The rapid growth of private market secondaries is causing significant data challenges for investors. In this article, Simon Tang, Accelex’s Head of US, dives into the issue of unstructured data and how it is hampering the growth of private markets investing.
The private secondaries market is growing rapidly. In H1 2025, secondary transaction volumes hit $100bn, marking a new half-year record. This growth has been catalysed by LPs’ consistent liquidity needs, a strong investor-led push to diversify portfolios, a rush to rebalance private markets positions, and the growth of GP-led secondary opportunities as tariffs and geopolitical uncertainties shake up capital markets and the global status quo.
Expansion in the secondaries market is highly beneficial for private markets. By providing a channel for early exits and a lifeline of liquidity, secondaries are an important tool for primary fund investors in a market that is infamous for locking up committed capital for long periods of time, often for as much as a decade or more. However, secondaries growth brings its own challenges. With more transactions, allocations and deals in the industry, the quantity of unstructured information transferred between sellers, brokers and buyers explodes.
Normally, investors would view greater availability of information as a huge positive. However, higher volumes present a significant challenge for those entering the market or attempting to grow their allocation to secondaries, given the uniquely unstructured and inconsistent nature of private markets data.
The issue with private markets data
Unlike public markets where data feeds exist and data are standardised and easy to access, private markets are mired by unstructured and unstandardised documents. These include fund quarterly performance reports, financial statements, cashflow notices, and capital account statements, among others. Limited Partners (LPs) still rely on the PDFs provided to them by General Partners (GPs) to share critical investment data. Within the secondaries market specifically, unstructured documents from a broader portfolio opportunity with many underlying funds can lead to significant volumes of data being overlooked or not accessed for investment analysis.
A traditional secondary investment underwriting process is typically based on a triage approach. The idea is to identify the value-driving investments in a broader portfolio of opportunities, starting at the fund level and then focusing on the underlying portfolio companies within those funds. The next step is to dedicate human resources to manually extract and transfer this subset of data, including time-series company operating performance metrics, from the documents to a spreadsheet to feed the investment underwriting models.
This is a tedious process that is time-consuming, error-prone, lacks digital auditability and does not effectively scale as investment activity grows with the market. Ultimately, a substantial amount of valuable private markets investment data is left behind in the documents due to triage.
In addition to this challenge, some private market strategies rely on mark-to-market valuations, which means current quarter value drivers may not be going forward. Those funds and underlying assets that were triaged out of the underwriting process could indeed become key value drivers and vice versa. Robust secondary investment modelling and underwriting should be based on a complete set of portfolio data. Additionally, as more opportunities enter the deal funnel, the unstructured content can be transformed into structured and normalised private markets investment data to not only underpin underwriting, but also further leveraged as a feed into a data lake for market intelligence.
By effectively addressing these data challenges, secondary investment teams can focus on performing more comprehensive underwriting analysis across deal opportunities and qualitative due diligence. This could include GP succession planning, key man risk, performance attribution by partner, deal exit strategy and other important factors that may not be directly reflected in the documents or data. Meanwhile, clearing up these data challenges also enables them to more easily meet the tight timelines that are usually attached to these secondary opportunities.
Keeping up with risk in a volatile market
As dry powder in the secondary market grows rapidly, with billion- and multi-billion-dollar secondary-specific funds becoming increasingly common, this massive influx of buy-side capital is encouraging the sell-side to keep pace, driving the growth of opportunities available in the market. However, if a balanced equilibrium is not maintained, premiums to NAV will become the norm, and that is a risk that undermines a key rationale for investing in secondaries: price arbitrage.
A secondary investment that is priced at a premium to NAV will need to deliver even higher returns to justify the buyer’s acquisition. Couple this with a global macroeconomic environment that is volatile and uncertain in the near to mid-term, and the forecasted operating performance of portfolio companies could be more pro forma than ever before. A secondary investment made at a premium and then facing economic headwinds or a downturn would be a larger risk than the same investment as a primary. This scenario results in significant risk for secondary fund portfolios, their investors and asset management buyers in the market.
Exacerbating this risk is the traditional deal triage approach. From an investment perspective, secondary deal flow triage can lead to gaping holes in models and the underwriting process, which could result in assets that are mispriced and discount/premium offers to sellers that are not as robust as they should be. The ramifications on portfolio risk can be very significant: buy-side offers that are inaccurate by a mere 100bps across an overall $10 billion portfolio could result in $100 million of downside.
Robust data – an indispensable tool
Secondary market buyers must ensure they have a watertight underwriting process that makes full use of the investment data available to them in the transaction by the seller or broker. A complete dataset is essential for comprehensive modelling.
The sheer volume of unstructured data insights is becoming impossible to manage as the secondary market continues along its growth trajectory. The ability to analyse opaque datasets and extract valuable investment insights is now absolutely critical to ensuring strong, data-backed decision-making. Secondaries investors must rethink old processes and embrace innovative new private markets technology to stay ahead of the game.
