GP-led transactions: A way for limited partners to get the transparency, analysis, and options they want in complex deals

The portfolio management, liquidity, and value-creation benefits provided in mature-fund GP-led deals appeal to many LPs. (Photo: Bigstock)

In response to general partner (GP)-sponsored secondary activity growth, in April the Institutional Limited Partners Association (ILPA) released guidance to the industry on these often complex and conflict-prone transactions.   Entitled “GP-led Fund Restructurings: Considerations for Limited and General Partners”, ILPA’s guidance lays out a framework for GPs and limited partners (LPs) to work towards making the process for these transactions more efficient and transparent.

The portfolio management, liquidity, and value-creation benefits provided in mature-fund GP-led deals appeal to many LPs.  Investors want the options—a choice among cash-out, status quo, or a roll and invest alongside the new money alternatives—presented to them to be individually fair and derived from a transparent process.  Indeed, ILPA’s guidance is largely about process and LP expectations for oversight in GP-led deals. LPs believe that if there is a good process and oversight, they will get transparency and fairness.