The top 10 firms in this year’s SI 30 account for nearly three-quarters of the total amount raised over the last five years. This concentration of money in the hands of a few firms is only going to intensify in the next few years as at least seven of the top 10 are raising mega-funds this year.

The largest offerings come from the ranking’s leaders, Ardian and Lexington Partners, which are each seeking $12 billion. Lexington was set to hold a first close on $9 billion-$10 billion earlier this summer, according to two sources familiar with the matter.

Although it is the first time since the inception of the secondaries market that so many large players are raising such large vehicles at the same time, it doesn’t seem to be hindering fundraising, and so far, funds are on track to meet or exceed their targets, according to market participants.

“I haven’t necessarily heard a lot of concerns,” says Andy Nick, a managing director at Greenhill Cogent. “Based on early discussions, people who have backed them historically seem to be backing them again.

“Certain firms have doubled their fund size every time they have gone out. They had certain LPs grumble and say ‘I’m not sure whether it’s fully scalable to support the same return levels’ but they still backed them, and I guess time will tell what the returns will look like. They didn’t seem to have any problem raising that new and bigger fund last time.”

Macro trends

It’s not all plain sailing of course. Secondaries funds are subject to the same trends affecting the wider private equity fundraising market, says Mark McDonald, global head of private equity at DWS.

“LPs are committing more capital to fewer managers and expect the dispersion of returns in secondaries funds going forward to be higher,” he says. Those with strong performance and a differentiated approach in terms of deals, size or reach should benefit from these trends, while more generalist funds may face headwinds, he adds.

As far as deployment goes, the top firms are diversified enough in terms of strategies and geographies that, although they may compete on deals, there are enough transactions to put the money to work.

“They all do very diverse things,” says Nick. “When you take the variety of the underlying supply that they buy from a strategy perspective, but also from a geography perspective, even from a deal-type perspective, the secondaries funds end up looking pretty different.”

Another concern could be whether the spike in mega-funds raising this year will signal a huge drop in 2019, but that won’t be the case. Several of the large funds will stay open until the beginning of 2019 to accommodate investors.

Based Private Equity International methodology, which counts total money raised at final close, 2019 is likely to be a healthy fundraising year in the secondaries market.

The wild card is how an economic downturn, when it comes, will impact fundraising. But for now, the secondaries giants are only getting bigger.

Find the full ranking here.