ILPA Makes Recommendations for LPs Participating in GP‑Led Secondary Fund Restructurings

Secondary transactions led by general partners (GPs) have been on the rise over the last few years to both provide liquidity for existing limited partners (LPs) and also extend the term of a fund to maximize the value of its assets. While the stigma attached to these transactions has diminished, their increased prevalence raises numerous questions for LPs about the transaction process and how it is structured; conflicts of interest to identify and avoid; and transparency to be requested from GPs. To assist LPs in navigating these issues, the Institutional Limited Partners Association (ILPA) issued guidance to prescribe considerations and recommendations for LPs to weigh throughout the process. This article summarizes the guidance and highlights the practical steps proposed by ILPA. For coverage of ILPA guidance on other issues affecting the private funds industry, see “Trends in the Use of Subscription Credit Facilities: Advantages for PE Investors and Sponsors Have Led to Adoption by Some Hedge Funds and Credit Funds (Part One of Two)” (Jan. 24, 2019); and “How Managers May Address Increasing Demands of Limited Partners for Standardized Reporting of Fund Fees and Expenses” (Sep. 1, 2016).

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