1"use strict";(self.webpackChunkfront_client=self.webpackChunkfront_client||[]).push([[129],{90129:function(e,i,t){t.r(i),t.d(i,{TimelineOfSemiLiquidFundChunk:function(){return w}});var n,s,r,a,o,d=t(30168),l=t(17589),c=t.n(l),u=(t(58422),t(27633)),h=t(84916),p=t(55831),m=t(23712),f=c().div.withConfig({componentId:"sc-xxlqbd-0"})(["display:flex;flex-direction:column;width:100%;"]),g=c().div.withConfig({componentId:"sc-xxlqbd-1"})((function(e){var i=e.theme;return(0,l.css)(n||(n=(0,d.Z)(["\n display: flex;\n flex: 1;\n &:nth-child(odd) {\n border-width: "," 0 "," 0;\n border-style: solid;\n border-color: ",";\n }\n "])),i.borderWidths(1),i.borderWidths(1),i.palette.neutral[300])})),v=c().div.withConfig({componentId:"sc-xxlqbd-2"})((function(e){var i=e.theme;return(0,l.css)(s||(s=(0,d.Z)(["\n flex: 1;\n padding: 20px;\n font-weight: ",";\n border-width: 0 "," 0 ",";\n border-style: solid;\n border-color: ",";\n &:first-child {\n border-right: 0;\n }\n background-color: ",";\n "])),i.typography.fontWeights.medium,i.borderWidths(1),i.borderWidths(1),i.palette.neutral[300],i.colors.backgrounds.surfaces.secondary)})),y=c().div.withConfig({componentId:"sc-xxlqbd-3"})((function(e){var i=e.theme;return(0,l.css)(r||(r=(0,d.Z)(["\n flex: 1;\n padding: ",";\n box-sizing: border-box;\n border-width: 0 "," 0 ",";\n border-style: solid;\n border-color: ",";\n &:first-child {\n border-right: 0;\n }\n "])),i.spacing(8),i.borderWidths(1),i.borderWidths(1),i.palette.neutral[300])}
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1),". As the graph below demonstrates, a closed-ended fund would need to generate an IRR of 18.4% to achieve the same 3x multiple",(0,m.jsx)("sup",{children:"*"}),"."]}),(0,m.jsxs)("p",{children:["The true power of compounding may unfold over time. J.P. Morgan\u2019s modelling projects that, over a 30-year period, there is a dramatic and ever-widening gap in wealth creation between an open-ended fund that continually reinvests proceeds and a traditional PE fund that distributes them",(0,m.jsx)("sup",{children:"*6"}),". For long-term investors, this demonstrates how the compounding engine within evergreen funds can become a significant driver of portfolio outperformance if they remain allocated and the underlying portfolio companies perform well."]}),(0,m.jsxs)("figure",{className:"w-richtext-figure-type-image w-richtext-align-fullwidth",children:[(0,m.jsx)("div",{children:(0,m.jsx)("img",{src:"/images/edication-materials/semi-liquid-2.png",loading:"lazy",alt:""})}),(0,m.jsx)(b,{children:"Source: KKR 2024"})]}),(0,m.jsx)("h3",{children:"Easier to manage"}),(0,m.jsxs)("p",{children:["Finally, semi-liquids are designed to simplify the allocation process for investors. Commitments are paid upfront, and investors don\u2019t have to keep track of multiple capital calls and distribution notices",(0,m.jsx)("sup",{children:"7"}),". This is in addition to historically more predictable redemption periods and streamlined communication between investors and fund managers, which may further reduce administrative burdens."]}),(0,m.jsx)("h2",{children:"Private equity funds in a nutshell"}),(0,m.jsxs)(f,{children:[(0,m.jsxs)(g,{children:[(0,m.jsx)(v,{children:"Semi-liquid open-ended fund"}),(0,m.jsx)(v,{children:"Closed-ended fund"})]}),(0,m.jsxs)(g,{children:[(0,m.jsxs)(y,{children:["Investors may be able to make redemptions at set intervals \u2013 usually either monthly or quarterly \u2014 at a capped percentage of net asset value (NAV)",(0,m.jsx)("sup",{children:"*"}),"."]}),(0,m.jsx)(y,{children:"Investor capital is locked up in the fund until the end of its life and all assets are realised."})]}),(0,m.jsxs)(g,{children:[(0,m.jsx)(y,{children:"Entire capital is called up front with exposure to underlying assets at the first subscription window."}),(0,m.jsx)(y,{children:"Commitments are made upfront, but capital is only put to work when managers make capital calls at various points through the investment period of the fund."})]}),(0,m.jsxs)(g,{children:[(0,m.jsx)(y,{children:"Distributions are typically made at regular intervals or reinvested, which may result in compounding returns."}),(0,m.jsx)(y,{children:"Distributions are at manager discretions and can cluster at the end of a fund\u2019s life when portfolios are harvested."})]}),(0,m.jsxs)(g,{children:[(0,m.jsx)(y,{children:"To facilitate liquidity, a portion of assets are held in liquidity sleeves of liquid assets."}),(0,m.jsx)(y,{children:"Structures are illiquid, but managers don\u2019t have to hold liquidity sleeves to cover redemption windows."})]})]}),(0,m.jsx)(x,{className:"FootnotesWrapper",children:(0,m.jsx)(p.b,{footnotes:[{order:1,marker:"*",value:"Liquidity is not guaranteed. Liquidity in this context refers to the option of redeeming up to 5% NAV on a\nquarterly basis. Redemptions are not guaranteed, may not be eligible to all investors and are subject to demand\nand to general partner approval."}]})}),(0,m.jsx)(x,{className:"FootnotesWrapper",children:(0,m.jsx)(h.f,{footnotes:[{order:1,value:"https://www.morganstanley.com/im/publication/insights/articles/article_evergreenprivateequityfunds.pdf"},{order:2,value:"https://am.gs.com/en-us/advisors/insights/article/2023/semi-liquid-funds-key-features"},{order:3,value:"https://pws.blackstone.com/emea/wp-content/uploads/sites/20/blackstone-secure/Life-Cycle-of-Private-Equity-EMEA.pdf?v=1638976450"},{order:4,value:"https://advisor.morganstanley.com/the-davis-yost-group/documents/field/d/da/davis-yost-group/Research_Evergreen_Private_Equity_Funds.pdf"},{order:5,value:"https://www.kkr.com/insights/evergreen-vehicle-private-equity"},{order:6,value:"https://am.jpmorgan.com/us/en/asset-management/institutional/insights/portfolio-insights/alternatives/assessing-the-benefits-of-open-end-alternative-investments"},{order:7,value:"https://www.privateequityinternational.com/why-semi-liquids-are-not-just-for-wealthy-individuals"}]})})]})}}}]);
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