GP-led secondary transactions now represent around a third of all secondary investments.
GP-led transactions emerged as a solution to 3 main issues -
As a private equity fund/approaches the end of its life, a general partner (GP) may believe one or more portfolio companies still have a great deal of growth potential. A GP-led transaction can allow them to maintain control, either with existing or new limited partners (LPs).
Alternatively, a company many be enduring a difficult period that has hindered, but not damaged, its case for growth. GP-led transactions can buy time to allow the business to stabilise.
Finally, a portfolio company may be in a challenged sector or geography, and the GP may wish to wait until the exit environment is more supportive.
GP-led transactions emerged as a solution to 3 main issues -
As a private equity fund/approaches the end of its life, a general partner (GP) may believe one or more portfolio companies still have a great deal of growth potential. A GP-led transaction can allow them to maintain control, either with existing or new limited partners (LPs).
Alternatively, a company many be enduring a difficult period that has hindered, but not damaged, its case for growth. GP-led transactions can buy time to allow the business to stabilise.
Finally, a portfolio company may be in a challenged sector or geography, and the GP may wish to wait until the exit environment is more supportive.
How Do Private Equity Firms Make Their Money?
https://www.linkedin.com/pulse/how-do-private-equity-firms-make-money-kelley-w-powell
https://www.linkedin.com/pulse/how-do-private-equity-firms-make-money-kelley-w-powell
LinkedIn
How Do Private Equity Firms Make Their Money?
The following is adapted from Courage to Lose Sight of Shore. Seeking private equity investment is a great way to secure the funds and expertise needed to take your company to the next level, but from the outside, the process of private equity can appear…
A toehold position is an acquisition or investment strategy where a private equity fund targets a particular company but buys less than 5% of the public company’s stock. This “toehold” position is sufficient to enable them to exert pressure on the company, whether aiming to ultimately acquire it or merely to raise its performance and improve returns. Due to the small ownership percentage, the purchase does not need to be filed with the Securities and Exchange Commission (SEC).
Are SPACs a really good thing? The devil lies in the structure
https://m.economictimes.com/markets/stocks/news/are-spacs-a-really-good-thing-the-devil-lies-in-the-structure/articleshow/82013070.cms?
https://m.economictimes.com/markets/stocks/news/are-spacs-a-really-good-thing-the-devil-lies-in-the-structure/articleshow/82013070.cms?
The Economic Times
SPACs: The devil lies in the structure
SPAC IPO investors tend to be a group of very savvy hedge funds, sometimes referred to as the “SPAC Mafia”, and other large institutional investors.
Investment strategies versus various investment objectives
Source: LPeC |
H = high M = medium L = low
Source: LPeC |
H = high M = medium L = low
As more investment capital has flowed into PE, one of the major trends has been the creation of more non-flagship funds.
These “alternatively structured funds” are created for a specific purpose that complements the main investment activities. They might be growth or opportunity funds, SPVs (special purpose vehicles), syndicates, and co-investment vehicles, among others.
The number of non-flagship funds has been going up pretty consistently, Funds are diversifying their own investment strategies and investing in areas, they haven’t invested in before.
There has also been significant growth in private credit funds, which provide credit to “buyout funds” in need of capital to invest in businesses they acquire. Before 2019, banks typically provided that funding. Post-2019 because of regulatory and other factors, banks don’t do that anymore. So, some PE funds have added credit arms to their businesses.
These “alternatively structured funds” are created for a specific purpose that complements the main investment activities. They might be growth or opportunity funds, SPVs (special purpose vehicles), syndicates, and co-investment vehicles, among others.
The number of non-flagship funds has been going up pretty consistently, Funds are diversifying their own investment strategies and investing in areas, they haven’t invested in before.
There has also been significant growth in private credit funds, which provide credit to “buyout funds” in need of capital to invest in businesses they acquire. Before 2019, banks typically provided that funding. Post-2019 because of regulatory and other factors, banks don’t do that anymore. So, some PE funds have added credit arms to their businesses.