Article

Financing for continuation funds: a practical guide to market trends, opportunities and issue spotting

Financing for continuation funds: a practical guide to market trends, opportunities and issue spotting
Published Date
Jan 27 2025
Continuation funds are providing an attractive alternative exit route for fund managers in the current global economic climate. A record number of continuation vehicles were launched in 2023, a trend that has continued into 2024 as general partners (GPs) seek to avoid disposing of investments, hopeful that improved economic conditions and decreasing borrowing costs will help boost valuations and provide liquidity solutions for investors, who continue to experience growing capital needs.

While GPs and investors in these transactions have not traditionally considered using leverage, financing at the continuation fund level either in addition to or as an alternative to asset-level financing can create a better overall return profile for investors in the right circumstances.

As the continuation fund market matures, equity commitments alone are increasingly insufficient to meet an individual continuation fund manager’s strategy or liquidity needs. The topic of financing for continuation funds has understandably therefore hit the radar of fund managers and finance providers alike. 

In this article, first published in Global Legal Insights – Fund Finance 2025, we explore some of the market trends that have been driving adoption, the options for structuring financing for these vehicles and finally some practical considerations for implementing a financing.

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