Securitisation, not secondaries

In the article Dr. Christian Diller and Dr. Marco Wulff analyse securitisations as an alternative to straight secondary sales for private equity investors. Securitisations offer many attractive benefits for investors including the reduction of private equity exposure, the decrease in open commitments, significantly lowering the risk-weighted assets for regulated financial institutions as well as a significant non-recourse upfront cash payment. In contrast to a straight secondary sale the upside of the portfolio can be partially captured with a securitisation as the originally investor participates in the positive development of the portfolio and retains his private equity exposure.

The article is not only interesting for banks and insurance companies considering the reduction of risk weighted assets, but to all LPs currently contemplating a secondary sale of portfolio assets.

Montana Capital Partners