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
20212022, but it undoubtedly won’t be my last.
– John Jenkins