Sun Capital launches data site for LP fund sales

The private equity firm has created a site for potential sellers and buyers of its fund interests to exchange info, a move that puts Sun Capital into one of the IRS’ ‘safe harbours’ from certain US tax regulations.

Sun Capital Partners has launched a “qualified matching services” for investors to trade secondary interests in its funds. The online service allows sellers to post information for potential buyers.

“This is a fancy LP dating service,” said one person with knowledge of the situation.

The firm created the site to be “ahead of the curve” in regards to an Internal Revenue Service rule that mandates if  2 percent or more of a fund is sold in a year, the agency can designate the fund as publicly traded. Firms with qualified matching services have more leeway – up to 10 percent of the fund needs to be sold before the IRS can designate the fund publicly traded.

The issue has come to the forefront as the secondaries market has exploded, with cash-strapped LPs looking to unload fund interests to gain liquidity, according to Chris Roman, a partner with law firm Clifford Chance.

More than a quarter of North American limited partners will be over-allocated to private equity by December, according to a recent report from secondaries firm Coller Capital. That over-allocation means that most LPs will either have to readjust allocation targets, reduce commitments or sell fund interests on the secondaries market.