In a context where exits from private equity assets continue to show a complex landscape and appetite for the asset class remains bright, it is no surprise that continuation funds are establishing themselves as a popular liquidity solution in the market.
From being a fringe solution a decade ago, these vehicles have become a more everyday proposition, increasingly popular among asset managers and investors alike. And the figures reflect an expanding market.
Data from Preqin show that continuation funds went from 13 vehicles, with $9 billion in assets in 2018, to 123 closed vehicles globally last year, totaling $75 billion.
One of the ingredients behind this growing popularity is related to liquidity dynamics within the private equity market, which continue to evolve. “While exit activity has improved, driven by some large transactions, overall distribution remains below the historical norm and many investors continue to seek new ways to achieve liquidity solutions,” Schroders noted in a recent report.
Looking ahead, expectations are for momentum to continue, considering that this type of fund is becoming increasingly attractive to GPs.
Growing Interest
A survey conducted by Bain & Company earlier this year showed that 27% of the asset managers surveyed had initiated or completed a continuation vehicle transaction in the last 24 months.
Of this total, 22% involved a single-asset deal, 3% involved multi-asset strategies, and the remaining 2% used a mix of single-asset and multi-asset investments.
Projecting into the future, expectations are even more dynamic. Four out of ten GPs expect to explore one of these transactions within the next one to two years. 24% anticipate making single-asset investments, 5% multi-asset investments, and 11% both.
The drive behind this interest, as outlined in the Bain survey, lies in the search for liquidity. When asked about the strategic reasoning behind continuation deals—both executed and projected—53% pointed to providing liquidity for existing LPs.
The other priorities highlighted were acquiring more capital to use in add-on M&A (42% of respondents) and resetting investment horizons for assets that require a longer holding period (33%).
“It is clear that continuation vehicles are becoming an established part of the liquidity toolkit. Beyond delivering capital to LPs, many GPs are using them to refinance assets and fund mergers and acquisitions for ‘buy-and-build’ strategies,” the consulting firm concluded in its report.
The Importance of the Secondary Market
The boom in continuation vehicles has reinforced the importance of secondary markets. According to Schroders, both LP-driven portfolio sales and continuation investments continue to grow, to the point that 2026 is shaping up to be a new record year for capital raising.
“Continuation investments in particular are becoming an increasingly established feature of the private equity ecosystem. While they continue to benefit from cyclical liquidity needs, our analysis shows that their growth is largely structural, reflecting their ability to retain ownership of high-quality assets with greater upside potential while providing optional liquidity to existing investors,” the firm stated in its report.
All in all, this phenomenon has left its mark on the secondary market. Figures from specialized advisory firm Evercore Private Capital Advisory show that transaction volume in the first half of 2026 exceeded $120 billion.
This represents a 20% increase compared to June 2025 and positions it as the strongest first half on record. Furthermore, they emphasized that these data consolidate the strong results of last year, when annual volume grew by 40% to $226 billion.
It is worth noting that, of the total capital accumulated in secondary transactions this year, the largest share comes from GP-led activity, at $65 billion. In contrast, LP-driven transactions totaled $56 billion.
“Single-asset continuation vehicles represented the largest share of GP-driven activity, concentrated in high-quality assets,” Evercore emphasized in its report.
