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Hong Kong financial centre
Hong Kong’s viability as a fund management destination for those eschewing the Cayman Islands could swing on the strength of its carried interest tax reform.
Changing fund terms
The changes followed a proposed management buyout that was rejected in a London meeting of the LPAC in the first half of last year, PEI has learned.
The industry organisation is circulating a draft proposal recommending a host of disclosures on GPs’ use of subscription credit lines, with an eye to helping LPs manage exposure to the lines, allocation to PE and overall liquidity.
recycle, trash, rubbish, garbage
These situations are especially relevant in older funds that have deployed most of their capital, with little left to reinvest back into portfolio companies.
Two European LPs have already defaulted on capital calls, and more are rumoured, as LPs get hit with a one-two punch of large, often early capital calls and drying up distributions.
CVC Capital Partners VIII is targeting just under $19bn.
Coronavirus impact on markets
Drawdowns could enable managers to pre-empt liquidity issues arising from the pandemic but may compound the problem for certain LPs.
Travel disruption from coronavirus
Sponsors are also pushing for longer due diligence windows to account for disruption caused by coronavirus and to better understand its impact, a law firm has said.
Recent data from Paul Weiss show the average headline fee rate has dipped below 2%.
Debt line
GPs can avoid potential liquidity issues by drawing down loans early and performing greater due diligence on their lenders.
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