What are secondary markets in private equity?

Secondary markets in private equity are specifically defined as platforms or venues where investors can buy and sell existing interests in private equity funds. This occurs after the initial investment has been made, allowing investors who may wish to liquidate their positions to find buyers for their shares or interests in a fund. This functionality enhances liquidity for private equity investors, who typically commit capital for long periods in illiquid investments.

In contrast, markets for new private equity fund launches refer to the initial fundraising efforts where capital is raised to create new funds, which does not describe a secondary market. Debt obligations of private equity firms pertain more to leveraged finance and do not reflect the transfer of interests in the equity portion of private equity investments. Lastly, markets for commodities associated with private equity investments refer to physical goods and do not relate to the secondary trading of private equity assets. Therefore, the role of secondary markets is crucial for enabling liquidity and facilitating transactions in previously illiquid investments.