Apollo is building daily marks, KKR is scaling secondaries and the market’s dry powder buffer is thinning as demand for liquidity rises.
Daily Marks Era Dawning
For years, private credit managers sold investors on a reassuring premise: steady yields, muted volatility and none of the white-knuckle swings that plagued public markets. The pitch worked, drawing $1.4 trillion into the U.S. market in an asset class that prided itself on opacity.
Apollo (NYSE: APO) is now wagering that era is ending.
The New York-based alts giant has been quietly assembling the plumbing for a more liquid version of private credit. It’s building systems for daily pricing and laying the groundwork for the kind of active secondary market that the booming industry has never managed to develop at scale.
Apollo says it has built a $13 billion market that continues to grow.
The move reflects a deepening tension inside private credit between what the asset class has always been and what it is rapidly becoming.
Retail investors, lured in through interval funds and semi-liquid vehicles, now sit alongside the pension funds and endowments that once dominated the investor base. Those newer entrants expect more frequent redemptions, clearer pricing and — increasingly — the ability to exit.
The obstacle has always been valuation.
Unlike publicly-traded bonds, private loans rarely change hands and carry no observable market price. Buyers have long exploited an accounting quirk that lets them instantly mark up a portfolio acquired below its stated net asset value — booking paper gains the moment a deal closes, even though nothing in the underlying portfolio has been sold or has actually grown in value.
“This leads to mispricing on a short-term basis, which was not that important in institutional funds where investors were not coming and going, but turns out to be very important in funds on an evergreen basis where investors have the opportunity to receive at least a portion of liquidity on a quarter-by-quarter basis,” Apollo CEO Marc Rowan said on a conference call last week. “We’re not sure this accounting practice makes sense, although it is what is currently demanded by the marketplace.”
A nascent secondaries market reached a record $20 billion in volume last year. That high is expected to be eclipsed this year as more new players emerge and incumbents scale.
Blue Owl (NYSE: OWL), for instance, is one of the latest new entrants, marketing its debut strategy focused on acquiring stakes in private credit funds.
Blue Owl Co-Chief Executive Officer Marc Lipschultz endorsed the secondaries market in August as a “great business to be had being a really thoughtful buyer when you have more sellers today than you’ve ever had in the past.”
Managers have relied on internal models and periodic third-party reviews to assign values, which is a system that institutional investors tolerated in exchange for higher yields and long lockups. Critics have long questioned whether the resulting marks reflected genuine asset quality or simply the absence of scrutiny.
Rowan argues that the firm’s push toward more dynamic pricing could erode that ambiguity. Regular marks would give buyers and sellers a common reference point, compressing the wide bid-ask spreads that have historically made private credit transactions cumbersome.
Rowan says Wall Street banks, too, may grow more willing to lend against portfolios whose values are updated consistently. Wall Street’s entry would accelerate growth in NAV financing and portfolio recapitalizations.
“When public markets reprice, private markets should too,” Rowan says. “If we hold a position with anyone else, we take the lowest mark, always, whether we agree with that mark or not, because that is indicative of where someone might sell the position.”
The firm’s scale gives it unusual leverage to drive the transition.
Apollo oversees hundreds of billions of dollars in credit strategies and benefits from its ownership of Athene, the insurer whose permanent capital provides flexibility that few rivals can match.
First Take: Not everyone is eager to follow. A functioning secondary market would introduce real-time price discovery into corners of the market that have long avoided it, potentially exposing aggressive valuations during periods of stress.
KKR’s Secondaries Push
KKR’s latest acquisition gives it exposure to nearly every major U.S. sports league, but the firm’s larger ambition may be building a scaled secondaries business for the wealth era.
KKR (NYSE: KKR) has formally closed its acquisition of Arctos Partners and its $16 billion AUM, creating a new business unit called KKR Solutions. The deal, initially valued at $1.4 billion with up to $550 million in additional performance-linked equity consideration, immediately establishes KKR as a serious player in institutional sports investing. Founded in 2019 byIan Charles and Doc O’Connor, Arctos owns minority stakes in the NFL, NBA, MLB, NHL and MLS.
That reach gives KKR an area of exposure many of its large-cap rivals had already begun pursuing. Firms including Blackstone, Ares Management and TPG have all expanded into sports-adjacent investing as institutional appetite for franchise-related assets has accelerated.
Still, industry executives view secondaries as the more strategic element of the transaction. KKR has long lacked a dedicated secondaries platform despite explosive growth across the market.
Other large firms have taken a similar approach.
EQT (NYSE: EQT) announced in January that it was acquiring Coller Capital for up to $3.7 billion. Jeremy Coller launched the pioneering secondaries firm in 1990.
KKR Solutions is now being positioned as the future home of a scaled, multi-asset secondaries platform, with Arctos Keystone’s GP Solutions capabilities serving as a foundation. The business is expected to span private equity, sports and other alternative asset classes over time.
The strategy could become particularly important in the wealth management channel, where KKR has been aggressively expanding distribution.
A proprietary secondaries platform would allow the firm to offer high-net-worth investors differentiated private-market exposure with potential liquidity features that traditional drawdown funds cannot easily provide.
Intermission: The Arctos acquisition may ultimately say less about sports ownership than about where alternative managers see the next major growth opportunity: packaging private-market liquidity solutions for a much broader investor base.
Dry Powder
The PE secondaries market is on the cusp of a remarkable milestone — and quietly facing a structural problem that could define its next chapter.
Secondary deal volume for private assets surged 41 percent to a record $220 billion last year, according to William Blair. Transaction volume is now forecast by Jefferies to approach $300 billion annually within the next 12 to 24 months as investors facing stalled traditional exits continue to use secondaries as their primary liquidity outlet.
