Continuation Vehicles And Considerations For Asset Level Debt

For managers (i.e. the Sponsor) of closed-ended private equity funds (including real estate or infrastructure funds), continuation vehicles offer the Sponsor an alternative to the traditional exit routes for investments.

In a CV structure the Sponsor will transfer an asset (the "CV Investment") from its existing fund to a newly established continuation vehicle ("CV"), also managed by the Sponsor.

The investors (being the limited partners (the "LPs")) in the existing fund have the option to either re-invest their commitment into the CV, or to cash out (a partial sale option may also be offered) on the sale by the existing fund of the CV Investment to the CV. New LPs (often secondary funds) will also usually come into the CV to provide additional capital. Any existing LPs that have re-invested into the CV might also have the opportunity to increase their commitments to the CV.