Permanent capital vehicles (PCVs) enjoy definitional ambiguity in the PE industry. The more expansive definition encompasses funds that simply have longer lifespans than the typical 10‑ to 13‑year fund. The narrower definition focuses on certain economic and liquidity structures, among others, that differ from typical closed-end funds. Although each PCV tends to be highly bespoke, there are certain fundamental features and approaches that form a baseline for managers and investors interested in the approach. This second article in a three-part series discusses common features of private fund PCVs, as well as two types of structures that are commonly found in the PE space. The third article
will provide an overview of certain difficulties that arise when creating private fund PCVs and suggestions for how they can be mitigated. The first article
analyzed how PCVs are defined in the private funds context, why interest in them has grown in recent years and what appealing benefits they offer to participants in the private funds industry. For more on a type of PCV structure, 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).