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May 22, 2025 | 9 min read
The private credit market has soared in popularity since the Great Financial Crisis, transforming from a lender of last resort to an institutional asset class that rivals the scope of the high yield bond and leveraged loan markets.1 In the U.S. and Canada alone, 42% of institutional investors plan to increase their allocations to private debt over the next three years,2 and assets under management (AUM) in the sector are expected to reach $3 trillion by 2028.3
As investors increase their exposure to private credit, a framework for portfolio construction can help navigate the increasing complexity of this market. In this paper, we define the different segments of the private credit market, offer a recommended framework for portfolio construction, and weigh some of the tradeoffs associated with the different implementation options.
As private credit continues to take market share from traditional banks and public fixed income markets, the number of financing strategies within the asset class has expanded significantly. These strategies can be categorized into three broad segments:
Typically used to initiate a leveraged buyout, M&A, or other corporate purpose. It Includes senior direct lending as well as junior credit strategies.
Financing that is collateralized by a specific asset or pool of assets, allowing the owner of the asset to borrow against its value.
These smaller, specialty funds provide non-traditional financing strategies; examples include litigation finance, strategies that securitize pharmaceutical or music royalties, and venture lending.
There are four crucial steps for determining broad allocations to the credit segments listed above. These include strategic sub-segment positioning, diversification implications, and relative risk/reward considerations.
The first step in building a private debt portfolio is deciding how much to allocate to each of the three credit segments discussed above. Allocators typically devote the largest allocation of a private debt portfolio to the corporate credit segment, given the breadth of the opportunity set, the more easily quantifiable nature of its risk profile, and the ability to mitigate idiosyncratic credit risk through broad-based portfolio diversification.4 In this segment, loans are backed by the cash flows of the borrower, which allow the lender to assess the reliability of the borrower’s cash flows and the quality of the borrower’s management team in executing on its overarching strategy. Of the three credit segments, direct lending historically has the lowest historical return, but also the lowest risk profile, as shown in Figure A below.
We believe asset-based lending should represent the next largest segment of a diversified private credit allocation. These loans are often collateralized by physical assets, which means they should be less correlated to the corporate earnings cycle and have an inherent recovery value in the event of a default. However, given the intrinsic tie to the perceived value of collateralized assets, it requires specialized expertise on the part of the lender. Thus, it is imperative to select managers with narrowly defined, subject matter expertise of managing and valuing the collateralized assets. Figure A below shows that as one moves from corporate credit to asset-based strategies, the expected return increases; however, so does the dispersion of performance, as measured by standard deviation, within the category.
Lastly, a smaller percentage can be assigned to what we call niche strategies. These strategies have more of an absolute return orientation and are intended to be highly idiosyncratic and uncorrelated to other market segments. This market segment can include strategies that collateralize music or pharmaceutical royalties, or litigation finance strategies that provide capital to support legal actions in exchange for receiving a portion of the proceeds that are earned in a court decision. Manager skill is a paramount consideration when making an allocation to one of these narrowly defined market segments. While not every allocator needs to extend out on the risk spectrum to include niche strategies, they can play a diversifying role in an existing allocation to corporate credit or asset-based lending. As shown in Figure A, these strategies present the highest return potential of the three categories. However, they are also considered to be the riskiest given the wide dispersion of performance returns across funds in the category.
Source: Preqin, as of 12/31/2024.
After determining the overall portfolio allocation among corporate credit, asset-based lending, and niche strategies, one needs to consider the portfolio’s corporate credit sub-allocations to senior vs. junior credit, as well as the split between sponsored and non-sponsored credit.
Sponsor-backed businesses are owned by private equity sponsors and benefit from both professional management and the dedicated sector expertise of the PE sponsor. By contrast, the non-sponsored market often entails lending to family- or entrepreneur-owned businesses, which broadens the opportunity set but also introduces additional risks. For example, the owner of a family-owned business might have more trouble discerning the true value of their company due to the family’s psychological attachment. They might also have non-financial objectives, like maintaining a certain equity stake for the founding family, even if future generations may not be equipped to run the business. Lastly, financial reporting may not be as clean and as thorough as for a sponsored-backed business, introducing additional uncertainty in the underwriting process. In turn, the non-sponsored market has typically experienced a higher default rate than the sponsored market but has also commanded a yield premium over time to account for these incremental risks.
