Inside LPs' growing liquidity toolkit
PJT Park Hill partner Adrian Millan and StepStone Group private equity partner John Kettnich examine the rapid rise of structured partial liquidity solutions in the LP-led secondaries market, including collateralized fund obligations (CFOs), NAV loans, and preferred equity. They break down the portfolio characteristics required for structured liquidity, explain why sluggish distributions and limited dry powder are driving debt-based secondaries, and contrast transaction timelines and economics against traditional portfolio sales.
- Institutional LP sales carry an implicit cost of capital near 15%, driven by secondary market discounts and forfeited upside. Read →
- Institutional sellers now run parallel processes, testing outright secondary portfolio sales against structured debt like collateralized fund obligations and NAV loans. Read →
- Collateralized fund obligations require a minimum portfolio value of $500 million to absorb upfront fixed legal, structuring, and rating agency expenses. Read →
- Annual private equity distributions dropped from a historical average of 20 percent of prior-year net asset value to roughly 10 percent over the past four years. Read →