Most LPs believe GPs are well resourced to manage continuation vehicles (CVs), while nearly a fifth of LPs are opting to roll into these deals
Continuation vehicles have rapidly gained acceptance as a means for GPs to hold on to their highest quality assets for longer, while offering LPs the option to roll into the new fund or to sell for liquidity.
In our survey, almost one in five LPs say they typically roll their investment when presented with a CV. This suggests that, while CVs are providing an exit path and liquidity to the large majority (81%) of LPs, a reasonable minority see these transactions as offering the potential for further attractive risk‑adjusted returns.
As the market develops further, we are starting to see continuation vehicles of existing continuation vehicles. LPs are also witnessing this trend, with 62% of respondents saying they have already seen, or expect to see, CVs “squared”
Three-quarters of LPs believe that GPs have adequate to strong resources for managing CVs. This suggests that a sizeable majority of LPs have confidence in GP operational capabilities, even in what is a relatively new and evolving market segment.
LP support is critical to these transactions and so our findings on LPs rolling and having confidence in GP resources are encouraging as this segment of the market evolves further. By providing an alternative to fixed-term fund constraints, further CV adoption could prompt an evolution in private markets towards considered and asset-specific investment horizons.
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In our latest barometer report, we ask LPs for their views...