We believe there is a role for both sponsored and non-sponsored lending in a private credit portfolio but suggest sizing these positions to reflect the incremental risks associated with non-sponsored lending. Historically, non-sponsored deals represent about one-third of the private credit market, as shown in Figure B below. We think that is a reasonable place to start when deciding how much to allocate to this market segment.
Source: LSEG LPC 1Q25 US Sponsored Market Private Deal Analysis.
Senior credit sits atop the capital structure and is first in line to be repaid coupon and principal payments in the event of a default. Junior credit sits below senior credit but above equity in the capital structure. In return for taking a subordinated position, junior credit providers get paid a higher yield for assuming this incremental risk.
The junior credit market is much smaller than the senior market and tends to be more bespoke in nature. For example, junior credit deals are sometimes structured to pay coupon payments in cash; other times they are structured to pay their interest in-kind, referred to as payment-in-kind securities. Additionally, junior market deals may be structured as fixed-rate securities, or structured as a spread over a floating, short-term interest rate like the 3-month Secured Overnight Financing Rate (SOFR). The senior credit market is structured to be almost exclusively floating rate.
Junior credit can play a valuable role in a broadly diversified private credit portfolio. Junior credit introduces an opportunity to generate incremental yield and higher returns, while offering valuable diversification by allowing LPs to get fixed-rate exposure, which is particularly valuable in a market environment like today’s where the trajectory of monetary policy and interest rates is highly uncertain. A rough rule of thumb: If one were to bifurcate the corporate segment of private credit into senior and junior exposures, the senior market would represent about two-thirds of the overall market, which intuitively makes sense since the senior tranche is about twice as large as the junior tranche in a typical capital structure.
The asset-based lending market is expanding rapidly, driven by a need for working capital and alternative financing solutions, as banks reduce their footprint in this market. Asset-based lending allows firms to borrow based on their assets, like accounts receivable, real estate, and intellectual property, rather than cash flow. It is well suited for asset-rich companies experiencing seasonal or cyclical sales fluctuations, commodity price changes, or earnings volatility. Borrowers in this market often include manufacturers, distributors, and retailers needing capital to manage operations and growth.
Since the debt is often securitized by physical assets, asset-based lending tends to be less correlated to corporate earnings and can diversify a private credit portfolio that has a large allocation to corporate direct lending. In the example shown below in Figure C, we ran four hypothetical portfolios featuring various exposures to corporate credit, asset-based lending, and niche strategies. These hypothetical models suggest that a 30% allotment to asset-based lending, depending on an allocator’s risk/return, liquidity, and diversification requirements, may provide higher total returns and risk-adjusted return than a portfolio without an allocation to asset-based lending. It is important to keep in mind that within an asset-based lending allocation, it is recommended to diversify across consumer credit, mortgage-backed, and commercial mortgage-backed exposures to ensure adequate diversification both by manager and by market sub-segment.
Strong borrower demand for nonbank financing has also expanded the market universe for niche financing options such as music royalties and litigation finance. These assets are generally uncorrelated to the economic environment and potentially provide an opportunistic means for allocators to maximize yield within a well-balanced portfolio. However, given the specialized nature of these assets and the industry-specific risk they represent, investing in this sub-strategy requires sophisticated knowledge and a focused level of attention. Based on our analyses, we see that a 10% allocation to niche strategies in a diversified private credit portfolio may provide the most attractive risk-adjusted returns compared to the other hypothetical portfolios. Allocators are likely to be best served by diversifying this allocation across sub-strategy type, which would include the likes of music and/or pharmaceutical royalties as well as even narrower sectors like litigation finance to ensure adequate diversification by manager and strategy.
In Figure C below, we evaluate the risk and return profile of four hypothetical model portfolios, with varying allocations to the three market segments.
