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ILPA issues guidance for GP-led secondary transactions

The Institutional Limited Partners Association (ILPA) has released guidance regarding the practice of general partner (GP)-led secondary fund restructurings. The guidance was issued in response to the increasing prevalence of such transactions and the bespoke nature of each situation.

The intent of the guidance is to offer specific parameters that allow for an efficient and transparent process, encourage productive dialogue among stakeholders and foster better decision making by limited partners.
“The GP-led secondary process can offer significant benefits to both general and limited partners in terms of portfolio management, liquidity, and value creation towards the end of the life of a fund,” says Steve Nelson, CEO, ILPA. “As these strategies grow in popularity, establishing a common set of expectations related to communications, timelines, disclosures and access to information is critical. This guidance seeks to provide those recommendations in a manner that creates alignment between GPs and LPs, and allows limited partners to act in the best interest of their beneficiaries.”
The ILPA guidance, which was developed with input from LPs, GPs and industry advisers, includes recommendations around the GP-led process that address the following:
•      Limited Partner Engagement and the Role of the LP Advisory Committee
•      Adequate Disclosures of Information
•      Timing and Structure of a Well-Run Process
•      Allocation of Fees and Expenses
•      The Role of Third Party Advisers
•      Steps for LPs to Take When Engaging in a GP-led Process.
Emphasis throughout the guidance centres on early engagement of limited partners in the process, symmetry of information disclosure among all stakeholders, and an adequate timeline for LPs to make an election. 

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