Retail Capital

Retail vehicles, typically characterized by their fully funded nature (versus a drawdown model), continuous investment period with no defined end date, and ability to access liquidity through defined redemption windows, represent a sea change for private markets.

The rapid growth of these vehicles introduces a series of new challenges for LPs to consider in their relationships with existing and prospective GPs, relating to investment allocation, conflicts of interest, economics and incentives, transparency, and governance.

Through a series of white papers and programming, we’re educating our LP members on the impact U.S.-oriented retail vehicles have on institutional funds and the overall health of the market, and providing key questions for them to discuss as they are engaging with their GPs. 

The first whitepaper, ILPA Retail Capital Analysis: Primer and Questions to Ask GPs, contains information on:

• The definition and key characteristics of retail vehicle offerings, such as Tender Offer Funds, Interval Funds, Non-Traded BDCs, and Non-Traded REITs, and how they differ from traditional institutional private funds
• The potential implications for investment allocation, conflicts of interest, economics and incentives, transparency and governance, as well as broader market health
• Market overview along with updates on legislative and regulatory developments with the potential to further drive the growth of retail participation in private markets
• The ins and outs of how retail vehicles operate in terms of investments and allocations, liquidity, valuations, fees and expenses, and governance
• A set of questions LPs can use to engage GPs on retail vehicles and potential impacts on institutional funds

The forthcoming papers in the series will consider additional topics such as:

• Ongoing regulatory and policy developments in the US regarding 401(k) capital
• Overview of offerings from global jurisdictions (such as ELTIFs in the EU and LTAFs in the UK)
• Overview of offerings and different investment approaches used by GPs in their retail vehicles
• Specific LPA language to watch for and recommended counterpoints to address the most concerning challenges
• Specific DDQ language to incorporate into the due diligence process