medium · Private Equity pe-core
Fund Sigma is creating a 'Continuation Vehicle' (CV) for its star asset, PrismCo. The current NAV of PrismCo is $500M. The GP offers LPs the choice to cash out at a 15% discount to NAV or roll into the CV.
If an LP with an $8M interest chooses to cash out, what is their distribution, and why might the GP prefer a CV over a traditional trade sale?
- $8M; To avoid paying any carried interest on this deal
- $6.8M; To extend the holding period for a high-performing asset
- $1.2M; To liquidate the fund's remaining assets quickly
- $6.8M; To reset the management fee schedule to a materially higher rate
Sign up free to see the explanation and track your rank →
More Private Equity pe-core practice
- If the GP receives a 20% carry on the profit from Deal A immediately, and the fund eventua
- Following the investment, what is the investor's ownership percentage in the company, assu
- What is the Interest Coverage Ratio?
- A private equity firm is calculating a 'Public Market Equiva… — If the KS-PME score is 1.1
- A sponsor provides an 'Equity Cure' to a portfolio company. What is the standard purpose o
- What is the new effective conversion price for the growth equity investor?
- Which company will report a higher 'Gross Margin' and a higher ending 'Inventory' value on
- What is the company's Interest Coverage Ratio?