Finance
HIG Capital Enters Secondaries Arena With $1.5 Billion Continuation Fund Strategy
Global Banking & Finance Review®
Company
Alternative asset manager HIG Capital has begun preliminary discussions with investors about raising $1.5 billion for a new fund that would back continuation vehicles created by other private equity firms, according to people with knowledge of the plans.
Alternative asset manager HIG Capital has begun preliminary discussions with investors about raising $1.5 billion for a new fund that would back continuation vehicles created by other private equity firms, according to people with knowledge of the plans.
The Miami-based firm expects to formally launch fundraising in early 2026 for a vehicle that would deploy at least $50 million per transaction across roughly 20 middle-market continuation funds. According to Bloomberg, HIG Capital manages approximately $70 billion in assets and maintains connections with over 800 private equity managers, positioning the firm to source deals across a fragmented market.
Continuation vehicles allow private equity sponsors to retain ownership of portfolio companies beyond typical fund life cycles by transferring assets into new structures. The approach has gained traction as traditional exit options through mergers, acquisitions and public offerings have narrowed amid higher borrowing costs and market uncertainty.
Private Equity Firms Turn to Alternative Exit Paths
Elevated interest rates over the past two years have curtailed buyout activity and IPO windows, forcing private equity firms to explore creative liquidity solutions. Continuation funds have filled that gap, providing existing investors with an option to cash out while enabling sponsors to extend hold periods for assets they believe require more time to mature.
Jefferies Financial Group data indicates continuation vehicles represented 19% of private equity exits in the first six months of 2025, compared with 13% across all of 2024. The increase underscores how market conditions have reshaped portfolio management strategies across the industry.
HIG Capital's planned fund would invest in these continuation vehicles as a limited partner, essentially betting on the ability of other managers to generate returns from seasoned portfolio companies. The strategy differs from traditional secondaries investing, which typically involves purchasing stakes in existing funds across multiple portfolio companies.
Morgan Stanley Team Leads New Initiative
HIG Capital recruited four professionals from Morgan Stanley's private equity secondaries group earlier this year to build out its GP-led transaction capabilities. Dan Wieder, who joins as managing director, will lead the effort alongside managing director Yash Gupta and principals Austin Gerber and Joe Holleran.
The team's collective experience spans several decades of secondaries investing across various market cycles. HIG Capital plans additional hiring and expects to deploy some existing investment professionals to support the secondaries platform over the next 18 months.
Founded in 1993 by Sami Mnaymneh, founder, executive chairman and CEO, and Tony Tamer, founder and executive chairman, HIG Capital has expanded from its core private equity business into credit, real estate, infrastructure and growth equity. The firm operates from offices in multiple U.S. cities and maintains international affiliates in Europe, Latin America, the Middle East and Asia.
Deal flow for the new fund would likely concentrate on sectors where HIG Capital has developed expertise, including business services, industrials, healthcare and consumer companies. The firm has not determined whether it would back continuation vehicles for its own portfolio companies, according to people familiar with the strategy.
Building on Middle-Market Franchise
HIG Capital has maintained an active deal pace throughout 2025 despite broader market headwinds. The firm completed the acquisition of 4Refuel, a Canadian mobile fueling company, from Finning International for up to CAD 400 million in July. That same month, HIG Capital facilitated the merger of portfolio companies Converge Technology Solutions and Mainline Information Systems, creating IT services provider Pellera Technologies with roughly $4 billion in annual revenue.
The firm has also executed multiple exits this year, divesting SoldierPoint Digital Health from Iron Bow Technologies to GovCIO and selling specialty pharmacy platform Soleo Health to Court Square Capital and WindRose Health Investors. These transactions demonstrate HIG Capital's ability to navigate complex carve-outs and create value through operational improvements.
More broadly, HIG Capital has participated in European expansion deals, real estate acquisitions and infrastructure investments across multiple jurisdictions. The firm announced a strategic stake in HELLER Group, a German machine tool manufacturer, and completed several logistics and industrial property acquisitions in France, Norway and the United Kingdom through its real estate division.
Secondaries Market Attracts New Entrants
Several large alternative asset managers have recently moved into the secondaries space or expanded existing platforms. Warburg Pincus, Leonard Green & Partners and New Mountain Capital have all announced plans to raise funds focused on backing other firms' continuation vehicles.
The convergence reflects growing recognition that secondary transactions generate attractive risk-adjusted returns while addressing persistent liquidity constraints across the private equity ecosystem. For incoming investors, continuation vehicles offer exposure to mature assets with proven business models and shorter time horizons compared to traditional buyout funds.
Market participants note that competition for deals has intensified as more capital targets the space. Sponsors launching continuation vehicles can now choose from multiple potential anchor investors, potentially driving up valuations and compressing returns.
HIG Capital's extensive manager relationships may provide some advantage in sourcing opportunities, particularly among middle-market firms that lack established secondary market connections. The firm's operational resources and sector expertise could also appeal to sponsors seeking value-added partners rather than purely financial buyers.
Representatives for HIG Capital declined to comment on the fundraising initiative or discuss details of the secondaries strategy.
The fund would mark HIG Capital's first dedicated secondaries vehicle, though the firm has participated in GP-led transactions on an opportunistic basis through its existing funds. A successful raise would further diversify HIG Capital's product lineup and potentially generate management fees from a growing asset base.
Whether the firm can differentiate itself in an increasingly competitive market remains to be seen. Success will likely depend on deal sourcing capabilities, underwriting discipline and the ability to support portfolio companies through operational improvements rather than financial engineering alone.
Disclaimer :
This article is for informational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any financial product.
This article may contain forward-looking statements based on current expectations and assumptions. Actual results may differ materially. No guarantee of future performance is implied.
A continuation vehicle is a structure that allows private equity sponsors to retain ownership of portfolio companies beyond the typical fund life cycle by transferring assets into new funds.
Private equity refers to investment funds that directly invest in private companies or engage in buyouts of public companies, often with the goal of restructuring and improving their operations.
Market conditions in private equity refer to the economic environment affecting investment opportunities, including factors like interest rates, competition for deals, and the availability of exit options.
Fundraising in finance is the process of gathering capital from investors to support business operations, investments, or specific projects, often through the issuance of securities or investment funds.
A limited partner in private equity is an investor who contributes capital to a fund but has limited liability and does not participate in the day-to-day management of the fund.
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