LP-led secondary describes a secondary transaction where limited partners—not the general partner—initiate the sale of existing fund interests to new buyers.

How it works

An LP (or group of LPs) decides it needs liquidity, wants to rebalance away from private markets, or no longer wants exposure to a particular GP vintage. They engage a secondary advisor or run a limited process to find buyers for their stakes.

Pricing negotiates around reported NAV, quality of underlying assets, and remaining unfunded capital. Stakes in top-tier funds may trade near par; weaker portfolios or GPs with reputational issues can trade at meaningful discounts.

The GP is notified and typically must approve transferees, but unlike a GP-led continuation fund, the GP is not structuring the transaction to extend fund life—it is reacting to LP-driven demand.

Why it matters

• Founders: LP-led activity does not directly change your cap table, but widespread selling in a fund can influence how aggressively that GP supports follow-on rounds or pushes for exits.
• Investors: If you hold illiquid fund interests, LP-led secondaries are the standard escape hatch. Discount to NAV is the price of liquidity.

Common mistake

Confusing LP-led secondaries with GP-led continuation vehicles, where the GP rolls assets into a new fund and offers LPs cash or roll options. LP-led deals are seller-initiated; continuations are GP-initiated.

Related ideas

See also LP secondary, continuation fund, NAV, and vintage year.