Getting Creative: Strategies For Turning Around A Poor Performing Fund

Amid the macro-economic turbulence and geopolitical shifts that have so far characterised the 2020s, exit routes for funds have become constricted: traditional IPO exits have narrowed, leverage models have tightened amid higher interest rates, and a persistent valuation gap has emerged between buyer and seller expectations, with knock-on effects for transactions which would traditionally see a return of debt capital, in the case of a credit fund, or of equity capital to a sponsor. Nonetheless, GPs remain under pressure to return capital to LPs and increasingly, whether due to prevailing market conditions or as a consequence of a GP’s inadequate or failing performance or both, they are unable to do so in accordance with the terms of the fund’s limited partnership agreement (LPA).