Key Takeaways
- • Nearly one-quarter of limited partners have encountered evidence of continuation-fund-on-continuation-fund (CV-on-CV) structures, according to Coller Capital's latest investor survey, indicating a proliferation of nested continuation vehicles in the market.
- • Limited partners demonstrate a preference for liquidity exit events over committing capital to continuation funds, suggesting growing LP fatigue with extended hold periods and nested fund structures.
- • Coller Capital's survey findings highlight structural tension between general partner preferences for continuation vehicles (which extend fund life and management fees) and LP preferences for capital return and deployment flexibility.
Summary
Coller Capital's latest investor survey reveals a significant market trend: most limited partners are choosing liquidity events over rolling their capital into continuation funds. This finding reflects broader shifts in LP preferences regarding fund structures and capital deployment strategies in the private equity market.
The survey data indicates that nearly one-quarter of LPs have observed CV-on-CV structures—continuation funds built on top of other continuation funds. This prevalence of nested continuation vehicles signals the extent to which the continuation fund model has become embedded in GP-LP relationships, particularly as GPs seek to extend fund lifespans and preserve management fee streams from aging portfolios.
The preference for liquidity over continuation fund rollups suggests LP sentiment has shifted materially. Rather than committing fresh or recycled capital into secondary continuation vehicles, institutional investors increasingly prioritize cash distributions and the flexibility to redeploy capital across their portfolios according to their own investment timelines and opportunity sets. This dynamic reflects LP concerns about fee drag, governance complexity, and the opportunity cost of remaining locked into GP-managed vehicles beyond original fund term endpoints.
The Coller Capital findings carry strategic implications for general partners managing mature portfolios. As LPs demonstrate growing preference for clean exits, GPs may face increased pressure to pursue traditional exit strategies—secondary sales, IPOs, or third-party acquisitions—rather than relying on continuation fund vehicles to bridge portfolio realization timelines. This market signal suggests the continuation fund model, while valuable for portfolio extension, may have reached a practical saturation point where LP commitment cannot be assumed and must be actively earned through performance alignment and fee structures.
The survey data indicates that nearly one-quarter of LPs have observed CV-on-CV structures—continuation funds built on top of other continuation funds. This prevalence of nested continuation vehicles signals the extent to which the continuation fund model has become embedded in GP-LP relationships, particularly as GPs seek to extend fund lifespans and preserve management fee streams from aging portfolios.
The preference for liquidity over continuation fund rollups suggests LP sentiment has shifted materially. Rather than committing fresh or recycled capital into secondary continuation vehicles, institutional investors increasingly prioritize cash distributions and the flexibility to redeploy capital across their portfolios according to their own investment timelines and opportunity sets. This dynamic reflects LP concerns about fee drag, governance complexity, and the opportunity cost of remaining locked into GP-managed vehicles beyond original fund term endpoints.
The Coller Capital findings carry strategic implications for general partners managing mature portfolios. As LPs demonstrate growing preference for clean exits, GPs may face increased pressure to pursue traditional exit strategies—secondary sales, IPOs, or third-party acquisitions—rather than relying on continuation fund vehicles to bridge portfolio realization timelines. This market signal suggests the continuation fund model, while valuable for portfolio extension, may have reached a practical saturation point where LP commitment cannot be assumed and must be actively earned through performance alignment and fee structures.
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