For illustrative purposes only. Each hypothetical model portfolio’s construction targets allocations discussed in the text above. Model portfolios were constructed based on custom sub-composites of funds in Preqin’s private credit universe. Sub-composites were created in Preqin for each fund that fit into the three private credit segments delineated above (corporate credit, asset-based lending, and niche strategies). The total return (net IRR) for each sub-composite was calculated based on quarterly returns from 6/30/2020 to 12/31/2024. The historical risk-adjusted return is calculated using risk/standard deviation to reflect return per unit of risk. Returns shown are gross of portfolio level management fees and carried interest, but net of underlying management fees and carried interest. If portfolio level management fees and carried interest were applied returns would be lower. Hypothetical model performance results are inherently limited and should not be considered a reliable indicator of future results. One of the limitations of hypothetical performance results is that they are prepared with the benefit of hindsight. No representation is being made that any private credit allocation will or is likely to achieve profits or losses similar to those shown. This information should be used solely as a guide and should not be relied upon to manage your investments or make investment decisions. Investments in private funds involve significant risks, including loss of the entire investment. See Disclosures at the end of the paper for important information on this hypothetical illustration.
Depending on one’s return target and risk tolerance, one can size the relative allocations to these market segments. We believe for most allocators, the 60/30/10 portfolio strikes a nice risk/return balance, after incorporating the different risk/return profiles of the underlying credit segments.
After a private credit LP has mapped out its private credit allocations, it must then consider the best way to implement that allocation. Historically, many allocators have relied on making primary commitments to private credit GPs to obtain their desired exposure. These are investments in a private credit fund at the time it is being raised. Historically, allocators have largely relied on making these commitments to private credit GPs in closed-end funds or drawdown funds that raise and invest capital over discrete time periods. Today, allocators have more tools at their disposal to manage these exposures, including a wide array of semi-liquid vehicles, which offer LPs flexibility to moderate their deployment over time.
In addition to committing capital to private credit GPs on a primary basis, allocators now also have the option to consider a range of strategies in the credit secondaries market. Secondary investments occur when a buyer purchases existing private assets, which we believe offer several key advantages. Credit secondaries funds can mitigate blind-pool risk by investing in seasoned assets, which also leads to quicker deployment, accelerated cash distributions, and enhanced returns. A credit secondaries portfolio is substantially more diversified than investing in a credit portfolio managed by a single GP, as a secondaries portfolio will have exposure to thousands of underlying loans, which minimizes the impact of a default/impairment in any underlying position. Finally, by purchasing positions in existing LP portfolios at discounts to par, there is an opportunity to generate a return premium relative to relying exclusively on primary commitments.
The last decision that newer allocators to the space need to consider is the decision to build a private credit portfolio sequentially or concurrently. In other words, allocators can either make a pro-rata allocation to the corporate, asset-based lending, and niche strategies at the outset, or they can start with corporate credit and incrementally add exposures to higher-risk segments of the market as they grow more familiar with these market segments over time. Recognizing the diversification benefit that we quantified above from having exposure outside of just the corporate credit segment of the market, we believe allocators are best served by building out allocations to all three segments of the market simultaneously, recognizing that it might take time to properly diligence each segment of the market and the respective managers in each segment. One way to mitigate this challenge is to use the credit secondaries market as a tool to get broad-based, immediate diversification across market segments and managers by leveraging the secondary manager’s intimate familiarity with the market and its underlying managers in each market segment.
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The private credit market today bears little resemblance to the humble stature of the asset class 20 years ago. Private debt’s rapid growth and expanding universe of financing structures has set forth yield and diversification opportunities like never before for investors and allocators alike. But as it has grown, private credit has become increasingly complex and more challenging for allocators to navigate. Taking a thoughtful approach to portfolio construction can help mitigate this risk by helping to ensure that allocators are properly diversified and do not have disproportionate exposure to any segment of the market.
Diversification does not ensure a profit or protect against a loss.
HarbourVest Partners, LLC is a registered investment adviser under the Investment Advisers Act of 1940. This material is solely for informational purposes and should not be viewed as a current or past recommendation or an offer to sell or the solicitation to buy securities or adopt any investment strategy. The opinions expressed herein represent the current, good faith views of the author(s) at the time of publication, are not definitive investment advice, and should not be relied upon as such. This material has been developed internally and/or obtained from sources believed to be reliable; however, HarbourVest does not guarantee the accuracy, adequacy, or completeness of such information. There is no assurance that any events or projections will occur, and outcomes may be significantly different than the opinions shown here. This information, including any projections concerning financial market performance, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. The information contained herein must be kept strictly confidential and may not be reproduced or redistributed in any format without the express written approval of HarbourVest.
