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All across the country. So many deals not hitting proforma with asset values marked down 30-40% (or more).
Right now rescue capital and lenders kicking the can is keeping these losses from having to be realized.
“all across the country”? Did a bot write this. Your comment makes no sense
I think they actually are responding as if this was a RE thread, not a PE thread which actually may be correct given amount of HNW individuals that serve as LPs in the space. RE deals alot of times have that GP / LP concept thats deal specific where the GP is the operator and only ponies up like 10% with like 90% passive money.
Based on the most helpful WSO content, there isn't any indication of LPs being in a "fire sale" secondary process or failing to meet their funding requirements. However, the "denominator effect" has been a significant factor. This effect occurs when the allocation to private equity increases as a percentage of an LP's total portfolio due to declines in other asset classes, even if the absolute amount invested in private equity remains unchanged. This can lead to unintended overexposure, prompting LPs to adjust their allocations. As a result, there has been an increase in secondary shares being offloaded in the market by LPs.
While this doesn't directly point to LPs being distressed, it does highlight the challenges they face in managing their allocations effectively.
Sources: Troubled fundraising processes, What do you love/hate/regret about public credit/HY/Distressed?, Moving to Buy-Side in a Recessionary Environment
in institutional world? nahh. Its happens on rare occasion but LP defaults are more idiosyncratic vs systematic. LPs can tap the secondary market nowadays. legal docs outline punitive measures in the event of default. Interest owed, GP/otherLPs option to buy out defaulting LP interest at discount, etc.
if youre calling capital, it means you are investing in a deal today with awareness of current market environment. so its not like your buying into a shitty legacy asset pool given restriction on investment period.
PE and PC are very small parts of their portfolios. Like 80% is bonds
What kind of a dumbass response is this.
Ok explain then
there were very few 'distressed' LPs even in the wake of the financial crisis (and GPs did not call capital for a good 9 10 months). it's a fear that has yet to be realized on a broad basis.
Alternatives are smaller component of the portfolio. Even if the alternatives were a larger part, an LP could always sell more liquid assets or secondary market.
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