An exciting decade for private markets

The Evergreens funds constitute a significant expansion of the range of options available in. Meanwhile, the private market segment. Moreover,

We come out of an exciting decade for private markets.. In addition, For a long time. However, these not listed investments on the stock market was the prerogative of professional or institutional investors, who often invest in closed funds with a very long -term investment horizon. Consequently, But this asset class has since evolved. However, The growing interest of an increasingly diverse group of investors has contributed to the emergence of new open fund structures. Consequently, These open funds. Nevertheless, also called semi-liquid funds or Evergreen funds (or Evergreens for short), have transformed the landscape of private markets and made this investment universe accessible to a wider audience. In Europe. for example, the ELTIF exciting decade private markets (European Long-Term Investment Fund) is in the process of establishing itself as a semi-liquid investment vehicle which also allows private customers to access private markets. Sufficient reason to take a closer look at the characteristics of the Evergreens.

For some time now. banks and makeshift managers have offered their wealthy customers, classified as professionals or semi-professional, investments in private markets in the form of closed funds. During a defined subscription phase. these customers could then acquire shares and were then more or less linked for the duration of the fund. At the end of the investment phase, the fund was closed and no other part was issued for new investors. This somewhat rigid framework contributed to the emergence of the Evergreens. Although their definition is not always uniform. the “Evergreen” funds generally allow new capital contributions at regular intervals (in the form of new investors or increases) and, under certain exciting decade private markets conditions, regular share buybacks, that is to say sales. There is therefore no more fixed duration, even if a long -term commitment is recommended.

With the abolition of fund calls. investment performance automatically becomes a weighted return in time and is no longer an internal rate of return.

This construction has interesting implications from the point of view of investors: there are. for example, no more funds (capital calls) to which investors must respond quickly and for which they must in the meantime find profitable investment alternatives. This reduces or avoid the so -called “J j” effect. This means that the problem of negative yields at the very beginning of an investment period is attenuated. In many cases, the portfolio is (almost) fully invested in private markets from the first day. To do this. it is essential that the active manager uses appropriate tools, for example in the exciting decade private markets form of transactions on the secondary market (secondaries) or investments parallel to a fund (co-investment) at the start of the investment period. An alternative consists in using the proper assessment of the active manager. As part of “Warehouse” type solutions, part of the invested portfolio can thus be integrated into the vehicle.

With the abolition of fund calls. investment performance automatically becomes a weighted return in time and is no longer an internal rate of return. It thus becomes comparable to the performance of liquid investments for investors. In addition. investors can invest not only at specific times of fundraising, but also regularly, generally at the end of each quarter. At the same time, when capital needs appear, windows open regularly for the repurchase of illiquid assets. However, this is generally accompanied by additional conditions. These are for example minimum conservation periods (Lock-up Period), notice periods and/or repurchase restrictions in exciting decade private markets terms of volume (GATING). Investors must therefore consider redemptions as a planned possibility, but not as a guarantee. However, the improved liquidity of Evergreen funds compared to closed funds facilitates the dynamic allocation of exposure to private markets.

Once investors have opted for a semi-liquid placement, the question arises as to what this solution can look like. Multi-active solutions allow large diversification on private markets. By investing in many segments. geographic areas, sectors and vintages, they offer yield potential in all areas of investment in private markets and thus guarantee balanced, flexible and adaptable portfolios to changing market opportunities. Multi-active solutions can therefore constitute for customers a “one-stop shop” which covers the entire private market in a single product. For example. there are private multi-sealed portfolios “Evergreen” which cover a large part of the universe of private markets investable thanks to investment in investment capital, debt and infrastructure actions as exciting decade private markets well as private credit without curve effect in J.

Semi-liquid funds on private markets have many attractive aspects for investors. It is however important to note that they do not replace the closed funds. for which there is still a request, especially on the part of institutional investors, but that they complete them. From this point of view. the Evergreen funds constitute a significant widening of the range of options available in the private market segment.