When the coronavirus pandemic slammed the brakes on what had been a lucrative and frothy cycle for the PE industry, sponsors were left scrambling to figure out ways to fortify their existing portfolio companies and to take advantage of discounts in the market. Although a number of liquidity options existed, sponsors were forced to frantically learn about the relative merits and risks associated with each. As the pandemic persists, however, sponsors are in position to gauge each option in a measured manner and pursue optimal paths for their funds and LPs. Those and other topics were addressed in a recent panel hosted by Strafford CLE Webinars featuring Willkie Farr & Gallagher attorneys Brian I. Greene, Mark Proctor and Raphaël Bloch. This second article in a two-part series describes the key considerations, advantages and limitations of using preferred equity lines, top-up funds and net asset value facilities to generate fund-level liquidity. The first article
provided an overview of potential capital providers and other stakeholders in liquidity solutions, and examined GP‑led restructurings and other alternative liquidity options. See our two-part series: “Types of Rescue Capital PE Sponsors Can Pursue to Help Their Portfolio Companies Survive the Pandemic
” (Jun. 9, 2020); and “Key Terms, Process Considerations and Potential Issues When Providing Rescue Capital to Distressed PE Portfolio Companies
” (Jun. 16, 2020).