Weekly Digest: Notable charity events in the private equity sector
In the ever-evolving world of private equity, a significant shift is underway as institutions demand more liquidity solutions to navigate a challenging exit environment. This trend is reshaping the industry towards secondary market transactions, innovative continuation vehicles, and semi-liquid fund structures that better balance liquidity and returns for investors.
One such innovation is the North Haven Private Assets Fund, introduced by Morgan Stanley Investment Management. This evergreen private equity fund marks the firm's first foray into this area, offering individual investors private equity exposure with enhanced liquidity. The strategy is structured in contrast to the more traditional closed-end model.
Meanwhile, Mérieux Equity Partners has reached the first close of its €150m Mérieux Innovation 2 (MI2) fund. This fund targets scalable platform technologies with proof of concept, scientific strength, and reduced binary risk. Initial investments for MI2 will typically be around €6m. The fund primarily focuses on Croatia, Slovenia, Romania, and Bulgaria, with potential additional investments in Albania, Bosnia and Herzegovina, Greece, Hungary, Kosovo, Montenegro, North Macedonia, and Serbia.
Corsair Capital, on the other hand, has closed a $600 million continuation vehicle and secondary fund. This marks Corsair's first multi-asset transaction of this kind. The Corsair fund will anchor high-performing European financial services assets from multiple Corsair funds. The Corsair continuation fund, Corsair Riva, L.P., is structured to offer existing investors optional liquidity.
The European Bank for Reconstruction and Development (EBRD) is considering a €25m equity investment in Provectus SEE Fund II, a €200m private equity vehicle managed by Croatian firm Provectus Capital Partners (PCP). Provectus SEE Fund II focuses on providing equity and equity-related capital to small and medium-sized enterprises across Southeast Europe.
The rise in interest in private equity secondaries is also noteworthy. Institutional investors are looking to sell older fund commitments at modest discounts to unlock capital. Apollo Global Management has raised $5.4 billion for its first secondaries fund, S3 Equity and Hybrid Solutions, underscoring this growing trend.
This shift towards liquidity solutions in private equity is a response to increasing pressure on managers to provide cash distributions to limited partners (LPs), as LPs seek liquidity before committing to new funds. This is driven by a stall in exits (M&A and IPO markets) and lengthening hold periods, causing fundraising difficulties for general partners (GPs).
In conclusion, the private equity landscape is adapting to meet the growing demand for liquidity. The emergence of secondary market transactions, innovative continuation vehicles, and semi-liquid fund structures is a significant development that offers a more balanced approach to liquidity and returns for investors in a challenging exit environment.
- The North Haven Private Assets Fund, launched by Morgan Stanley Investment Management, aims to offer private equity exposure with enhanced liquidity, Countering traditional closed-end models.
- The Mérieux Innovation 2 (MI2) fund, managed by Mérieux Equity Partners, obtained €150m at its first close, targeting scalable technologies in specific European countries for initial investments around €6m.
- Corsair Capital closed a $600 million continuation vehicle and secondary fund, marking its first multi-asset transaction of this kind, with the Corsair fund intended to offer existing investors optional liquidity.
- The European Bank for Reconstruction and Development (EBRD) is contemplating a €25m equity investment in Provectus SEE Fund II, a private equity vehicle focusing on providing capital to small and medium-sized enterprises across Southeast Europe.
- Institutional investors, seeking liquidity before committing to new funds, are selling older fund commitments at modest discounts, a trend exemplified by Apollo Global Management's $5.4 billion raised for its first secondaries fund, S3 Equity and Hybrid Solutions.
- General partners (GPs) face fundraising difficulties due to a stall in exits (M&A and IPO markets) and lengthening hold periods, causing increased pressure to provide cash distributions to limited partners (LPs).
- The private equity industry's shift towards secondary market transactions, innovative continuation vehicles, and semi-liquid fund structures is a response to the growing demand for liquidity, created by a challenging exit environment.
