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.

ILPA recommends the Limited Partner Advisory Committee (LPAC), and, where relevant, all LPs, (1) gets engaged earlier and has an enhanced oversight role throughout the transaction process; and (2) enlists the help of its own counsel and specialist financial advisor to assist, particularly in GP-led deals that are complex and prone to conflict.