Sustainable Infrastructure and Energy Transition - Secondaries Market Overview.

A secondaries GP-driven transaction in which a private markets / private equity General Partner (GP) arranges for existing assets in one of its funds to be sold to a new or continuation vehicle, often to extend the holding period or unlock liquidity for existing investors (Limited Partners or LPs). Proposed Scenario - Fund I (near end of life) holds a portfolio of assets. The GP creates a continuation vehicle (Fund II), transfers the asset, and brings in secondary investors to Fund II. Fund I’s LPs receive liquidity or can reinvest in Fund II.

Key Aspects:

PurposeProvides liquidity to LPs who want to exit early.Gives the GP more time to manage and potentially grow the asset’s value.Can refresh capital to pursue new investments.

StructureA GP selects one or more assets from an existing fund and transfers them to a continuation fund (a new vehicle).Secondary investors buy into this new vehicle, providing liquidity to the LPs in the original fund.Existing LPs may either “roll over” their investment into the continuation fund or cash out.

MotivationPortfolio companies with strong growth potential may require additional time and capital beyond the typical 7-10 year fund life.GPs can crystallise performance fees (carried interest) by realising part of the value.

BenefitsGPs: Retain high-performing assets while generating liquidity.LPs: Gain flexibility—either cash out or stay for potential upside.Secondary Investors: Access mature, lower-risk assets with clearer exit horizons.

For a low-yielding green sustainable infrastructure fund, a GP-driven secondaries transaction can offer several strategic benefits vis a vis the following

In essence, a GP-driven secondary transaction helps unlock trapped value, align long-term sustainability goals with investor flexibility, and ensure critical green energy projects reach their full potential.

Challenge	Benefit
Liquidity for Existing LPs Green infrastructure projects, such as wind or solar farms, often have long development and return horizons.	Existing LPs seeking liquidity before project maturity can exit early without disrupting the asset's long-term strategy.
Extended Investment Horizon Sustainable energy projects might take longer to reach full operational efficiency and generate target returns.	A continuation fund extends the asset's life, allowing the GP to maximize value over a longer period without a forced sale.
Enhanced Capital for Asset Optimisation Low yields may limit reinvestment in technology upgrades or capacity expansion.	Secondary investors can inject fresh capital into the continuation fund, enabling asset improvements (e.g., grid upgrades, battery storage) that enhance future returns.