Leverage

Quarterly reports to investors must be explicit on the use of subscription credit lines, while LPs must ask for data that discounts the impact of borrowed cash, the lobby group recommends.

Crestline, which is based in Texas, has shifted towards the preferred equity niche. Secondaries Investor caught up with the firm’s head of PE credit and fund restructuring to talk deal sourcing and increased interest in preferred equity.

One of the interests sold in the manager's 2006-vintage distressed fund was a $100m stake held by Ontario Teachers' Pension Plan, Secondaries Investor has learned.

Secondaries funds take full advantage of subscription lines, but subscription lines also benefit from the secondaries market.

Providers of subscription lines are increasingly looking to take control of LP transfers, according to lawyers at Debevoise & Plimpton.

Buyers are using levels of leverage that 'haven't been seen before', according to Mario Giannini.

Some investors are in favour of reducing the frequency of capital drawdowns; many are concerned about the risks of extending loan periods.

Not having negotiated subscription lines themselves, investors may be unaware of terms that could block sales of their interests, writes Andy Thomson, editor of sister publication Private Debt Investor.

In this third excerpt from sister publication Private Equity International's secondaries roundtable, some of the market’s top participants discuss the use of leverage to boost returns.

The number of leverage providers in secondaries has more than doubled over the last four years, according to the report obtained exclusively by Secondaries Investor.