Nothing herein should be construed as a solicitation, offer, recommendation, representation of suitability, legal advice, tax advice, or endorsement of any security or investment and should not be relied upon by you in evaluating the merits of investing in HarbourVest funds or in any other investment decision.
Credit Strategy Risks: A fundamental risk associated with credit investments is credit risk, which is the risk that a borrower will be unable or unwilling to make principal and interest payments on its outstanding debt obligations when due. Investments in subordinated or junior debt investments, should an issuer trigger an event of default, depending on the capital structure and the issuer’s financial situation, a loss of the entire value of the investment is possible. Adverse changes in the financial condition of an issuer or in general economic conditions (or both) could impair the ability of such issuer to make payments on its debt and result in defaults on, and declines in, the value of its subordinated debt more quickly than in the case of the senior debt obligations of such issuer. Adverse changes in the financial condition of an issuer or in general economic conditions (or both) could impair the ability of such issuer to make payments on its debt and result in defaults on, and declines in, the value of its subordinated debt more quickly than in the case of the senior debt obligations of such issuer.
Hypothetical Models: Model results are hypothetical and inherently limited. They should not be relied upon as indicators of future performance. Individual fund and strategy performance can be better or worse than the model. No investor received the indicated hypothetical model performance. Certain assumptions have been made for modeling purposes. No representation or warrant is made as to the reasonableness of the assumptions made. Changes in the assumptions may have a material impact on the hypothetical returns presented. Different hypothetical model scenarios will provide different results. While the model portfolio may consist of investments made by HarbourVest during the relevant period(s), it does not reflect an actual portfolio managed by HarbourVest during the relevant period(s) and does not represent the impact that material economic and market factors might have had on HarbourVest’s decision making if HarbourVest had been managing a fund that incorporated the investment strategy shown during the specified period(s).
In addition, investment results may be materially different from the results portrayed in the model portfolio during the relevant period(s). Actual investments may have substantially different terms than those reflected in the model portfolio. No representation is made that any investment will or is likely to achieve returns similar to those presented, and there can be no assurance that an investment will achieve profits or avoid incurring substantial losses. Other periods selected for the model portfolios may have different results, including losses. Current model results may differ from those shown.
Hypothetical Model Methodology: The model portfolios were constructed based on custom sub-composites of funds in Preqin’s private credit universe. Fund inclusion in each composite was determined by the stated strategy or objective of the fund. The corporate direct lending composite includes direct loans to primarily private equity backed companies. The Asset-Based Lending composite includes funds involved in aviation finance, consumer credit, residential mortgage-backed securities, and/or credit related strategies secured by hard assets. The Specialty Finance composite includes funds that provide financing based on royalty income streams, litigation claims, and/or insurance linked income. The period under review covers June 30, 2020, through December 31, 2024, which represents the total combined time period in which performance data was available for all three sub-composites. The Corporate Direct Lending sub-composite includes 90 funds, the Asset-Based Lending sub-composite includes 35 funds, and the Niche/Specialty Finance sub-composite includes 7 funds. Each sub-composite contains all representative funds with performance data available through Preqin for the time period covered. Performance and risk metrics were calculated based on past results and no projections or forecasts are included in the analysis.
