Secondary Market Vehicles in EMDEs: Lessons and Implications for Development Actors
Credible exit routes are essential for stronger capital markets in EMDEs. But many developers and fund managers still face limited options for selling down assets or exiting long-term holdings. This slows fundraising and constrains capital flows into impactful investments. This report, authored by ThirdWay Partners and supported by MOBILIST and British International Investment, examines how scalable secondary market vehicles can help address these constraints.
Why secondary market vehicles matter in EMDEs
“Primary market development happens because of secondary market development. You need something that allows investors to exit."
Weak exit routes and limited liquidity constrain capital markets in emerging markets and developing economies (EMDEs). Across infrastructure and real estate, project developers often struggle to sell down or refinance operating assets, which slows capital recycling and constrains their ability to originate new projects. In private equity, fund managers face challenges exiting long-dated investments, extending holding periods and reducing the pace at which capital is returned to limited partners and redeployed into new funds.
Scalable secondary-market vehicles can help address these constraints by providing structured exit pathways for existing investors, improving liquidity, and enabling more effective capital recycling. This report focuses on secondary vehicles that take equity ownership in assets, rather than on debt-pooling vehicles. It covers infrastructure and real estate vehicles as well as private equity secondaries, drawing on market mapping, case studies (full case studies in Appendices), quantitative benchmarks, and interviews with market participants.
Where secondary vehicles are emerging and key drivers
Secondary market vehicles are complementary market-building tools rather than standalone solutions.
- The analysis shows that the development of secondary vehicles is limited in number but gaining momentum in specific markets and asset classes. Case studies from India, Mexico, South Africa, and Kenya illustrate that where supply, demand and system enablers are in place, these vehicles can scale and play a meaningful role in capital market development.
- In infrastructure and real estate, vehicles such as Infrastructure Investment Trusts (InvITs), YieldCos, and Real Estate Investment Trusts (REITs) demonstrate how pooled, income-generating assets can be transferred into investable formats that support predictable exits and attract longer-term capital.
- In private equity, secondary activity has historically been more constrained, particularly in Africa and South Asia, where weak exit environments and inconsistent valuations have contributed to long-dated or “stuck” capital in tail-end and underperforming funds.
- The report documents the gradual emergence of private equity secondaries in markets such as Brazil, India, and parts of Africa, including both Limited Partner (LP)-led and General Partner (GP)-led transactions.
Public and private secondary vehicles: roles and trade offs
Public and private secondary vehicles serve different roles depending on market depth
A key theme in the report is that public and private secondary vehicles serve different roles depending on market depth, asset characteristics, and macroeconomic conditions. Public vehicles can broaden participation and improve transparency where markets are sufficiently deep and stable, but they also face higher thresholds around scale, governance, and liquidity. Private and unlisted vehicles can operate more flexibly in thinner or more volatile markets, though often with narrower investor bases and weaker benchmarks. Successful market development depends on matching vehicle design to local conditions rather than replicating models wholesale.
The role of development finance institutions (DFIs).
The ability of DFIs to take these actions depends on expanding mandates and incentives, including recognising secondary market creation and capital recycling as development outcomes.
The report concludes with a discussion on the role of development finance institutions (DFIs) and other development actors. For example, in infrastructure and real estate, DFIs can play a catalytic role by anchoring early pilots and working with regulators and exchanges to refine vehicle structures in markets where asset pipelines and institutional participation are already emerging. In private equity, DFIs are LPs in many ageing EMDE funds where exit routes are constrained. In the short term, unlocking liquidity may require DFIs to recognise losses rather than holding positions indefinitely.
Longer-term progress depends on supporting purpose-built secondary vehicles that can provide repeatable exit pathways and improve capital recycling across the market. The ability of DFIs to take these actions depends on expanding (and in some cases shifting) mandates and incentives, including recognising secondary market creation and capital recycling as development outcomes.
CASE STUDIES
Experiences from case studies in EMDEs and developed markets provide lessons on the tools that could be adapted.
