Secondary Fund Purchases

Examples of Certain Managers: Transactions facilitated by secondary managers such as Ardian, Coller, Lexington, StepStone

Liquidity (for sellers): Provides an exit mechanism for LPs prior to fund maturity.

Access (for buyers): Ability to acquire seasoned portfolios, often at discounts to NAV.

Valuation: Negotiated pricing based on portfolio quality, GP reputation, and market conditions.

Fees: Buyers assume existing fund economics; in certain cases, terms may be partially renegotiated.

Transparency: Variable, depending on GP cooperation and available information rights.

Convexity: Moderate to high; discounted purchases may enhance IRRs and introduce optionality.

Downside Protection: Discounts function as a margin of safety, similar to public BDC purchases below NAV. Seasoned portfolios also mitigate J-curve risk and enhance return visibility.

Pros: Immediate cash yield, J-curve mitigation, potential discounts.

Cons: Limited ability to alter portfolio composition; competitive pricing environment.