“Professional Investor” under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the “SFO”) and its subsidiary legislation) means:
(a) any recognised exchange company, recognised clearing house, recognised exchange controller or recognised investor compensation company, or any person authorised to provide automated trading services under section 95(2) of the SFO;
(b) any intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong;
(c) any authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong;
(d) any insurer authorized under the Insurance Ordinance (Cap. 41 of the Laws of Hong Kong), or any other person carrying on insurance business and regulated under the law of any place outside Hong Kong;
(e) any scheme which-
(i) is a collective investment scheme authorised under section 104 of the SFO; or
(ii) is similarly constituted under the law of any place outside Hong Kong and, if it is regulated under the law of such place, is permitted to be operated under the law of such place,
or any person by whom any such scheme is operated;
(f) any registered scheme as defined in section 2(1) of the Mandatory Provident Fund Schemes Ordinance (Cap. 485 of the Laws of Hong Kong), or its constituent fund as defined in section 2 of the Mandatory Provident Fund Schemes (General) Regulation (Cap. 485A of the Laws of Hong Kong), or any person who, in relation to any such registered scheme, is an approved trustee or service provider as defined in section 2(1) of that Ordinance or who is an investment manager of any such registered scheme or constituent fund;
(g) any scheme which-
(i) is a registered scheme as defined in section 2(1) of the Occupational Retirement Schemes Ordinance (Cap. 426 of the Laws of Hong Kong); or
(ii) is an offshore scheme as defined in section 2(1) of that Ordinance and, if it is regulated under the law of the place in which it is domiciled, is permitted to be operated under the law of such place,
or any person who, in relation to any such scheme, is an administrator as defined in section 2(1) of that Ordinance;
(h) any government (other than a municipal government authority), any institution which performs the functions of a central bank, or any multilateral agency;
(i) except for the purposes of Schedule 5 to the SFO, any corporation which is-
(i) a wholly owned subsidiary of-
(A) an intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong; or
(B) an authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong;
(ii) a holding company which holds all the issued share capital of-
(A) an intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong; or
(B) an authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong; or
(iii) any other wholly owned subsidiary of a holding company referred to in subparagraph (ii); or
(j) any person of a class which is prescribed by rules made under section 397 of the SFO for the purposes of this paragraph as within the meaning of this definition for the purposes of the provisions of the SFO, or to the extent that it is prescribed by rules so made as within the meaning of this definition for the purposes of any provision of the SFO.
The first of such classes of additional “professional investor”, under the Securities and Futures (Professional Investor) Rules (Cap. 571D of the Laws of Hong Kong), are:
(k) any trust corporation (registered under Part VIII of the Trustee Ordinance (Cap. 29 of the Laws of Hong Kong) or the equivalent overseas) having been entrusted under the trust or trusts of which it acts as a trustee with total assets of not less than HK$40 million or its equivalent in any foreign currency at the relevant date (see below) or-
(i) as stated in the most recent audited financial statement prepared-
(A) in respect of the trust corporation; and
(B) within 16 months before the relevant date;
(ii) as ascertained by referring to one or more audited financial statements, each being the most recent audited financial statement, prepared-
(A) in respect of the trust or any of the trust; and
(B) within 16 months before the relevant date; or
(iii) as ascertained by referring to one or more custodian (see below) statements issued to the trust corporation-
(A) in respect of the trust or any of the trusts; and
(B) within 12 months before the relevant date;
(l) any individual, either alone or with any of his associates (the spouse or any child) on a joint account, having a portfolio (see below) of not less than HK$8 million or its equivalent in any foreign currency at the relevant date or-
(i) as stated in a certificate issued by an auditor or a certified public accountant of the individual within 12 months before the relevant date; or
(ii) as ascertained by referring to one or more custodian statements issued to the individual (either alone or with the associate) within 12 months before the relevant date;
(m) any corporation or partnership having-
(i) a portfolio of not less than HK$8 million or its equivalent in any foreign currency; or
(ii) total assets of not less than HK$40 million or its equivalent in any foreign currency, at the relevant date, or as ascertained by referring to-
(iii) the most recent audited financial statement prepared-
(A) in respect of the corporation or partnership (as the case may be); and
(B) within 16 months before the relevant date; or
(iv) one or more custodian statements issued to the corporation or partnership (as the case may be) within 12 months before the relevant date; and
(n) any corporation the sole business of which is to hold investments and which at the relevant date is wholly owned by any one or more of the following persons-
(i) a trust corporation that falls within the description in paragraph (k);
(ii) an individual who, either alone or with any of his or her associates on a joint account, falls within the description in paragraph (k);
(iii) a corporation that falls within the description in paragraph (m);
(iv) a partnership that falls within the description in paragraph (m).
