Asset management partner Lindsey Goldstein (New York) provided insights on launching a secondaries businesses in a two-part series recently published by Private Equity Law Report.
The first article, titled “Launching a Secondaries Platform: Why PE Sponsors Expand Into Secondaries and Key Pre‑Considerations to Weigh,” delves into which types of managers are pondering expansion into secondaries and why, as well as preliminary issues for those managers to consider. The primary drivers for managers to launch secondaries platforms seem to be because they see opportunities available in the secondary market and believe they have the resources and experience to be competitive. “The trend’s progression among larger, multi-product managers is nascent enough, however, that many of the PE firms interested in launching secondaries businesses have not yet actually raised commingled secondaries funds”, Lindsey observed.
The second article, titled “Launching a Secondaries Platform: Unique Aspects of Fund Structuring and Information Sharing Issues,” examines issues with information sharing and reporting in a secondaries fund context versus a traditional PE fund. “A structure that includes multiple different parallel funds and feeder funds going into some of those parallel funds, domiciled in various locations, can often meet the tax needs of various types of investors from the beginning, which can mitigate the need for an AIV down the road,” stated Lindsey. She also weighs the flexibility of the situation as “Information barriers are not being used in the same way they were a decade ago,” she said.
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