Northleaf has raised $908 million CAD for its fourth secondary fund at the perfect time.
Amid a lack of distributions from initial public offerings (IPOs) and mergers and acquisitions (M&A), secondaries have become an increasingly popular means of generating liquidity—and these days, the market is booming.
Global secondary volume hit a new high of $103 billion USD during the first half of 2025, according to the latest semi-annual review of the secondary market released by the global investment bank Jefferies. This is an “unprecedented” 51 percent higher than the prior record of $68 billion, set in the first six months of 2024, and puts 2025 on pace to be “a landmark year” for secondaries, the report says.
Secondary investments include purchases of equity stakes in companies from existing shareholders (including founders, employees, and other investors) and fund interests from general partners (GPs) or limited partners (LPs).
Global secondary volume hit an all-time high of $103 billion USD in H1 2025.
Tough venture capital (VC) fundraising conditions have added fuel to the red-hot secondary market. Fuelled by macroeconomic and geopolitical uncertainty, the continually cool exit environment has hamstrung GPs’ ability to exit their investments and return cash to LPs, which has led some to explore secondaries.
“The lack of IPOs and the lack of M&A is really triggering,” the lack of market liquidity, Maverix Private Equity founder and managing partner John Ruffolo recently said on the Tank Talks podcast.
Ruffolo noted that Canadian pension funds are using secondaries to rebalance their liquidity on a regular basis.
“As long as the VCs in particular are not exiting out, you’re going to see more and more pressure on these secondary transactions,” Ruffolo added, asserting that there are still “a lot of zombie assets sitting in venture funds.” Zombie assets are companies that are neither top performers or on the verge of shutting down, but floating around somewhere in the middle.
Some established Canadian tech firms have turned to secondary deals as a means of cleaning up their cap tables, generating liquidity for founders, employees, and early backers, and giving themselves the flexibility to stay private for longer and continue building for a larger outcome. Clio, Fispan, Jane Software, and Safe Software are among the companies that have executed sizeable secondaries since the beginning of 2024.
According to Jefferies’ report, LP volume accounted for more than half of overall activity in the first half of 2025 as LPs increasingly turned to secondaries “to generate liquidity, rebalance portfolios, and manage overallocations, particularly as traditional exit channels remain subdued.”
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On the GP front, Jefferies reported that the entrance of new investor groups, from institutional investors to specialized secondary funds, has helped fuel this increase.
The research found that VC and growth GPs have increasingly pursued secondary deals thanks to factors like persistently low distributions for mature-vintage funds, a big pool of late-stage VC-backed firms with strong growth and profitability, and the rise of specialist and generalist investors participating in these deals.
Secondary transactions accounted for $82 million of the $231 million in VC exits and $41 million of the $130 million in private equity (PE) exits that took place in Canada during the first quarter of 2025, according to Canadian Venture Capital and Private Equity Association data.
Toronto-based private investment firm Northleaf Capital Partners is no stranger to secondaries: According to the firm’s website, over the last 20-plus years, it has made more than 135 secondary investments and committed over $4 billion towards secondaries.
Through its secondary platform, Northleaf offers investors access to PE investments in LP-led and GP-led secondaries alongside mid-market sponsors. The investment firm also backs VC funds and growth-stage technology companies.
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As first reported by The Logic, Northleaf recently raised nearly $663.5 million USD (approximately $908 million CAD) for its fourth secondary fund, according to a United States (US) Securities and Exchange Commission (SEC) filing from earlier this month.
Northleaf declined BetaKit’s request for comment on the fund, which it initially disclosed plans to raise in a July 2024 SEC filing.
The firm previously closed $1.3 billion USD for its third and largest secondaries fund to date in early 2023. It remains unclear how much additional capital, if any, Northleaf plans to raise for its latest secondary fund beyond the $663.5 million USD it has disclosed to date.
A January 2025 filing in Canada’s securities disclosure system, SEDAR, indicates that at least 22 investors have contributed to the fund so far, and Canadian backers have provided the majority of the capital (nearly $670 million CAD).
Northleaf managing director Matthew Sparks recently told the website Buyouts that mid-market secondaries have thrived lately as volatility has hampered exit activity and PE fund distributions, and said he expects to see “compelling opportunities for secondary managers” for the rest of this year.
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“It’s a very robust secondary market, so I think it’s great timing on Northleaf’s part,” Pender Ventures managing partner Maria Pacella told BetaKit in an interview.
Pacella acknowledged that demand for secondaries has been on the rise lately, and said she anticipates more investors will look to sell stakes in individual companies and funds, from discounted transactions that arise from a need for liquidity to sales at a premium by successful firms like Clio and Jane.
At least half of Vancouver-based Pender’s investments to date have involved some form of secondary, and this was how the firm bought into its two biggest winners in Jane and Copperleaf Technologies.
Pender and Northleaf are not the only Canadian funds that see opportunity in the secondary market. Kitchener-Waterloo’s True North Fund focuses on investing in growth-stage Canadian technology companies primarily through secondaries. The True North Fund completed the second close of its first fund last year with $100 million CAD in total commitments towards its $200-million target, and its most recent investments include Clutch and PurposeMed.
Pinegrove Capital Partners, a joint vehicle from Toronto-based Brookfield Asset Management and Silicon Valley’s Sequoia Heritage, also plays in the secondary space, while Vancouver-based FinTech startup Hiive helps facilitate secondary sales.
Pacella said the Canadian tech ecosystem could see more dedicated secondary funds emerge amid these conditions, as well as growth funds that do secondaries more often as part of their overall mandate. Inovia Capital CEO Chris Arsenault told BetaKit last year that the firm has allocated a portion of its Growth Fund towards secondary.
Feature image courtesy Northleaf Capital Partners.