Attraction of Using Insurance Dedicated Funds in Season‑and‑Sell Private Credit Structures and As “Evergreen” PE Vehicles

Insurance dedicated funds (IDFs) seek to combine investment returns of private investment products with the preferential tax treatment afforded to insurance products. That combination, along with other key characteristics of the product, makes IDFs a potential “holy grail” for certain illiquid asset classes. In a guest article, K&L Gates partners Joel Almquist, Mark C. Amorosi and Yasho Lahiri discuss how private credit managers can use IDFs to mitigate harmful tax treatment to non‑U.S. investors and how PE sponsors can avoid certain fundamental shortcomings of traditional PE vehicles by using IDFs instead. Specifically, the article outlines how private credit managers can use an IDF as the seasoning vehicle in a “season-and-sell” structure to offset increased demand for the asset class among tax-sensitive and non‑U.S. investors. Further, it details how the IDF’s evergreen structure and redemption features, among others, make it advantageous compared to traditional PE vehicles. See “Overview of How Insurance Dedicated Funds Offer the Returns of Private Funds With the Favorable Tax Treatment of Insurance Products” (Jul. 27, 2021).

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