Neuberger Berman’s $4B GP-Led Secondary Fund Signals Structural Shift in Private Equity Liquidity

Neuberger’s Decade-Long Architecture

Neuberger Berman’s latest fundraise culminates a 10-year buildout of secondary market infrastructure: 190+ deals executed in 2024 alone, $15.5 billion deployed across primaries and secondaries, and a proprietary pipeline evaluating 2,900+ annual opportunities[1][13]. The firm’s integrated platform—combining $135 billion in private markets AUM with public market research capabilities—enables unique pricing power. Recent analysis shows NB-led continuation funds delivering 19.3% net IRR since 2020, outperforming the 15.7% median for traditional buyouts[13][14].

Competitive Landscape: First-Mover Advantages Cement

Capital Concentration Accelerates

With dry powder for GP-led strategies reaching $288 billion[16], the market shows early signs of bifurcation. Neuberger, Blackstone, and Lexington now control 38% of dedicated continuation fund capital—a figure projected to hit 50% by 2026 as smaller players struggle with sourcing and underwriting complexity[15][16]. The firm’s latest fund boasts a 4:1 re-up ratio from SOF IV investors, locking in institutional capital that new entrants can’t easily displace[2][13].

Regulatory & Structural Headwinds

SEC scrutiny of continuation fund valuations—up 27% since 2023—poses challenges for less-established managers[14]. Neuberger’s response includes implementing AI-driven NAV verification models and partnering with third-party auditors on 92% of 2024 deals[13]. Concurrently, the rise of evergreen structures (50+ launched in 2024) forces GPs to balance liquidity demands with long-term asset stewardship[5][8].

The New Liquidity Calculus for LPs & Sponsors

LP Portfolio Optimization

Top-tier pension funds now allocate 12-15% to secondaries—double 2020 levels—with NB’s RESOF II real estate vehicle attracting $1.05 billion by focusing on middle-market assets at 0.7x NAV[4][11]. The firm’s 68-company portfolio demonstrates secondary strategies’ diversification potential, combining 34% venture roll-ups with 41% mature buyouts[8][14].

GP Strategic Considerations

Sponsors using continuation funds report 22% higher carried interest realization versus traditional exits, per NB internal data[13]. The structure’s flexibility allows for recapitalizations (38% of 2024 deals), add-on acquisitions (29%), and public market bridging (15%)[16]. KKR’s $6B Asia Fund II and EQT’s recent €11B exit surge validate this approach[7][12].

Forward Outlook: Secondary Markets as Primary Exit

2025 Projections & Risks

Jefferies forecasts $185B+ in 2025 secondary volume, driven by 85 pending GP-led processes exceeding $500 million each[16]. Key risks include NAV compression in tech roll-ups (23% of 2024 deals) and regulatory proposals requiring 30-day liquidity windows for evergreen funds[5][14]. Neuberger’s response—a $2B dedicated tech secondary pool and daily liquidity swaps for 40 Act vehicles—positions it to capture this volatility[8][13].

Strategic Implications for Allocators

With GP-led secondaries projected to comprise 60% of PE distributions by 2027[14], Neuberger’s scale provides institutional investors three critical advantages: 1) Access to proprietary deal flow via 2,900+ annual evaluations[1], 2) Co-investment rights in 78% of continuation vehicles[13], and 3) ESG integration meeting SFDR Article 8 standards across 94% of assets[1][4]. As the $100B+ GP-led market consolidates, first-mover platforms like NB appear poised to capture disproportionate value.