Ropes & Gray Attorneys Discuss PE Continuation Funds in Mergermarket

Continuation funds are becoming increasingly prominent as a liquidity option for GPs, even as the outlook for private equity exits slowly improves.

Isabel Dische, chair of the alternative asset opportunities group, told Mergermarket that “there is a lot of buyside capital, but this is dwarfed by opportunities. There are new entrants, but the capital mismatch is there despite deal volumes being high.”

"Many mega asset managers now view secondaries programs as a key component of their product offerings and to that end are now acquiring or launching secondaries capabilities," Isabel said. “They're all thinking about how to do it differently.”

Paul Van Houten, co-head of the firm’s sponsors solutions group, said “until now, one of the reasons pricing has been at a discount to NAV is that the buyers are investing on the basis that these are passive investments with no control. However, we are now seeing traditional private equity sponsors looking at continuation vehicles to get access to attractive assets. This new dynamic may change pricing.”