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Accessing the Asset Class
Evergreen Fund
Perpetually Offered: Evergreen funds are perpetually offered with no stated termination date for the fund. Funds accept new subscriptions on an ongoing basis, typically monthly, allowing investors to invest at their convenience.
Traditional Fund
Finite Life: Traditional drawdown funds have a fixed lifespan, typically 10 to 12 years, with possible extensions. Subscriptions are accepted during the fundraising period only.
Evergreen Fund
Immediate Capital Deployment: When an investor subscribes to an evergreen fund, all capital is funded upfront and the investor receives their allocated number of shares based on the net asset value (“NAV”) price per share.
Traditional Fund
Capital Deployed Over Time: Capital is called over multiple years as the manager commits to new investments. Investors need to maintain cash reserves.
Evergreen Fund
Removes Reinvestment Risk: Evergreen funds may continuously invest inflows and reinvest proceeds from realizations into new investment opportunities.
Traditional Fund
Inherent Reinvestment Risk: To maintain their PE allocation or increase it in the future, an investor will need to invest in a subsequent fund.
Evergreen Fund
Ongoing Diversification: Evergreen funds allow for an investor to buy into a diversified pool of assets on day one, gaining immediate exposure to the funded portfolio and continued diversification as new investments are made.
Traditional Fund
Set Diversification: Investors gain exposure to the assets invested in during the finite investment period from a fixed pool of capital.
Evergreen Fund
Monthly Valuations: Subscriptions are priced based on the NAV per share, requiring regular asset valuations to determine the NAV for incoming investors.
Traditional Fund
Quarterly Valuations: Subscriptions are made during the fundraising period and do not require a NAV per share for new investors. Traditional funds typically conduct quarterly valuations for reporting purposes.
Evergreen Fund
Potential for Periodic Liquidity: Investors can redeem their shares at the current NAV per share price, subject to the fund’s liquidity terms. Redemptions are typically restricted to a percentage of the fund's NAV, such as 5%, within a specific period.
Traditional Fund
Illiquid: There is a lock-up period while the manager puts the capital to work. Liquidity depends on the exit of portfolio positions and distributions made to investors, and the timing is difficult to predict.
Evergreen Fund
Low Minimums & Eligibility Requirements: Evergreen funds generally offer less restrictive eligibility requirements, thereby increasing private equity's accessibility to a broader range of investors. Minimum investment amounts are typically lower, starting in the tens of thousands compared to hundreds of thousands.
Traditional Fund
High Minimums & Eligibility Requirements: Traditional PE funds tend to have higher eligibility requirements and minimum investment amounts, therefore limiting accessibility.
Comparing Evergreen and Traditional Fund Returns
- As the landscape of private equity investing continues to evolve, evergreen funds have emerged as a compelling alternative to traditional funds.
Buyouts Keynote Interview: Private equity for all
- In a keynote interview conducted by Buyouts, Peter von Lehe discusses how the democratization of private equity is about expanding access to the asset class by solving the structural and operational barriers to investing.
Access for All
- “The democratisation of private equity is about broadening access to the asset class, both in terms of who can invest and the ways in which they do so”
Deep Dive into Co-Investments
This module explores private equity co-investments, their distinctions from traditional private equity, reasons investors include co-investments in portfolios, and strategies for accessing them.
Upon completion this training qualifies for 60 minutes of Continuous Professional Development. Once fully completed we will email you a confirmation CPD certificate.