Key Facts
- Major institutional investors faced liquidity issues when, due to the general economic conditions, commitments to alternative investment funds exceeded distributions being received from those types of funds
- Mintz helped one investor develop a special purposed limited partnership vehicle
- The investor shifted a significant portion of its commitments to other investors through the new investment structure, which is also open to outside investors
The Situation
Institutional investors throughout the United States were facing liquidity issues during a period when their commitments to alternative investment funds greatly exceeded current distributions being received from these types of funds. Many investors could only dispose of these interests and get relief by incurring significant discounts. One major institutional investor turned to Mintz.
The Approach
Working in collaboration with the client’s investment team, Mintz developed a structure to permit shifting a significant portion of the investor’s commitments to other investors without incurring any discount penalty. This involved establishing a special purpose limited partnership vehicle to hold those investments in which other investors were able to participate in an economic and tax efficient way.
The Outcome
The investors completed the transaction and continued to utilize the structure going forward in order to be able to respond quickly to the changing investment conditions.