Fund managers are responding. London’s Pantheon launched its first dedicated private credit secondaries fund late in 2018, while Chicago-based Monroe Capital is understood to have entered the space in the past couple of months. Other newcomers are Manulife Investment Management and Tikehau Capital. Both unveiled secondaries platforms in Q3 2019. 

Growth in secondaries was spurred by the emergence of opportunistic funds during the financial crisis, when they bought fund interests from financial institutions and pension funds, says New York-based Jeff Hammer, global co-head of secondaries at Manulife. “We believe the same phenomenon is going to occur in the secondary market for private credit,” he says. “So much capital since the last credit crisis has been aggregated in finite-life vehicles — direct lending partnerships, private and public BDCs and CLOs — that liquidity pressures in the next crisis are going to play a significant role in ramping up transaction volume.”