Continuation Funds in 2026: Beyond Liquidity

In 2026, continuation funds (CFs) remain a positive subplot in the wider LP liquidity story of tightening exit activity and lack of distributions.

Year-end data for 2025 shows accelerating growth, with the number of CFs closed globally rising from 13 in 2018 to 123 in 2025. Aggregate capital raised increased from $9.0bn to $75.0bn over the same period (Fig. 1).

And CF growth is likely to continue. Continuation funds accounted for 12.4% of direct private equity fundraising in 2025, up from 1.2% in 2018 – meaning more than one dollar in eight raised to invest in private companies last year was earmarked for assets already in private equity hands (Fig. 5).

Fig. 1: The rapid rise of continuation funds continued in 2025 
Number of continuation funds globally and aggregate capital raised

_{Source: Preqin Pro. Data as of March 2026}

Some of that recent acceleration is clearly cyclical, reflecting a weaker exit environment and continued pressure on distributions. But growth, now across multiple years, combined with the rising share of direct private equity fundraising flowing into CFs, suggests the structure is also becoming more embedded in how private markets manage ownership and liquidity.

CFs are often viewed as a choice given by GPs to LPs. Investors can roll into a new fund and help back what could be a future unicorn, potentially over a shorter time frame. Or LPs can shake hands and receive the liquidity they are likely searching for in the current low distribution environment. With more data available at a fund, deal, and performance level every quarter, it is now possible to better test this choice.

Continuation funds and portfolio management

In 2026, continuation funds have continued their steady evolution from a cyclical trend to a structural tool. This evolution is likely to accelerate. Constrained exits may be increasing CF adoption now, but wider LP familiarity, repeat GP issuance, and a larger role in portfolio management suggest CFs are unlikely to retreat fully once the exit cycle improves.

Since 2021, there has been a sustained run of record-breaking CF activity by fund count, with 2023, 2024, and 2025 setting consecutive new highs. 2021 and 2025 stand out as record capital-raising years. 

Activity has been split between single- and multi-asset funds. Single-asset capital raised grew from $1.8bn in 2018 to $40.2bn by year-end 2025. Multi-asset grew from $7.2bn to $34.8bn over the same period.

In 2022, cumulative single-asset CF capital overtook multi-asset for the first time. This confirmed the shift toward ‘trophy asset’ CF structures and the end of GPs using CFs to park underperforming funds, or ‘zombies’ as they are known.

Many CFs today are created by GPs to isolate a high-conviction company, reset economics, bring in fresh capital, and extend a value-creation thesis that GPs (and some LPs) believe has further to run.

This single-asset trend carries a notable risk profile – often one company, one sector, one region. But the evolving role of these funds puts pressure on LPs to fully understand the data and its implications. LPs increasingly need to treat single-asset CFs as portfolio-construction decisions – with implications for concentration limits, stress testing, and exposure to a single company, sector, region, or GP.

Our series of three blogs focuses on:  

Continuation fund growth since 2018:
Tracking the journey from liquidity tool to their emerging place at the center of fund management, and diving into the data needed for critical decision-making in the coming years.

Deals and portfolio companies: 
Industry and region concentration of the portfolio companies at the heart of single- and multi-asset CFs.

Performance and LP profile: 
The performance of CFs, measured against the central thesis that these are ‘trophy assets’ that can offer performance growth and a quicker path to distributions. And how the LP profile breaks down since 2018.

Continuation fund growth since 2018

CF activity is broadening globally, but North America continues to lead the way. GP count in North America climbed from 7 in 2018 to 68 in 2025, with capital raised hitting $46.3bn. Meanwhile, in 2025, Europe truly joined the continuation fund party. The total number of CF GPs in Europe increased from 5 in 2018 to 40 in 2025, with capital raised rising to $26.6bn (Fig. 2 and 3).

Fig. 2: North America leads but Europe is catching up 
Total number of continuation fund GPs by manager region

_{Source: Preqin Pro. Data as of March 2026}

Fig. 3: North America capital raised nears $50bn 
Aggregate capital raised by manager region

_{Source: Preqin Pro. Data as of March 2026}

The fact that 5.5% of all funds raised (globally and across all asset classes) flowed into CFs in 2025 should raise eyebrows for those looking to stress test any concentration within their portfolios (Fig. 4).

Fig. 4: Continuation funds took a larger share of total capital raised in 2025
Continuation funds as a % of total global fundraising activity across all asset classes

_{Source: Preqin Pro. Data as of March 2026}

With a total of 12.4% of direct private equity fundraising flowing into existing investments, the industry is facing a challenge of how to understand, test, and report on these funds as they become part of the new normal in 2026 and beyond (Fig. 5).

At the same time, the growing share of first-time CF managers raises questions about manager selection and risk that feed directly into operational due diligence and exposure monitoring frameworks.

Fig. 5: 12% of capital raised for private company investment was rolled over into existing investments
Continuation funds as % of total direct private equity fundraising

_{Source: Preqin Pro. Data as of March 2026}

At the end of 2025, debutants made for a significant percentage of both capital raised and funds closed. The total number of first-time CF managers hit 79 in 2025, up from 75 in 2024, while aggregate capital raised rose to $37bn from $29.2bn the previous year (Fig. 6).

