Alex Ambroz

But what's happening now is that the funds, they're not selling the underlying companies and they're not taking them to IPO.

Or when they do take them to IPO, instead of selling and distributing cash, they're distributing shares.

Or what's also happening, and increasingly it's happening more and more, is that the private equity funds, instead of distributing cash, they're putting an underlying investment company into a continuation vehicle.

So Abu Dhabi Investment Corporation, just a few months ago, they sued a private equity fund that moved an underlying investment to a continuation vehicle.

instead of selling it to someone else.

That's very rare, but it does happen.

The other thing that allocators can do are secondary sales.

So secondary sales are when, you know, hey, we have this remaining commitment in this underlying fund, or we have several funds with which we still have underlying commitments, and we are gonna go out to the market, usually using a third party firm to help you with this process, and we're going to seek to sell them for as much a percent of NAV as possible so that we can get liquidity today.

Oftentimes, executing a secondary sale of any private asset fund, you're going to take a haircut.

Hopefully, you take the minimal haircut you can.

But one thing that's tough for allocators when they decide they want to go to the secondary sale process is that it can be damaging politically to the relationship that you have with the underlying private investment firm.

And it may mean that you are not allowed, that you don't get the call about the next fundraise that they have if they raise a second fund, if they raise the next fund.

So secondaries, it's a very, very common process that allocators can take part in.

And it's very common in the industry.

But there's a lot of allocators that just will not execute them for fear of damaging relationships and also damaging their reputation with other private asset funds for which they did not execute a secondary sale.

80% to 95% is what you're expecting if it's a great fund.

If it's a fund, and this is the tough part too, imagine you're the CIO, you're the head of private assets, and you've been carrying a line item at $100 million on the balance sheet of a private asset fund that's been there for years.

I've seen this myself when I was managing assets.

And the fund is there.

It's marked at 100 million.