How Can Secondaries Bring Liquidity to Cash-Constrained Fully Invested Funds?
Both on the venture and buyout side, fully invested funds face a widespread challenge: there are no exits in sight and the portfolio cannot access capital. Countless firms, including KKR, Bessemer Ventures and in a way, Bain Capital, have entered the market with annex funds to prop up their fully invested vehicles. Meanwhile, firms like KPS Capital and Leonard Green Partners have loosened recycling permissions on their funds, meaning they negotiated for more flexibility to re-invest proceeds on their portfolio companies back into the portfolio, rather than distribute it directly to investors. If those solutions aren’t an option, secondary funds can help. According to panelists at today’s Private Equity Secondaries Conference in New York, there are a few ways secondary buyers are easing mature fund pain.
