How do LP-led secondary transactions generally occur?

LP-led secondary transactions typically occur when limited partners sell their interests to other investors. This process allows limited partners (LPs) to liquidate their investments prior to the fund’s winding down, enabling them to access capital more quickly than waiting for the fund to sell its underlying investments. These transactions are particularly important in private equity as they provide liquidity in a market that traditionally has been illiquid.

In this context, the focus on limited partners selling their interests highlights a specific aspect of secondary market transactions, where existing investors look for new buyers for their commitments in a fund. This can happen for various reasons—LPs may need to reallocate their portfolios, respond to changes in strategy, or address liquidity needs.

The other options, while related to the concept of transactions, do not accurately describe LP-led secondary transactions. The sale of assets by general partners pertains more to the fund's operational activities rather than the specific market transaction occurring between LPs. The exchange of fund interests does not capture the essence of the transaction type, which specifically concerns the sale of interests outright. The issuance of new fund interests to investors does not apply as this relates to capital raising for a fund rather than the sales activity in the secondary market where existing interests are being transferred.