For the purposes of paragraphs (k) to (n) above:
An institutional investor as defined in Section 4A of the SFA and Securities and Futures (Classes of Investors) Regulations 2018 is:
(a) the Singapore Government;
(b) a statutory board as may be prescribed by regulations made under section 341 of the SFA, as prescribed in the Second Schedule of the Securities and Futures (Classes of Investors) Regulations 2018;
(c) an entity that is wholly and beneficially owned, whether directly or indirectly, by a central government of a country and whose principal activity is —
(i) to manage its own funds;
(ii) to manage the funds of the central government of that country (which may include the reserves of that central government and any pension or provident fund of that country); or
(iii) to manage the funds (which may include the reserves of that central government and any pension or provident fund of that country) of another entity that is wholly and beneficially owned, whether directly or indirectly, by the central government of that country;
(d) any entity —
(i) that is wholly and beneficially owned, whether directly or indirectly, by the central government of a country; and
(ii) whose funds are managed by an entity mentioned in sub‑paragraph (c);
(e) a bank that is licensed under the Banking Act 1970;
(f) a merchant bank that is licensed under the Banking Act 1970;
(g) a finance company that is licensed under the Finance Companies Act 1967;
(h) a company or co‑operative society that is licensed under the Insurance Act 1966 to carry on insurance business in Singapore;
(i) a company licensed under the Trust Companies Act 2005;
(j) a holder of a capital markets services licence;
(k) an approved exchange;
(l) a recognised market operator;
(m) an approved clearing house;
(n) a recognised clearing house;
(o) a licensed trade repository;
(p) a licensed foreign trade repository;
(q) an approved holding company;
(r) a Depository as defined in section 81SF of the SFA;
(s) a pension fund, or collective investment scheme, whether constituted in Singapore or elsewhere;
(t) a person (other than an individual) who carries on the business of dealing in bonds with accredited investors or expert investors;
(u) a designated market‑maker as defined in paragraph 1 of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations;
(v) a headquarters company or Finance and Treasury Centre which carries on a class of business involving fund management, where such business has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43D(2)(a) or 43E(2)(a) of the Income Tax Act 1947;
(w) a person who undertakes fund management activity (whether in Singapore or elsewhere) on behalf of not more than 30 qualified investors;
(x) a Service Company (as defined in regulation 2 of the Insurance (Lloyd’s Asia Scheme) Regulations) which carries on business as an agent of a member of Lloyd’s;
(y) a corporation the entire share capital of which is owned by an institutional investor or by persons all of whom are institutional investors;
(z) a partnership (other than a limited liability partnership within the meaning of the Limited Liability Partnerships Act 2005) in which each partner is an institutional investor.
An accredited investor as defined in Section 4A of the SFA and Securities and Futures (Classes of Investors) Regulations 2018 is:
(i) an individual —
(A) whose net personal assets exceed in value $2 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;
(B) whose financial assets (net of any related liabilities) exceed in value $1 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount, where “financial asset” means —
(BA) a deposit as defined in section 4B of the Banking Act 1970;
(BB) an investment product as defined in section 2(1) of the Financial Advisers Act 2001; or
(BC) any other asset as may be prescribed by regulations made under section 341; or
(C) whose income in the preceding 12 months is not less than $300,000 (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;
(ii) a corporation with net assets exceeding $10 million in value (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe, in place of the first amount, as determined by —
(A) the most recent audited balance sheet of the corporation; or
(B) where the corporation is not required to prepare audited accounts regularly, a balance sheet of the corporation certified by the corporation as giving a true and fair view of the state of affairs of the corporation as of the date of the balance sheet, which date must be within the preceding 12 months;
(iii) A trustee of a trust which all the beneficiaries are accredited investors; or
(iv) A trustee of a trust which the subject matter exceeds S$10 million; or
(v) An entity (other than a corporation) with net assets exceeding S$10 million (or its equivalent in a foreign currency) in value. “Entity” includes an unincorporated association, a partnership and the government of any state, but does not include a trust; or
(vi) A partnership (other than a limited liability partnership) in which every partner is an accredited investor; or
(vii) A corporation which the entire share capital is owned by one or more persons, all of whom are accredited investors.
Continuation solutions encompass a host of transaction types in which a GP secures interim liquidity and/or additional primary capital for their LPs in a strongly performing asset, or set of assets, that the GP will continue to own and control. Specifically, they include continuation funds, new funds created by GPs for the purpose of acquiring the asset(s) that continue to be managed by the same GP and capitalized by one or several secondary buyers, or equity recapitalizations involving a direct equity or structured equity investment into a portfolio company. These transactions can also include a parallel investment from the GP’s latest fund into that same pool of assets (a “cross-fund trade”).
