Secondary Trading Of Limited Partnership Interests In Private Equity Funds - Recent Developments

Much of the private equity activity in 2008 and the first half of 2009 has consisted of secondary purchases and sales of limited partnership interests in private equity funds. In the current economic climate, many existing investors in private equity funds are looking to sell their limited partnership interests for a variety of reasons, including elimination of balance sheet liabilities associated with the obligation to meet future capital calls and raising cash for other purposes such as funding of capital calls in other funds.

This has created a "buyers' market" in which institutional investors and new funds of funds with access to capital have the opportunity to buy private equity fund limited partnership interests in the secondary market at discounts from face value. These discounts have been reported to be as high as 50 to 70 percent. In mid-April 2009, Goldman Sachs Asset Management closed on GS Vintage Fund V, its fifth such fund, with $5.5 billion to invest