Infrastructure Secondaries Surge as Private Market Liquidity Crunch Deepens

What's New

According to Evercore's State of the Market report, infrastructure secondaries deal volume skyrocketed to $46 billion in 2023, up from $14 billion in 2020, as institutional investors seek liquidity amid challenging exit conditions in private markets.

Why It Matters This surge represents a fundamental shift in how infrastructure investors are managing portfolios, creating unprecedented opportunities for secondary buyers while offering much-needed liquidity options for limited partners facing distribution slowdowns.

Big Picture Drivers

• Liquidity Pressure: Fund distributions have fallen below 10% of NAV since 2023, forcing investors to seek alternative exit routes

• Market Mismatch: Growing supply-demand imbalance as secondary deal opportunities outpace available buyer capital

• Valuation Edge: Secondary buyers can acquire assets below fair market value, providing additional downside protection

• Portfolio Stress: Rising interest rates and market volatility are pushing institutional investors to rebalance holdings

By The Numbers

• $1.1 trillion: Total capital raised and invested by infrastructure funds

• $400 billion: Dry powder committed but not yet invested

• 60%: Portion of secondary market volume from LP portfolio sales (up from 40% historically)

• $70 billion: Projected infrastructure secondaries deal flow by 2028

Key Trends to Watch

• Continuation vehicles and GP-led transactions are becoming more prevalent as managers seek alternative liquidity solutions.

• LP portfolio sales are accelerating as institutions face mounting pressure to generate liquidity.

• Secondary buyers are gaining leverage in pricing as supply outpaces available capital.

• Digital infrastructure, renewables, and logistics sectors present unique secondary opportunities.

The Wrap

Infrastructure secondaries represent a rapidly maturing market that offers compelling risk-adjusted returns while solving critical portfolio management challenges for institutional investors. The sector's growth trajectory suggests it's evolving from a niche strategy to a mainstream portfolio tool.