When the Smart Money Sells: What Yale’s $6B Private Equity Exit Signals for the Secondaries Market

In April, Yale University began quietly marketing one of the largest private equity portfolios ever brought to the secondary market. The sale, internally code-named “Project Gatsby,” offered up to $6 billion in legacy fund stakes from the university’s $41 billion endowment. At first glance, it appears to be a liquidity-driven move. But the structure and timing suggest something broader: a shift in how even the most committed long-term allocators are managing risk, pacing, and duration inside private markets.

This is a response to slower cash flows, rising political friction, and changing assumptions about what institutional resilience requires in the current cycle.

Institutional Liquidity Is Tightening, and Secondaries Are Playing a Bigger Role

Slower cash flows are constraining capital

Private equity firms returned just 15 percent of fund value to limited partners in 2024. That figure represents a significant drop from the 25 to 35 percent range seen in prior years. For institutions like Yale, which draws more than one-third of its annual budget from the endowment, reduced distributions are more than an inconvenience. They present a strategic challenge.

Rebalancing is replacing long-hold conviction

The past two years have already seen large institutions adjust their pacing and allocation schedules. Yale’s secondary sale joins similar moves from Harvard, which is selling roughly $1 billion in private equity stakes, and the New York City Retirement System, which sold $5 billion earlier this year. These sales reflect a growing recognition that long-horizon private investments must now coexist with more dynamic portfolio management.

The secondaries market is evolving into a first-class tool

Yale is reportedly accepting modest discounts in the 5 to 10 percent range. These are not fire-sale conditions. Rather, they show how the secondaries market has become a tactical instrument for high-quality sellers. As traditional exits remain constrained, the ability to actively manage exposure in the secondary market is becoming a hallmark of sophisticated allocation.

What We Can Learn from Project Gatsby

A strategic retreat, not a structural reversal

Yale has been clear that it continues to view private equity as a core component of its investment strategy. The sale focuses on legacy fund interests, including positions with Bain Capital and Golden Gate Capital, while the university maintains commitments to new managers. The move appears to be about recalibrating portfolio composition and duration, not abandoning the asset class.

Deal structure reveals intent

Buyers were presented with two separate pools of funds. The first included “core” positions Yale most wanted to exit. The second offered “sweeteners” designed to make the overall portfolio more attractive. This dual-track structure points to targeted de-risking. Yale appears willing to part with stronger performers to offload older or lower-return assets.

Political headwinds are accelerating financial decisions

Although Yale has not faced the same level of scrutiny as some of its peers, the policy environment is shifting. Proposed federal tax hikes on wealthy endowments, coupled with reductions in federal research funding, have created additional pressure. These dynamics, combined with a restrictive endowment structure, may have helped tip the balance toward a sale.

And yes, the name was deliberate. Yale’s bankers assigned the sale the code name “Project Gatsby,” a subtle reference to the F. Scott Fitzgerald novel. Fittingly, Nick Carraway, the narrator of The Great Gatsby, was a Yale graduate. 

What Family Offices and Advisors Should Take From This

Liquidity needs are not just an institutional issue

Private investors may not face the same regulatory scrutiny or payout obligations as large endowments. Even so, the underlying challenge is familiar. In a cycle where exits take longer and capital calls remain uneven, thoughtful liquidity management is becoming essential at all levels of the market.

Discounts are not a signal of distress

Yale’s sale shows that accepting a slight discount can be a rational, proactive decision. Selling assets at 90 or 95 cents on the dollar may be worth the flexibility it creates. For buyers, it can also present an opportunity to gain exposure to high-quality funds without competing in the primary fundraising market.

Strategic liquidity does not imply a loss of conviction

Yale’s continued commitment to private equity reinforces an important point. Selling part of a position is not a signal that the broader strategy is broken. For advisors guiding clients through similar questions, this distinction matters. Rebalancing and conviction can coexist.