Hi all,
I'm a first-time Limited Partner in a private equity fund. Given IB's attractive borrowing rates, I'm planning on using my portfolio account borrowing on margin to help cover the periodical, and time-sensitive, cash required for the lumpy capital calls the fund will solicit over the next 3-5 years. I'll be holding my IB money in ETS/broad markets, not necessarily single stocks, for risk reduction.
I've been telling myself that this feels like a fairly low risk strategy. Especially given the periodic distributions/capital returns over the course of the funds life as portfolio companies begin to see their exits. This provides the ability to reduce margin pressure, sort of acting as a revolving line of credit.
In theory, it feels solid. But tell me if I'm crazy, or if there is anything that I'm not thinking through.
Hey spinyourwheels, I think you deserve a response...heck, everyone does. We're listening, sorry about the delay ...my best guess at places on WSO that could help:
More suggestions...
You're welcome.
Personally, I prefer to have the $ on hand to fund capital calls, but given the lumpiness of cap calls / distros that the right approach to manage liquidity.
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