Faced with elevated redemptions, Partners Group is using an umbrella structure to try to solve its evergreen fund’s liquidity challenges. Key questions remain before it’s likely to have any followers.
By Jack Arrowsmith, London
Liquidity pressure is very hard to escape. Quarter after quarter, semi-liquid funds have been hit with redemption requests. For most, the response has been to impose a cap on new withdrawals.
Others have opted to meet redemption requests in full, hoping this would restore investor confidence.
That approach has seen some success: Oaktree’s Strategic Credit Fund honoured its redemptions in full for Q1 2026, amounting to 8.5 per cent of net assets. Withdrawal requests then came in below 5 per cent for the next two quarters.
For the more serious cases, managers might be forced to abandon these vehicles. In December 2025 the board of the CPG Carlyle Commitments Fund, which had been facing severe redemption pressure, announced a wind-down of the fund, scheduled to be completed by 2028.
Now, a manager is trying a new way out. In October, Partners Group announced plans to restructure its Luxembourg-domiciled evergreen private equity fund, Global Value SICAV, into an umbrella structure. The proposal will be put to shareholders next week.
It will see the creation of two sub-funds, according to the vintage of the assets. One quarter of the assets, which are younger and higher performing, will move into a “compounding fund”, targeting new investments.
The remaining three quarters, which are older and weaker-performing, will move into a “distributing fund”, which will seek to return capital to investors.
The firm is also reducing the redemptions cap at both funds to 2.5 per cent, according to Bloomberg, with plans to subsequently resume the 5 per cent limit for the compounding fund.
Global Value SICAV’s problems stem from a portfolio with heavy exposure to highly valued 2021/22 investments, as well as competitive pressure from new entrants into the evergreen market. The result has been a familiar cycle of liquidity demands.
“You get into this negative feedback loop: you have redemptions, no money coming in, unfunded liabilities, and it’s constantly draining your NAV. You might have to start selling off assets on the cheap, just to fund these future commitments,” explains Evan Clark, a senior private market analyst at the EDHEC Infrastructure and Private Assets Research Institute.
Under the fund’s original structure, the demand for liquidity could put its top-performing assets at risk. There would also be little incentive to subscribe if the capital is funding redemptions. For firms in this situation, an umbrella fund could be one way to preserve value.
Assets in the compounding fund are protected from being sold to meet the liquidity demands of investors in the distributing fund, alleviating concerns of a fire sale of top assets.
“That can be fairer for both sides. Continuing investors are less exposed to the cost of forced sales, and new investors do not automatically come into legacy exposures,” says Renaud Oury, the Luxembourg regional head for Apex Group.
A spokesperson for Partners Group told Private Equity Wire®: “Since the announcement of the evolution of our European evergreen strategy, we have received positive feedback from our distribution partners and clients, both in Europe and globally, who see our approach as a potential blueprint for the industry.”
But the proposal is not without its challenges. For some, the fact it could be seen as a blueprint is precisely the problem, as it seeds doubt in new evergreen investments.
“As an investor in these vehicles, one now has to consider the possibility that the manager pursues this structure and that a significant portion of their investment moves to a run-off portfolio with unknown timing of realisation, distributions, and management attention,” says Clark.
With the goal simply to realise the investments, assets in the distributing fund may receive limited attention from the firm, while continued management fees would incentivise a longer hold period.
“It’s not a vehicle that’s making new investments, so it doesn’t seem that it should warrant the management fees you would have associated with a fund that’s active in making new investments,” says Clark.
In the case of Partners Group, a person familiar with the matter told Private Equity Wire® that the distributing fund will see a management fee reduction of at least 25 bps. The person added that the assets will carry over at their existing valuations.
But if the fund’s problems stem partially from an inflated asking price, then a valuation correction may be inevitable in order to exit the assets.
“The possibility that the book is mis-marked gets camouflaged because they will push most assets, up to 75%, into a distributing fund, that will almost certainly sell or be valued by a potential buyer at less than the NAV,” says Clark.
Compounding all these challenges is the fact that evergreen fund managers will have to communicate these changes to a retail audience.
“In an institutional fund, you would typically discuss such a measure directly with investors in advance. In a retail-distributed fund, communication is more complex because it has to pass through multiple intermediaries,” says Veronica Aroutiunian, a partner in the investment management group at Debevoise & Plimpton.
Those intermediaries carry their own risks. Aroutiunian cites the case of UBS, which the FT reported had advised its clients who were over-allocated to private credit that they should trim their positions, triggering a wave of redemptions at one of Blue Owl’s flagship funds.
Equally, there could be a contamination risk for a firm’s other funds, if a manager is relying on the same distribution channels across multiple funds.
For Partners Group, that could exacerbate existing liquidity pressure. In the third quarter, its flagship US fund had to cap redemptions at 5 per cent after receiving $2.2bn of requested withdrawals, equivalent to 15 per cent of the fund’s net assets.
Any implementation of an umbrella structure would need to be explained to retail investors.
“Applying this type of measure to a retail-distributed product is not impossible, but it requires substantially greater communication and coordination efforts,” says Aroutiunian.
And once implemented, the umbrella structure does not represent a complete solution to redemption pressure. The core challenge facing evergreen funds remains one of liquidity, and the need for managers to meet their obligations to investors.
“A sub-fund does not solve a liquidity problem by itself,” says Oury.
“If investors want their money back, the cash still has to come from somewhere, whether that is portfolio cash flows, asset sales, financing or new capital.”
