What is one motivation for a GP to pursue a secondary transaction?

A general partner (GP) may pursue a secondary transaction primarily to optimize their portfolio by selling underperforming assets. This strategic decision allows the GP to reallocate capital and focus on higher-performing investments, enhancing the overall performance of the fund. By divesting from underperforming assets, the GP can improve the fund's returns for its limited partners and potentially reinvest the capital into more promising opportunities.

Engaging in secondary transactions can also help to manage liquidity needs within the fund, as it provides a mechanism to realize cash flow from investments that may not meet performance expectations. Additionally, this practice often enables the GP to clean up the portfolio, leading to a more manageable and efficient investment strategy. Thus, the motivation to optimize the portfolio aligns with sound investment management principles, emphasizing the importance of pruning and enhancing the overall quality of assets within the fund.