Fig. 6: Steady growth of first-time continuation funds, but have they peaked?
Number of first-time continuation funds, aggregate capital raised ($bn)

_{Source: Preqin Pro. Data as of March 2026}

However, the peak year for first-time CFs is now likely in the past. The 64.23% of funds closed and 49.36% of capital raised in 2025 coming from first-time fund managers is at the lowest point in the last eight years. This suggests that if the number of CFs closed continues on its current trajectory, GPs will increasingly be bringing their second, third, or fourth CF to market in the years to come.

In turn, the flow of data on exits, performance, and distribution will help distinguish the best from the rest when it comes to GPs across CFs, and give more detail on the time horizons, regions, and industries needed for this approach.

In our report US Buyouts 2026: Deals, Exits, and Fundraising, Preqin tracked a $989bn global buyout backlog, or ‘exit overhang’, of portfolio companies held for five years or more, as of early 2026.

The problem has crossed over into CFs, challenging the central premise of a shorter and more direct path to growth and exit.

As shown in Fig. 7, 416 CFs are active and under five years old, representing $214.9bn of capital raised. However, 23 funds at $15.4bn are already five years old and 38 funds at $31.3bn are over six years old. That’s $46.7bn of CF value that may be approaching or beyond the typical holding period.

Fig. 7: Nearly $50bn of capital in continuation funds is over five years old  
The continuation vehicle 'exit overhang': % of continuation vehicles over five years old and their aggregate value

_{Source: Preqin Pro. Data as of March 2026}

These developments suggest that CFs are evolving into a rapidly maturing sub-asset class and are no longer just an opportunistic workaround or liquidity tool.

At the same time, the overhang data in Fig. 7 ($46.7bn of CFs are five years old and over) suggests the market now needs the same transparency, benchmarking, and exposure-management rigor that is applied to buyout and private credit.

Meanwhile, a new trend in CFs that emerged in 2025 is the amount of capital rolling from one continuation fund into another (Fig. 8).

Fig. 8: CFs rolling into new CFs was an emerging trend in 2025  
Continuation funds rolled into further continuation funds

_{Source: Preqin Pro. Data as of March 2026}

As the CF growth story continues, there are two distinct views: one paints it as a sign of growing maturity and confidence in the approach; the other view is that CF growth is simply further evidence of capital being recycled rather than returned.

Either way, for Aladdin and Preqin users, that means CFs should be modeled, benchmarked and stress-tested as a first-class exposure – not as a footnote to secondaries.

The second blog in this series, on deals and portfolio companies, can be viewed here and the third blog, on performance and the LP profile, here

Continuation fund FAQs 

What is a continuation fund in private equity?

A continuation fund is a GP‑led structure that moves one or more assets from an existing fund into a new vehicle managed by the same sponsor, typically giving existing LPs a choice to sell for liquidity or roll into the new vehicle.

What is a ‘continuation vehicle’ (CV) – is it different from a continuation fund?

A continuation vehicle (CV) is the new vehicle created in a sponsor‑initiated (GP‑led) process; ‘continuation fund’ is commonly used to describe the same outcome in fund terms – usage varies, but both point to the same GP‑led transfer-and-election mechanics.

What are secondaries in private markets?

Secondaries are transactions that provide liquidity by allowing existing investors to sell fund interests or assets to new buyers, spanning both LP‑led and GP‑led (sponsor‑led) segments.

Where do continuation funds sit in the secondaries universe?

Continuation funds sit within GP‑led secondaries (sponsor‑led transactions), which have grown from a small segment into a major and increasingly complex part of the secondaries market.

What’s the difference between LP‑led and GP‑led secondaries?

In LP‑led secondaries, an LP sells its fund stake; in GP‑led secondaries, the sponsor initiates a transaction (often a continuation vehicle) and offers existing investors the option to sell, roll, or reinvest on new terms.

When are continuation funds typically used?

Continuation funds are typically used when GPs want to extend holding periods and/or access fresh capital to keep developing assets – particularly when exits are slower or fund timelines are tightening.

Why do GPs use continuation funds?

GPs use continuation funds to retain assets they believe still have upside, while providing LPs with an optional liquidity event and often resetting terms to align incentives for the next phase of ownership.

Why would an LP choose to roll into a continuation fund rather than take liquidity?

LPs may roll when they want to maintain exposure to an asset they still believe can grow – but rolling requires re‑underwriting and can be challenging when many LPs are simultaneously seeking liquidity.

How is a continuation fund different from the original (legacy) fund?

A continuation fund is a new vehicle that acquires assets from the legacy fund, may involve different governance/economics, and often brings in new capital – while the legacy fund moves closer to winding down after the transfer.

What’s the difference between ‘zombie’ continuation funds and today’s ‘trophy asset’ continuation funds?

Earlier continuation fund use cases were often associated with tail-end/underperforming ‘zombie’ portfolios, whereas recent activity has shifted toward single-asset, high-conviction deals designed to extend ownership of ‘trophy’ assets.

Disclaimer

_{The opinions and facts included within this report do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin accepts no liability for any decisions taken in relation to this report.}

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