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| Good afternoon. In today's Daily Pitch, we unpack what's driving the rise in LP secondaries, KKR's $2.2 billion exit in the defense industry and insights from our US VC Valuations and Returns Report, sponsored by Morgan Stanley at Work. |
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| LP secondaries soar with influx of first-time sellers |
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By Emily Lai, Private Equity Reporter
LP-led secondary deal activity has surged as investors, many of whom are selling for the first time, seek more liquidity for their portfolios.
While GP-led secondaries remain a major driver of growth in the secondaries market overall, LP-led secondaries volume has also been increasing.
According to investment bank Jefferies, LP-led secondary deal volume reached $56 billion in the first half of 2025, representing a 40% increase from H1 2024 and accounting for 54% of the overall secondaries deals in the market. Similarly, 2024 recorded 45% growth in volume, compared with just 7% the previous year.
"The seller universe is broader and more established than it has ever been," said Philipp Patschkowski, managing director at Neuberger Berman and the firm's European secondaries strategy lead. |
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Patschkowski estimated 40% of LP stake sellers last year were first-timers, as LPs are increasingly proactive about putting assets up for sale.
The reasons are twofold. First is the lackluster exit market. According to PitchBook data, there have been just 5,306 private market exits so far this year, compared to the 6,896 in 2024. The limited distributions to LPs are expediting their decision to sell as the ultimate investors demand to see returns on the investments they have made.
More LPs are also using the secondary market to create liquidity for portfolio rebalancing. With PE fund terms often extending beyond the traditional 10 to 12 years, there is a growing need for LPs to adjust their portfolios. |
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| A message from J.P. Morgan |
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| Building long-term partnerships for every stage of growth |
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Every company’s exit story is unique — shaped by ambition, timing, and relationships built along the way. J.P. Morgan is committed to being a long-term partner through each stage of growth, helping leadership teams think strategically about liquidity, valuation, and legacy. J.P. Morgan’s global reach and deep sector expertise allows it to connect clients with the right opportunities and counterparties when the time comes to transition or scale. J.P. Morgan believes thoughtful preparation starts well before the exit moment. Learn more about the current environment and key considerations in the J.P. Morgan 2025 EMEA Exit Report. |
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• Apollo Global Management will buy a majority stake in Spanish soccer club Atlético de Madrid, marking the first investment from its new $5 billion sports fund, Apollo Sports Capital. Read more
• Morningstar and PitchBook announced the upcoming launch of indexes designed to measure the performance of evergreen funds. Learn more here
• KKR has sold aerospace and defense components maker Novaria to Arcline Investment Management for $2.2 billion. The sale highlights how rising US defense spending is driving deals across the sector. Read more |
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| US VC valuations hit new highs as investor returns lag |
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By Kyle Stanford, Director of US Venture Research
Across all VC stages, the median pre-money valuation is now as high or higher than 2021 levels, according to our Q3 2025 US VC Valuations and Returns Report.
Investor competition for AI deals has added a significant boost to valuations. And multi-stage VC firms' more aggressive move into early-stage deals has also inflated valuations, thanks to these firms' looser discipline when it comes to valuations.
With that, the median seed pre-money valuation reached $13.9 million in Q3.
But returns continue to lag. The rolling 1-year IRR for the VC market is just 3.1%, and cash flows back to LPs have been in negative territory since 2022. Additionally, VC funds of the 2020 vintage have the lowest total value to paid-in (TVPI) after five years of any vintage since 2010.
With valuations again reaching record highs, the market has another reason to worry about future fund returns. |
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This stark contrast puts additional pressure on the liquidity market.
More tech unicorns have gone public in 2025 than in recent prior years, although the overall IPO count for 2025 is likely to be only on par with the prior three years.
Large-scale M&A hasn't quite had the expected comeback for the year, and 2026 could be a make-or-break time for many VC firms.
For now, valuations continue to rise as dealmaking increases and AI startup costs decrease. Perhaps the rush of liquidity the market has hoped for might not be far behind. |
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Smart reads that caught our eye.
• The AI hype is outpacing electricity infrastructure. Investors have funneled money into data center projects, but empty California developments show that local utilities don't have the capacity to support them. [Fortune]
• The EU is easing back on personal data use regulations in the AI sector. A new draft law will simplify the AI Act in order to hopefully spur growth in the industry across Europe. [Bloomberg]
• "Normal people" should be able to invest in booming AI startups, Robinhood's chief executive says. Robinhood Ventures plans to offer tradeable shares in a fund that allows access to private AI companies. [ | | | | | | |
