Exit this way: no.1 — closed-ended fund exits

By Deborah Lloyd

The issue of fund exits is currently a hot topic. 176 funds are terminating between 2012 and 2016, with a total GAV of €68.6bn (£55.9bn) (from INREV [European Association for Investors in Non Listed Real Estate Vehicles]: Fund Trends Survey 2013). This is a new area for many fund managers and investors to experience. Managing investor expectation throughout this process has been a challenge for some fund managers. 

This is the first in a series of three briefings. This briefing covers the typical issues for exiting a closed-ended fund. Briefing two will look at open-ended funds. Briefing three touches on some more general issues applicable to all types of funds.

Closed-ended funds have a fixed end date. The term of a closed-ended fund will be set to tie in with the investment strategy of the fund. As part of the investment strategy, a fund manager will have a plan as to how it intends to create returns from the assets of the funds and when those assets should be sold to achieve those returns. Generally, a private equity real-estate fund has a fixed life of between seven and 10 years…

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