SI Decade: From frustration to longer holds with single-asset continuation vehicles

Subscribe to Spotlight on: Apple | Spotify | PodBean | Audible | Pandora

Single-asset continuation funds have surged in popularity in recent years. While the technology isn’t new, it took persistence from secondaries market advisers to show both private equity managers and buyers that vehicles associated with the moniker ‘zombie funds’ could be used to keep hold of star-performing assets.

Last year, single-asset continuation fund vehicles took out the largest share of GP-led transactions, accounting for around 39 percent of the $48 billion of volume seen in this part of the market, according to a year-end report from Lazard.

There was “some reluctance” from secondaries buyers when conversations around single-asset continuation fund transactions began, Harold Hope, global head of secondaries at Goldman Sachs Asset Management, told Secondaries Investor. “We traditionally bought portfolios. Sometimes they were concentrated portfolios, but they were always portfolios.”

Today, these vehicles allow Goldman Sachs “to mitigate some of the broader risk that we face when we buy a diversified portfolio”, Hope said, adding that the team is “excited about the opportunities” globally.

In this third episode of the Decade of Secondaries Investing podcast miniseries to celebrate the 10 years since Secondaries Investor launched, we sit down with Hope and Holcombe Green, global head of Lazard’s private capital advisory business. They discuss how continuation fund technology was developed over time to facilitate single-asset continuation funds, and how large this pocket of the market could become as more capital is allocated to the area.

For full coverage of our Decade of Secondaries Investing series, including all podcast episodes and an interactive timeline, click here.