The evergreen expansion: how perpetual capital is rewriting the rules of the secondaries market

 
The global secondaries market reached a record $240 billion in transaction volume in 2025: a 48% increase over 2024 levels, which was already a record-breaking year¹. A significant contributor to this growth has been the expansion of evergreen fund structures in the secondaries market. In 2025, 41% of the $113 billion raised by evergreen vehicles was allocated to secondaries². Despite broader market volatility, transaction activity across evergreen and secondary strategies remains resilient, showing little sign of slowing: Evercore estimates that 46% of secondary buyers are planning to raise an evergreen vehicle, while Baird projects that the total assets under management (AUM) of evergreen secondaries funds will triple over the next five years³.

As these vehicles proliferate in the secondaries market, they are not only bringing in more capital but are also influencing pricing dynamics and competitive behavior among buyers. For fund sponsors and institutional investors, this evolution raises a number of structural considerations, including the implications of NAV-based fee models, continuous capital deployment requirements, and periodic redemption features in the context of inherently illiquid private market assets.

This article assesses the impact of evergreen funds on secondaries deal flow and pricing, and identifies key considerations for market participants as these vehicles take on an increasingly central role in the secondaries market.

What are evergreen funds?

Evergreen funds (also known as perpetual or open-ended vehicles) operate indefinitely and offer investors periodic redemption rights, typically on a quarterly basis and often subject to a “gate” based on a percentage of net asset value (NAV). In contrast, traditional closed-end private equity funds typically lock up capital for a fixed 10-year term and are required to wind down on that timeline.

Secondaries are a natural fit for the evergreen structure for multiple reasons:

• LP interests acquired in the secondary market are typically matured and partly funded, generating earlier distributions that align with evergreens’ continuous liquidity needs;
• following regulatory developments in multiple jurisdictions that have expanded retail access, the diversification of a secondary portfolio suits this targeted investor base; and
• the known asset profile of secondaries enables immediate deployment, matching the continuous fundraising cadence of an evergreen vehicle⁴.

How evergreen funds are changing the competitive landscape

Pricing pressure on LP-led transactions

Evergreen vehicles have intensified competition in the LP-led secondaries market and appear to be influencing pricing expectations across the broader secondaries market. While average LP-led pricing held roughly flat in 2025 at just over 86% of NAV, evergreen vehicles paid a premium over the market average, clearing at nearly 90% of NAV⁵.

Unlike closed-end funds, which generally earn fees on committed capital and can afford to walk away from processes with premium pricing, evergreen managers charge fees based solely on the fund’s NAV and are therefore incentivized to bid aggressively in order to deploy capital quickly. Furthermore, the sheer volume of retail capital flowing into evergreen vehicles further amplifies the effect on pricing. According to a Baird study, ’40 Act funds have underwritten to internal rates of return as low as 10 to 12%, creating challenging competitive dynamics for traditional buyers with higher return targets⁶. William Blair’s 2026 Secondary Market Report observed that the LP-led market now experiences “extreme fluidity” in pricing, with “price outcomes increasingly driven by ’40 Act fund appetites”⁷.

And the appetite is not limited to LP-led transactions alone. While LP-led deals still represented the majority of evergreen capital deployment, in 2025, approximately 42% of evergreen deployment was directed to GP-led opportunities: up from 39% in 2024⁸.

Liquidity mismatch and the redemption squeeze

The same structural features that allow evergreen funds to outbid closed-end managers in LP-led processes may also play out when these funds are on the sell side, particularly in times of market volatility. While traditional closed-end secondaries funds that are illiquid by design can generally sustain market volatility and hold their positions, semi-liquid funds with periodic withdrawal obligations cannot. A key feature of evergreen funds is providing their investors with periodic redemption opportunities while still holding an illiquid asset base. This mismatch between investors’ liquidity expectations and the nature of the assets held can put pressure on these evergreen vehicles to sell at the wrong time. While that may create an opportunity to buy on the secondaries market from distressed evergreen fund sellers, the nature of secondaries investments themselves provide some insulation. Secondaries portfolios are typically highly diversified and routinely generate distributions that can fund ordinary-course redemptions without a distressed sale.

Key takeaways

Evergreen funds are now a permanent feature of the secondaries market. Some market participants project that secondary-focused evergreen AUM could scale to approximately $200 billion within the next five to ten years⁹. For sponsors already operating an evergreen vehicle or contemplating launching one, there are potential opportunities created by this shift:

1. Single-asset CVs: a closed-end opportunity

As evergreen migration into GP-led transactions accelerates, the best opportunities may lie in single-asset CV transactions. These deals often reward patient diligence on a single underlying company and require investor commitments that could exceed evergreen funds’ concentration and/or risk tolerances.

2. Turn evergreen redemption pressure into a closed-end selling point

The liquidity-management vulnerabilities embedded in evergreen structures have the potential to create a competitive opening for certain managers to market their structural durability and long-duration alignment with institutional sellers who value certainty of execution.

3. If you can’t beat them, consider building one

With seven of the ten largest secondaries buyers already actively investing out of their evergreen vehicles alongside traditional closed-end funds¹⁰ and 46% of secondary buyers planning to raise one, now may be a critical moment to decide whether to remain a single closed-end platform manager or to add an evergreen and/or retail-focused sleeve. Doing so has the potential to unlock access to a growing retail investor base and allow managers to dual-track a bid for the same asset calibrated to different return and liquidity profiles. However, a word of caution: investors and regulators alike have intensified their scrutiny of valuation methodology, fund governance and conflict mechanics in respect of sponsors that run parallel institutional and retail vehicles.

As evergreen funds continue to reshape the secondaries market, sponsors and investors alike will need to adapt their strategies to navigate the competitive pressures, structural complexities, and emerging opportunities that this rapidly growing asset class presents.