January 7, 2022

Private Equity: LPs Say Continuation Funds are a Game Changer

According to Coller Capital’s most recent Global Private Equity Barometer, limited partners think that “continuation funds” are a potential game changer.  Here’s an excerpt from the report:

LPs recognize that the rapid growth of continuation funds represents a significant evolution of the private markets ecosystem – an evolution whose implications are yet to be fully clear. A majority of PE investors believe the principal effect will be to strengthen the overall private markets ecosystem, but a sizable minority believe the change will be more profound, serving to undermine PE’s traditional 10-year-fund model.

Two thirds of LPs believe that continuation funds are likely to prove good owners for their portfolio companies. However, some LPs remain to be convinced – one third believe that the companies in continuation funds might have had better prospects with different, third-party owners.

The report also says that 56% of LPs say that they are changing their business practices in an effort to make themselves more attractive co-investment partners for general partners.  Specific efforts include more rapid decision-making, developing expertise in particular areas of the market or expressing a willingness to bear some of the economics on co-investments.

This blog was supposed to be published yesterday, but I mistakenly set the publication date for 2021, so it ended up being posted on that date’s page.  This was my first public screw-up of 2021 2022, but it undoubtedly won’t be my last.

John Jenkins