Gp financing: locked out
20.01.2025 – Articles
GP financing can be too costly or tricky to secure. Despite a handful of structural innovations coming to market, these solutions also favour larger managers, meaning small caps are increasingly being locked out of financing solutions.
One of the most commonly cited challenges I hear when speaking to CFOs at the moment is financing the GP commitment. The struggle is especially real for small cap managers. Here we explore the drivers behind the issue, as well as some of the solutions that have come to market more recently.
Twofold problem
When it comes to financing the GP commitment, the problem is twofold. First is the slower M&A market; fewer exits mean less cash coming back to the fund, resulting in a shortfall in cash for the GP commitment.