Yet even as deal flow accelerates toward that threshold, the capital available to fund it is being stretched dangerously thin.
Overall, secondaries dry powder now exceeds $300 billion, with a growing portion earmarked for GP-led deals as managers raise standalone vehicles or dedicate sleeves within broader funds.
“There just isn’t enough buyer capital, investor capital, to be able to support the entirety of the CV market opportunity today,” says HarbourVest Managing Director Michael Pugatch. “There are many more GPs that would like to execute continuation solutions transactions than there is buyer capital available today.”
Despite record fundraising, the capital overhang in secondaries — the ratio of available dry powder to annual deal flow — has declined sharply. Evercore puts it at 1.24x for LP-led deals and 1.22x for continuation funds, compared with 1.8x and 1.7x, respectively, at the end of 2024.
Put another way, the market now has little more than a year’s worth of buying power in reserve. In most private asset classes, an overhang of three to four times annual deployment is considered healthy.
Secondaries was the only private markets strategy to see a decline in available dry powder in 2025, with the amount available to do deals dropping 1.3 percent year over year. The math is simple and uncomfortable: transaction volume has been growing faster than the industry’s ability to raise capital to fund it.
The paradox runs deeper. Secondary funds find themselves in a peculiar situation where the very thing driving record deal volume — a lack of liquidity among fund investors — could prevent them from raising the capital needed to pursue all possible deals.
LPs squeezed by years of meager distributions are both the primary source of deal supply and the principal source of fundraising capital. When they are cash-strapped, they sell stakes into the secondary market. But they are also less able to commit fresh capital to the secondaries funds buying those stakes.
The industry’s biggest players are racing to close that gap.
Three secondary funds currently in market are targeting final closes at or above $20 billion: Lexington Capital Partners XI (target: $25 billion),Blackstone Strategic Partners X (target: $22 billion) and Dover Street XII (target: $20 billion). Blackstone’s secondaries business separately crossed $100 billion in assets under management in the first quarter.
New capital sources are also entering the mix. Closed-end fundraising for secondaries strategies reached 18 percent of total private capital raised in 2025, up from just seven percent in 2021, alongside strong inflows from evergreen retail vehicles, according to Ropes & Gray.
Last Word: Whether those inflows arrive fast enough to match a market sprinting toward $300 billion is the central question hanging over the industry. For now, the boom is real — but so is the funding gap chasing it.
Transactions
- Sumitomo Mitsui Trust Bank took a minority position in GP stakes firm Hunter Point Capital.
- Pantheon launched evergreen vehicle Pantheon Global Infrastructure Secondaries Fund.
- Westwood Holdings Group (NYSE: WHG) announced on an earnings call that it’s raising Westwood Energy Secondaries Fund III, which it expects to close next year. CEO Brian Casey didn’t disclose a target. The predecessor vehicle raised $300 million and closed in 2024.
- Blue Owl Capital (NYSE: OWL) is approaching its $13 billion target for its sixth GP stakes fund. Co-CEO Marc Lipschultz told analysts that the vehicle has raised approximately $9 billion in the main fund and more than $10 billion, including co-investment capital, as of April.
Continuation Vehicles
- Reverence Capital closed a $2 billion continuation vehicle to retain control of wealth management firm Osaic. Ares (NYSE: ARES) and Franklin Resources (NYSE: BEN)-owned Lexington Capital Partners served as lead investors. Bain Capital also invested.
- Verdane closed a $746 million CV to retain ownership or three portfolio companies: Arrive Group, Talentech and Pet Media Group. Coller Capital served as lead investor.
- Bridge Growth Partners closed a $790 million CV to retain ownership of enterprise software company Solace. Apogem Capital, Golub Capital, HSBC Asset Management and Schroders Capital served as lead investors.
- Trispan closed a CV to retain control of portco Sugar Beets, which owns bakery-café Maman. Kline Hill Partners served a lead investor.
- MidOcean Partners closed a CV for auto after-market parts supplier Cloyes Gear & Products. Hamilton Lane (NYSE: HLNE) served as lead investor.
- Baird Capital closed a $450 million CV to retain ownership of life sciences consultant Blue Matter. Ares served as lead investor.
- Audax closed a $1 billion private credit CV. Pantheon served as the lead investor.
- RS2 Healthcare Partners closed a CV for portfolio company Loftware Inc. Accel-KKR served as lead investor.
People
- Pantheon has added Leif Lindbäck, CVC Capital Partners‘ co-head of TMT Europe, as a PE secondaries partner.
- Aqualis Partners has added Dan Santopietro as chief financial officer and Dylan Arpey as director of investor relations to help grow its secondaries strategy. Santopietro served as head of fund finance at CVC Secondary Partners. Arpey joins from SV Health Investors, where he led investor relations for its growth buyout strategy.
- Akin Gump Strauss Hauer & Feld poachedKirkland & Ellis Partner Richard Shamos to beef up its secondaries unit.
- Blackstone Managing Director Jonathan Hamilton joined SQ Capital as a managing director.
- FIRSTavenue partner and head of Asia Rachel Guan joined Dawson Partners as senior principal and head of Asia institutional.
- Barings associate director and fund controller Katherine Swol joined Ares Management as associate vice president in secondaries.
- A&O Shearman business development head Guy Wilmot joined BMS Group as a director covering private equity, secondaries, and tax.
- PJT Partners Director Kavi Amin joined Evercore as a director.
- Morgan Stanley Managing Director William Boyle joined JPMorgan as global head of secondaries advisory.
That’s the market in motion. Stay sharp and see you May 27. Until then, send tips, quips and tidbits to secondaries@themiddlemarket.
