Fund restructurings and recapitalisations have been slower to gain traction in Europe, as compared to the US, according to Sunaina Sinha managing partner at placement agent and secondaries advisory firm Cebile Capital.
“It’s quite clear European GPs are lagging behind US GPs in terms of accepting restructurings and recaps,” she said.
These deals tend to have a low probability of working out and a “long burn”, she explained. Costs for these deals are also often higher in Europe than in the US, she added, referring to lawyer fees and other administrative costs.
Her firm Cebile hasn’t led any fund restructurings or recapitalisations yet but is in conversations with some GPs, who are asking more questions about these deals.
Sinha said she’s fielding questions from GPs like: ‘how does this mechanism work?’ or ‘what will we gain from the deal?’
Other GPs are more concerned about a structured deal creating too much noise in the market. “They’re asking ‘will this taint us or make us look like a problematic GP?’” she said.
Still, Sinha doesn’t expect the European market for restructurings to catch up to that of the US this year, despite GPs’ enquiries.