It’s full steam ahead for the secondaries market. As of late November the top 10 largest secondaries funds were seeking a combined $51 billion, according to PEI data. This includes the latest vehicles from Ardian and Lexington Partners, both seeking $12 billion – the largest amount ever sought for the strategy.

It will be of comfort to these large firms that LP appetite for the strategy remains strong. According to the PEI LP Perspectives Survey 2019, at nearly half of LPs plan to commit to secondaries funds over the next 12 months, a sign that high pricing for second-hand fund stakes and falling returns for the strategy have not deterred LPs just yet.

“It looks like the strategy is firmly anchored in LPs’ investment agendas and is here to stay,” says Bernhard Engelien, a managing director at advisor Greenhill.

LP portfolios or “plain vanilla” transactions comprised the bulk of deal volume in the first half of this year. Looking into 2019 secondaries buyers can rest easy in this part of the market: according to the survey, just under half of LPs plan to be active in the private equity secondaries market either as a buyer, a seller or both.

The picture is less rosy in other asset classes, with around 20 percent of LPs in real estate and infrastructure and around 7 percent in private debt saying they plan to buy or sell interests.

“It has become much more a part of normal business for LPs to manage their portfolios in private equity but other strategies are lagging behind,” Engelien says. While the survey results for real estate are surprising, most infrastructure investors are pension funds and life insurers that are typically underallocated to the asset class, and therefore selling has “not really been a topic” for them, Engelien says. Private debt, meanwhile, is too young an asset class to see meaningful deal volume, although Greenhill is seeking second-hand stakes in some senior lending funds coming to market, he adds.

But when it comes to GP-led transactions – secondaries processes such as fund restructurings or stapled tender offers which are initiated by a manager – many LPs remain sceptical, with more than one-third feeling the costs were unfairly divided between the GP and the fund, according to the survey.

With the Securities and Exchange Commission’s fining of buyout firm Veronis Suhler Stevenson in September in relation to a GP-led secondaries deal, and the Institutional Limited Partners Association set to issue guidance next year on such transactions, there will be increased pressure on GPs over the next 12-18 months to provide greater transparency.

“There will certainly be greater emphasis on having LPs’ interests being better represented in these types of transactions,” Engelien says.