The search for permanent capital has led some PE sponsors to consider launching unlisted registered funds. Although unlisted closed-end funds of PE funds must offer liquidity to their investors through regular tender offers, they can be considered permanent capital vehicles (PCVs) because of their continuous offering, infinite-life structure. Similarly, interval funds also must offer periodic liquidity to investors but be able to raise capital continuously. For sponsors seeking true PCVs, however, there are a number of exchange-listed vehicles that, depending on the strategy, can provide the solution. This third article in a three-part series details the features, merits and downsides of closed-end funds of PE funds and interval funds, followed by suggestions of how sponsors can determine which vehicle is right for them. The first article
explained the malleable definition of permanent capital and the location of unlisted registered funds on the spectrum of permanence, as well as their fundamental traits and advantages. The second article
listed the challenges of creating and operating unlisted registered funds and described the appeal of private and non-traded business development companies. See our two-part series on closed-end funds of PE funds: “Relative Merits of Registration Options and an Infinite‑Life Structure
” (Jun. 2, 2020); and “Considering Bespoke Valuation, Co‑Investment, Director and Tax Issues
” (Jun. 16, 2020).