Secondaries dry powder finds its home in unglamorous CVs

StepStone just led a continuation vehicle for Core Health & Fitness, a fitness-equipment maker most sponsors have never heard of, and PWD's deal log shows Gainline Capital Partners rolled the company into the StepStone-led vehicle while Hudson Hill closed a single-asset continuation vehicle for InXpress, a shipping and logistics franchise business. Neither announcement came with a multi-billion-dollar figure, and that silence is the tell: the secondaries market's capital overhang is finally finding a home where the underwriting can actually get done.

The two closings land while the top of the market is still waiting for large LP portfolios to trade. Golub Capital committed $1 billion to secondaries and hired Matt Shafer from Northleaf Capital Partners to run it, a commitment made before the team was fully built, and a former Children's Health allocator left to launch Gordian Investment Group, a secondaries firm premised on execution rather than capital. The capital is not scarce; the people who can underwrite it are.

That distinction explains why the deals clearing at the bottom look the way they do: a single-asset continuation vehicle for a fitness-equipment maker or a logistics franchise requires a different kind of underwriting than a diversified LP portfolio, because the sponsor knows the asset, the management team, and the supply chain. StepStone's job was to lead new capital into a vehicle that extends Gainline's hold, but the diligence is less about pricing a pool of unknown assets and more about confirming the company's next growth phase.

Hudson Hill's InXpress close follows the same logic: InXpress is a franchise model for shipping and logistics, not a venture-backed platform, and a continuation vehicle lets Hudson Hill extend its hold while bringing in new investors who want exposure to a single, understandable cash-flow business. The deal clears because the underwriting can be done by a small team in weeks, not a 20-person committee, and when execution is the scarce input, that speed is the entire game.

The large continuation vehicles still exist and still command attention: Bridgepoint's Pantheon deal put an 11x Saviynt rollover in public view, a reminder that top-tier software assets can fetch eye-watering marks in continuation structures. But those trophy CVs are not where the volume is. Mega-fund secondaries buyers are waiting for large LP portfolios to come to market, and those portfolios are not clearing at the pace their funds require, so the capital migrates down-market where individual sponsors need liquidity solutions and secondaries firms can deploy $50 million, $100 million, or $200 million at a time.

At the top, mega funds chase trophy CVs and multi-billion LP portfolios; at the bottom, sponsors and secondaries firms construct bespoke single-asset vehicles for ordinary businesses, and the bottom is where the clearing happens because the underwriting intensity matches the available talent. The clearing is the market's new default deployment.

The arithmetic of deployment explains the shift: a $1 billion secondaries commitment that waits for large LP portfolios must clear maybe four or five $200 million-plus trades a year, and those trades are scarce with brutal competition, while the same billion dollars can be spread across a dozen or more sub-$500 million continuation vehicles, each one requiring a sponsor relationship and company-specific diligence rather than a portfolio pricing model. The per-dollar underwriting is heavier, but the path to deployment is wider.

That dynamic also changes who competes: large LP portfolio buyers need relationship coverage across hundreds of institutions and the patience to wait for sellers, while single-asset CV buyers need a different kind of access—knowing which sponsors are reaching the end of a fund's life, which management teams want to roll equity, and which assets can sustain leverage. The talent pool for that is smaller than the talent pool for portfolio modeling, which is why a $1 billion pre-hire commitment and an allocator's execution-first launch are the same story.

Golub's $1 billion pre-hire commitment makes that plain: the capital is being committed against a strategy and a hire, not a track record, which is only rational if the firm expects to deploy through many smaller transactions rather than a few large ones. If the bottleneck were mega LP portfolio volume, a $1 billion commitment would be waiting for a phone call that may not come; by pairing the commitment with a specific hire from Northleaf, Golub is signaling that sourcing and underwriting capacity, not money, is the product.

Gordian Investment Group's launch from a former Children's Health allocator makes the same point from the allocator side: the firm is premised on execution rather than capital, a sentence that would have sounded strange five years ago but is now the only thesis that makes sense. Limited partners have too much capital chasing too few large transactions; the managers who can find and underwrite lower-mid continuation vehicles are the ones who will put that capital to work.

That StepStone, a firm with deep institutional secondaries roots, led the Core Health & Fitness vehicle suggests the institutional giants are moving down-market: the fitness-equipment maker is a manufacturer with ordinary margins, not a data-center play or a software roll-up, and a continuation vehicle for that asset will never be the headline but will clear. Multiply that by the hundreds of sponsors sitting on similar assets and the secondaries market's dry powder has an obvious escape valve.

For limited partners, the bifurcation is not an abstraction: the secondaries funds they backed are now telling them that deployment will come through a stream of single-asset CVs, not a few portfolio trades, which changes the fee and carry math. Single-asset CVs are more labor-intensive for the manager and more idiosyncratic for the LP, but they also offer transparency into the underlying company. LPs who insist on diversified portfolio exposure may be waiting longer than they expect; LPs who accept single-asset underwriting risk will get capital called more steadily.

The next test is whether the large LP portfolio market reopens fast enough to absorb the capital still waiting at the top; until it does, the deals that clear will look more like fitness equipment and shipping franchises than software unicorns.