YieldCos in the United States
YieldCos are vehicles that pool multiple operational infrastructure assets (often in renewable energy) to provide exits for project developers and enable capital recycling into new projects. In turn, YieldCos distribute a significant portion of operating cash flows to investors as dividends.
This case study explores the rise and subsequent correction of the U.S. YieldCo market following its launch in 2013, and analyses the challenges faced by SunEdison’s YieldCos. It assesses the impact of YieldCos on market functioning and sustainable development in the U.S. – by providing reliable and repeatable exit routes, they shortened holding periods and lowered required returns, while supporting significant growth in renewable energy. The case study concludes by outlining the supply, demand, and system enablers which supported the initial success of YieldCos in the U.S.
Infrastructure Investment Trusts (InvITs)
Infrastructure Investment Trusts (InvITs) allow infrastructure developers to monetise operational projects by pooling assets into a single investment vehicle. Structured as trusts, InvITs can be publicly listed or privately listed.
This case study reviews the growth of the InvIT market in India, from a single vehicle in 2018 to 27 in 2025, and shares insights on IndiGrid, the first listed power-sector InvIT. It analyses how increased liquidity has impacted the infrastructure market – accelerating capital recycling, lowering the cost of capital, and supporting faster fundraising, alongside employment growth and infrastructure transformation. The case study concludes by outlining the supply, demand, and system enablers which have supported the expansion of InvITs.
Real Estate Investment Trusts (REITs) in Mexico
Real Estate Investment Trusts (REITs) are structured investment vehicles that hold, operate, and in some cases develop income-generating real estate. In Mexico, these vehicles operate as irrevocable trusts known as FIBRAs.
This case study traces the development of the Mexican REIT market from their introduction in 2011 to more than a dozen listed vehicles in 2025, representing c.USD 50 billion in investment properties. It shares insights on FIBRA UNO, the first FIBRA, which now has over 600 properties across diversified real estate segments. The case study examines how FIBRAs deepened capital markets by broadening the investor base (particularly through pension fund participation) and lowering the cost of capital. They have supported industrialisation and became a platform for the green building agenda. The case study concludes by outlining the supply, demand, and system enablers which have supported the market’s expansion.
Private Market Secondaries
Private market secondaries include Limited Partner (LP)-led and General Partner (GP)-led transactions. LP-led transactions involve the sale of fund interests to secondary buyers, while GP-led transactions typically restructure or extend fund assets, often through continuation funds (both single- and multi-asset). Since their emergence in the U.S. in the mid-1980s, global secondaries markets have expanded significantly, reaching c.USD 162 billion in transaction volume by 2024.
This case study focuses on secondaries market development in Latin America, India, and Africa. It highlights how supportive regulation and global investor participation fuelled growth in Brazil, how macro confidence, global investor participation, and specialised intermediaries strengthened the market in India, and how early momentum in Africa has been constrained by structural and execution challenges. It explores how secondaries vehicles and transactions improve primary market functioning by providing earlier liquidity to LPs, broadening investor participation in capital markets, and accelerating capital recycling.
The case study outlines the supply, demand, and system enablers which have helped secondaries to succeed in some market contexts, and concludes with an overview of liquidity guarantees, NAV lending facilities, and MDB/DFI-backed funds with secondary strategies.
Developed Market Listed Investment Trusts
The UK investment trust market has operated for over 150 years and manages over GBP 250 billion in assets as of 2025. Supported by mature market infrastructure, strong regulation, established governance standards, and confidence from foreign investors, the UK (and other developed capital markets) offers a practical option in the short term for listing investment trusts focused on EMDE markets where capital markets are less developed.
This case study reviews the UK investment trust market, its current challenges, and key lessons, and reviews the Vietnam Opportunity Fund, a London-listed trust invested in over 200 companies in Vietnam. It examines how developed market listings can provide investors with liquidity and exit routes while channelling long term international capital into EMDEs. The case study concludes by outlining the supply, demand, and system enablers for listing EMDE-focused investment trusts in developed markets.