Fund managers will become more proactive in helping to provide liquidity for their investors and overseeing secondaries trading in their funds, according to 17Capital co-founder Pierre-Antoine de Selancy.
Speaking on a panel on evolving fund strategies at the BVCA Summit 2016 on Thursday, de Selancy predicted that GPs will start to work on “providing more of a solution on the liquidity front” and will also “take control of what happens on the secondaries market for their investors”.
“We’ve been seeing some GPs organising auctions for their LPs in 2007 and 2008 and making sure that they find the best buyer, and not only the guy who can write the largest cheque into the next fund,” he said.
“For a lot of GPs, especially if you go into the large end, people want to know who their investors are, and if someone leaves they want to make sure they leave in the best possible way.”
As well as managing auction processes, GPs will also work on offering alternatives to investors that may want to only partially liquidate their fund stake.
“This is a trend which is there and which is going to slowly develop,” de Selancy said. “GPs will offer more options to their LPs and take care of that part of their business more.”
De Selancy said he expects to see more inclusion of wording around liquidity assistance in the LPAs of funds being raised, “anticipating that and making sure they can provide [solutions]”.
De Selancy’s comments echoed those of fellow co-founder Augustin Duhamel, speaking earlier this summer at the launch of the PEI Media book Private Fund Restructuring.
Duhamel said he expected GPs will in future “integrate liquidity management into their offering,” as reported by Secondaries Investor.
London-headquartered 17Capital provides preferred equity to GPs, LPs, listed private equity funds, funds of funds and managers of evergreen funds that are trying to accelerate liquidity or to general partners looking for more capital, according to its website.
In June, the firm returned to market with its fourth fund, which is understood to be seeking around €900 million, as reported by Secondaries Investor.