Did the SEC consider credit secondaries in its rulemaking?
Getting a fairness or valuation opinion on a private equity GP-led secondaries transaction is a straightforward, albeit costly task. In credit secondaries, however, the rule change creates a cumbersome burden.
Did the U.S. Securities and Exchange Commission take into account credit secondaries when it imposed its GP-led secondaries rule? Market participants don’t think so and warn it will create some difficulties.
Within the private fund advisers rules under the Investment Advisers Act of 1940, which were voted through last month, GPs either based in the US or with US investors must obtain a fairness opinion or a valuation opinion from a third party in continuation fund transactions.
While it’s a straightforward concept to get either a valuation or fairness opinion on a concentrated number of assets involved in an equity transaction, GP-leds involving credit funds – which typically have a higher number of underlying assets than their equity counterparts – will be a lot more cumbersome.
Read the full article on Secondaries Investor here.
Managing Partner @ Tempest "A Brave New World"
1 年Valuing a credit portfolio is done all the time. The higher the number of credits, the more the portfolio can be normalized and analyzed statisictally and by comparables.