medium · Private Equity pe-core
A GP-led secondary involves transferring a 'crown jewel' asset from an old fund to a new Continuation Vehicle (CV). An LP in the old fund has an interest worth $10M. The LP is offered two choices: cash out at $9.5M (a discount) or roll into the CV.
If the LP rolls, which statement best describes their outcome?
- They retain exposure to the asset's future upside but may pay new fees/carry
- They must contribute an additional $10M of fresh new capital to join
- They receive the discounted $9.5M cash payout and also retain a 5% ownership
- They are contractually guaranteed a fixed 20% annual IRR on their newly rolled equity stake
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