GPs are increasingly negotiating so-called staple asks, meaning LPs entering a continuation vehicle agree to commit a portion of their capital to the GP’s primary fundraise, according to 9fin sources.
These staples are a common feature in continuation vehicle deals, according to one secondaries investor, and are breathing new life into what is fundamentally a challenging fundraising environment.
”GPs often try to get LPs to invest 50/50 in the CV and their next direct lending flagship fund, but it usually ends up being 80% into the CV and 20% into the new fund,” according to another secondaries investor.
A recent secondaries transaction by Jefferies Credit Partners contained this feature. The firm is arranging a secondaries fund of about €1bn, seeded with loans that are, on average, around a year old. The transaction requires investors to also commit capital to the firm’s $4bn European institutional direct lending strategy, announced earlier this month, they added.
It is important to note, however, that the Jefferies example is not a traditional continuation fund, as the loans were initially funded through Jefferies’ balance sheet rather than held in an older fund vintage, sources said.
Jefferies declined to comment.
Staple necessities
Market players agree that private...
