. Received: 40,000 plus 5,000 plus 157,000, together EUR 202,000. On paper the position stood at a TVPI of 1.14 the day before. Sold, it is 0.96. The twenty-point discount does not cost a fifth of the gain; it turns a gain into a small loss, because it applies to the entire remaining value and not to the profit.

Why would a buyer pay less than NAV for assets the manager values at NAV? The buyer wants a return above what the fund itself will earn from here. The NAV is months old when the deal closes. And for a single small stake the buyer does the same legal work as for a large one. The discount pays for all three.

What does the fund manager have to do with it?

Everything. A limited partnership interest is not a share that can simply be transferred. The partnership agreement practically always makes a transfer subject to the general partner's consent, and often gives the manager or the other investors a right of first refusal. The manager will check the buyer as it checked you, charge the legal costs of the transfer to the seller, and may refuse buyers it does not want in the fund. If you are a direct limited partner of a German KG, the change is also filed with the commercial register, since limited partners are entered there under § 162 of the Commercial Code.

So the first conversation is with the manager, before any broker. This has a practical side too: managers often know which existing investors would like a larger stake, and a transfer to someone already in the fund is the simplest transaction there is.

What can a small private LP realistically do?

In order of how often it works:

1. Ask the manager whether an existing investor or a known secondary buyer would take the stake. For a well-regarded fund this frequently produces an offer; for a struggling one it at least produces clarity.
2. Wait for a manager-led process. With USD 47 billion of such transactions in six months, more and more LPs receive a letter offering the choice between selling into a continuation vehicle at a set price or rolling over. That letter is how a private investor is most likely to meet the secondary market, and it comes with a short deadline. Read the price against your own record of the position, not against the manager's summary.
3. Bundle. Three or four stakes offered together reach a size at which intermediaries and specialised buyers engage. The price for the bundle will be set by its weakest part.
4. Solve the actual problem differently. Most private sellers do not want to leave the fund; they need cash for calls elsewhere. Pausing new commitments or borrowing against a securities depot is usually cheaper than a 20% discount, and reversible. The planning behind it is the subject of planning liquidity for capital calls.

What we would not do is sell a young fund. In its first years a fund's NAV is close to cost less fees, a buyer discounts that further, and the seller realises the bottom of the J-curve. Stakes in funds that are five to eight years old, largely invested and with visible exits ahead, are what buyers want and price best.

How a sale is taxed in Germany depends on how the fund is classified and how the stake is held. Clarify that with your tax adviser before agreeing a price; nothing here is tax or investment advice.

Why the price matters even if you never sell

Professional buyers paid 78% of NAV on average for venture portfolios in the busiest half-year this market has had. That is a market opinion on what reported venture NAVs are worth in cash today. An investor who plans liquidity, estate matters or a loan against the portfolio using 100% of reported NAV is using a figure nobody would pay.

A sober approach for your own overview is to keep two columns: the NAV as reported, and a cash value after a haircut by strategy and age of the fund. The second column is the one to use when the question is what you could raise within six months. To fill it, you need per fund the last reported NAV with its date, the unfunded commitment and the cash flows since that date. These are the same four things a buyer would ask for first.