Buyout firms are leaning more heavily than ever on continuation funds as traditional exits via IPOs or sales to outside buyers dry up, the Financial Times reports. Continuation funds accounted for USD 41 bn of exits in 1H 2025 — equal to 19% of all private equity sales, and 60% more than the same period last year, the FT reports, citing a recent report from investment bank Jefferies.

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That’s a record share as sponsors struggle to return capital to investors amid a prolonged slowdown in public listings and M&A agreements. The secondary market — where buyout firms and institutional investors can trade stakes — has also seen a boom in activity, with over USD 100 bn of holdings changing hands.

How it works: The continuation mechanism essentially allows the firm to sell portfolio companies to itself by transferring their assets to one of its internal funds. Investors can either cashout or roll over into the new vehicle. In theory, that gives buyers and sellers more time to realize value. In practice, it’s also a way to recycle capital and keep fee streams alive.

PE groups are holding upwards of USD 3 tn in unsold assets and are approaching a fourth year of subpar distributions to investors. “The exit environments are challenging and the IPO market is dormant,” Jefferies global co-head of secondaries Todd Miller told the Financial Times.

Despite the boom, continuation funds are not the preferred route for PE investors, with just one-sixth preferring continuation funds over traditional exits and nearly two-thirds saying they’d rather see sponsors sell via IPOs or M&A, according to a Bain & Co survey.

Still, it’s here to stay: Jefferies’ global co-head of secondary advisory Scott Beck expects “most sponsors will plan to do one or two” continuation funds out of every new fund, calling them a “bona fide exit route.”

TASI

10,946

-0.4% (YTD: -9.1%)

MSCI Tadawul 30

1,408

-0.3% (YTD: -6.7%)

NomuC

26,898

+0.5% (YTD: -14.5%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

5.0% repo

4.5% reverse repo

EGX30

34,125

+1.0% (YTD: +14.7%)

ADX

10,340

+0.4% (YTD: +9.8%)

DFM

6,150

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S&P 500

6,389

+0.4% (YTD: +8.6%)

FTSE 100

9,120

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Euro Stoxx 50

5,352

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Brent crude

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Natural gas (Nymex)

USD 3.11

+0.5%

Gold

USD 3,393

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BTC

USD 117,970

+0.3% (YTD: +16.1%)

Sukuk/bond market index

913.77

0.0% (YTD: +1.3%)

S&P MENA Bond & Sukuk

146.17

0.0% (YTD: +4.5%)

VIX (Volatility Index)

14.93

-3.0% (YTD: -14.0%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.4% on Thursday on turnover of SAR 4.9 bn. The index is down 9.1% YTD.

In the green: Azm (+10.0%), Northern Cement (+6.3%) and Obeikan Glass (+6.2%).

In the red: Sport Clubs (-7.3%), Gulf Union Alahlia (-4.6%) and Care (-3.5%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.5% on Thursday on turnover of SAR 22.3 mn. The index is down 14.5% YTD.

In the green: Apico (+17.7%), Amwaj International (+9.9%) and TMC (+9.9%).

In the red: Alrasheed (-3.3%), Mulkia (-3.1%) and Nofoth (-2.7%).

CORPORATE ACTIONS-

First Milling’s board approved distributing SAR 81.7 mn in dividends for 1H 2025 at SAR 1.48 per share, according to a disclosure to Tadawul. The distribution date is set for 20 August.

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