In Investec’s latest secondaries report, we found that GP-led deals are a rapidly growing area of the market. Specifically, single- and multi-asset continuation vehicles have gained significant popularity, offering benefits to both general partners and limited partners.
Continuation vehicles provide portfolio management advantages by attracting new funding. Newcomers can invest, and existing investors can choose to reinvest or liquidate their holdings and exit as desired. This eliminates the pressure to sell high-performing assets across the fund's life cycle and reduces portfolio risk by locking in investment gains.
In the current challenging fundraising environment, our report found that continuation vehicles can be a source of liquidity and so a benefit to General Partners (GPs). This allows for accelerated portfolio growth and generates returns for current investors. With more time and resources, the general partner can extend their investments in prized assets, supporting the investments they believe in for longer. Additionally, GPs may reset economics through newly designed deals.
The close alignment between GPs and Limited Partners (LPs) is crucial in continuation vehicles, and a successful transaction must meet the needs of both parties. One way the GP can ensure alignment is by rolling over crystallised carry interest, which demonstrates commitment and shares the risk of the investment. Through their bespoke structures and flexibility, continuation vehicles present an excellent opportunity to maximise alignment between all stakeholders.
Speak to an expert
Stefano Manna
Head of GP Advisory
Stefano leads the GP Advisory team at Investec and provides strategic advice to financial sponsors, offering a comprehensive range of private capital raising and liquidity solutions.
