How are GP-led secondary transactions typically funded?

GP-led secondary transactions are typically funded through a combination of existing or new investors along with debt financing. This dual approach allows General Partners (GPs) to restructure their funds, provide liquidity to current investors, or facilitate a transition when they are looking to extend the life of an investment.

Utilizing existing or new investors gives GPs the flexibility to attract additional capital that can be used to finance ongoing operations, support new investments, or buy out existing investors’ stakes. The inclusion of debt financing can also enhance the overall capital available for these transactions, allowing GPs to leverage assets and optimize returns.

This method of funding aligns well with the nature of these transactions, where GPs may need to balance the interests of current partners while seeking new funding sources. It maximizes the available resources and provides a structured way of executing complex investment strategies. Consequently, the combination of both avenues contributes to the overall success and viability of GP-led secondary transactions in private equity markets.