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.
Beatae assumenda quae consequatur vero necessitatibus architecto. Nihil nesciunt accusantium consequatur tenetur. Sit occaecati consequuntur iste aliquid sint reprehenderit. Ipsa tempore et eius a cumque.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...