- The overwhelming majority of institutional PE investment vehicles are structured to give the sponsoring GP the power of when to invest and liquidate.
- The “power of when” is a significant contributor to the historic outperformance of private over public equity and an expected future outperformance of 300 bps to 350 bps.
- Investment products (e.g., SPACs, ’40 Act PE funds of funds) currently available to other than the wealthiest individuals restrict the "power of when" associated with historic private equity returns.
- ’40 Act PE funds of funds rely heavily on secondary transactions, which may have benefits, but may have negative impacts and override a GP’s exercise of the “power of when”.
- A minor regulatory relaxation is needed to offer ’40 Act fund of funds with meaningful allocations to primary investments, allowing the underlying GPs to retain the “power of when”.
For further details see:
Private Equity: The Power Of When