The Wall Street Journal Pro Private Equity Quotes Asset Management Partners on Recycling Provisions
The latest feature of The Wall Street Journal’s Pro Private Equity’s “Coming To Terms” series highlights how private equity firms are utilizing recycling provisions to support portfolio companies with additional capital needed during the COVID-19 crisis. The article outlines that an increasing number of firms, foreseeing this need, are seeking amendments to these existing fund terms.
“Sponsors were front-footed and in the very early days quickly focused on their portfolio companies, went through the analysis on which companies needed the most immediate attention and were proactive about shoring them up,” Ropes & Gray asset management partner Debra Lussier and buyout and growth-equity funds team co-leader states in the piece.
Highlighting the need to act swiftly, asset management partner and private-equity industry group co-leader John Ayer added that for a fund sponsor, obtaining capital for portfolio companies through changes in recycling provisions is often easier than other alternatives. Putting together a follow-on fund to meet increased capital needs for portfolio companies would raise “a whole series of conflict and management approvals that would need to be addressed,” John said.
The May 20 piece, titled “Buyout Firms Seek Capital Recycling as Coronavirus Bites” also appeared in Private Equity News, and is part of a WSJ Pro Private Equity series about how the coronavirus pandemic is affecting terms and issues related to private-equity deals and funds.