The PE industry was riding a tidal wave of momentum in 2019 after sponsors raised $315 billion, which was the highest single-year fundraise in recent years. In addition, $5 trillion was invested in PE products or represented unfunded commitments yet to be called as of September 2019. That came to a screeching halt, however, with the spread of the coronavirus pandemic. The drastic reduction in fundraisings and M&A activity has created a real need in the market for new capital, particularly as PE sponsors seek to aid cash-strapped portfolio companies and take advantage of favorable investment opportunities. Strafford CLE Webinars recently hosted a webinar on liquidity options for PE funds featuring Willkie Farr & Gallagher attorneys Arash Farhadieh, Brian I. Greene, Mark Proctor and Raphaël Bloch. This first article in a two-part series provides an overview of potential capital providers and other stakeholders in liquidity solutions, and examines GP‑led restructurings and other alternative liquidity options (e.g.
, expanding or accessing existing credit facilities). The second article
will evaluate the advantages, limitations and key considerations from generating liquidity from preferred equity lines, top-up funds and net asset value (NAV) facilities. For additional commentary from Proctor, see “Merits of the Pledge Fund Model and Attendant Fund Formation Issues to Consider (Part One of Two)
” (Jun. 16, 2020); and “Primer on Deal‑by‑Deal Funds: Structural Overview and Investor Perceptions Affecting Adoption (Part One of Three)
” (Feb. 18, 2020).