Hedge Fund News From HedgeCo.Net

Hedge Fund Research: $116 Billion Locked in Zombie Funds

Main_240-Zombie-private-equity-fundsNew York (HedgeCo.Net) – Reuters reports that new data from Preqin shows that there are approximately 1,200 private equity funds that can be described as zombie funds sitting on $116 billion in assets.

In a zombie fund, the GP is sitting on their assets past their expected holding period with no intention of making realizations and no plans to raise a successor fund, while continuing to collect management fees from their investors.

“No one is a winner when zombie funds are involved and they represent a clear misalignment of interests between the fund manager and investor.” Ignatius Fogarty – Head of Private Equity Products at Preqin said in a statement, “Consequently, GPs should be eager to realize investments and return capital to investors so that there is no reputational damage that adversely affects their ability to raise a follow-on fund. The secondary buyout market goes some way in offering a solution to return capital to investors.”

Secondary buyouts can offer a solution, Preqin says, with a fund manager taking over the assets of a zombie fund and creating an exit opportunity and liquidity to the primary vendor.

Alex Akesson
For HedgeCo.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership in HedgeCo.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!

Related Posts Plugin for WordPress, Blogger...
This entry was posted in HedgeCo News, hedge-fund-research. Bookmark the permalink.

Leave a Reply