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Bailey McCann, Opalesque New York: Private equity fund managers continue to struggle as term, fundraising, and investment period extensions become more prevalent and expenses increase, according to a new report from law firm Barnes & Thornburg.
The report comes at a time when the private funds market is becoming increasingly difficult to anticipate and when costs on all sides of the deal table are rising.
"Both LPs and GPs acknowledge that the costs of launching and operating a private fund have steadily increased, with the costs associated with fundraising and compliance being a key component," says Scott L. Beal, partner and co-chair of Barnes & Thornburg's Private Funds and Asset Management practice.
Nearly 40 percent of both GPs (and LPs) observed increases in expenses over the past 12 months, which is more than twice the number reported last year. The majority of all respondents also saw high rates of fundraising period, investment period, and term extensions, as well as changes in GP commitments.
More workouts/restructurings are on the horizon. About 20 percent of respondents' private credit portfolios experienced restructuring activity over the past six months.
"Given the increased stress in the direct lending
market, we expect more fund managers to sell
or reduce some of their loans in their portfolios
and seek secondary liquidity to rebalance them,"
says Gregory G. Plotko, a partner in Barnes
& Thornburg's Restructuring and Bankru...................... To view our full article Click here
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