LP Stake Secondary
Private Equity Secondaries
Definition
An LP stake secondary is the sale of an existing limited partner interest in a private fund from one investor to another before the fund is liquidated.
Why it matters
LP stake secondaries create liquidity in otherwise locked-up funds, but pricing depends on NAV quality, unfunded commitments, fund age, manager consent, and buyer return targets.
Common misconceptions
- •A discount to NAV is not automatically cheap if the NAV is stale or future capital calls are large.
- •The seller may still need general partner consent before transfer settles.
Technical details
Pricing Drivers
Buyers adjust for reported NAV, expected exits, remaining term, unfunded obligations, fund-level leverage, manager quality, fee drag, and portfolio concentration.
Transfer Process
Transactions usually require purchase agreements, GP consent, AML/KYC review, tax forms, assignment documents, and settlement around capital call and distribution cutoffs.