Private equity executives defend continuation funds at Hong Kong investment summit
Industry leaders are pushing back against investor skepticism regarding the growing popularity of the liquidity structure during a summit in Hong Kong.
Private equity executives defended the use of continuation funds against skepticism from limited partners at Hong Kong’s flagship investment summit on Wednesday, according to Mint.
The structure allows firms to hold promising portfolio companies for longer periods to create value, though it remains contentious due to potential conflicts between general partners and existing investors seeking exits.
Jonathan Sokoloff, managing partner at Leonard Green & Partners, acknowledged persistent resistance from the limited partner community but stated the structure is here to stay.
Hamilton Lane co-CEO Juan Delgado-Moreira described the vehicles as a space where investors can either realize value or remain invested, noting that third-party valuations and advisory committee approvals help address governance concerns.
Delgado-Moreira said assets rolled into these vehicles have generated average money multiples of roughly four times and returns above the top quartile for buyouts.
Carlyle Group Inc. co-president and head of global private equity John Redett said the industry is entering a phase where managers must generate returns through active operational value creation.