Strategies for Unlocking Value in Investment Portfolios
GP-led secondaries refer to a type of secondary transaction in which the general partner (GP) of a private equity fund transfers the management...
Asset Realisation Strategy
Cork Gully works with key stakeholders to develop and execute asset specific realisation strategies with a view to optimising portfolio realisations within an agreed timeframe. We have a wealth of knowledge and experience across a number of asset classes and jurisdictions, and utilise this experience to develop innovative solutions to realisation challenges. The solutions we offer are often unique, although a typical engagement may see Cork Gully involved in:
- Strategic advice to incumbent management and advisers in relation to litigation and claims management;
- Managing illiquid assets to achieve maximum returns for investors; and/or
- Managing communications with investors and other key stakeholders to maintain transparency in the process.
Throughout the process we advise on identifying opportunities for divestiture, alternative strategies with third parties, or joint ventures. We maintain excellent relationships with purchasers on secondary markets and can utilise these, where required, in consultation with key stakeholders of the fund.
Portfolio Realisation Strategies
Fund portfolio realisation strategies may include:
- Selling off assets in one sector or industry and reinvesting the proceeds into another sector or industry that is expected to perform better. This strategy can help to manage risk and take advantage of emerging opportunities;
- Adjusting the mix of assets within the fund to optimize risk and return. This may involve selling off underperforming assets or increasing exposure to assets that are expected to perform well;
- Selling assets strategically to take advantage of short-term market conditions. For example, a fund manager may sell off assets in a particular sector if they anticipate a downturn in that sector; and
- Selling off an entire asset or business unit within the fund’s portfolio. This may be done to generate liquidity, simplify the portfolio, or focus the fund’s strategy on core assets. Selling assets in the secondary market, such as private equity investments or illiquid assets, to other investors. This can help to generate liquidity for the fund, but it may also require significant legal and regulatory expertise.
The choice of fund portfolio realisation strategy will depend on the specific goals and objectives of the fund, as well as the current market conditions and investment opportunities. It is important for fund managers to carefully evaluate the potential costs and benefits of each strategy, and to communicate with investors throughout the process.
Single Asset Realisation Strategies
Single asset realisation strategies refer to the methods used to sell or dispose of a single asset, such as a property or a business, to generate liquidity or unlock value, strategies include:
- Selling the asset outright to a buyer. This may be done through a private sale, auction, or listing on a public marketplace. Selling an asset may be an effective way to generate cash quickly, but it may not always provide the best value;
- Selling the asset to a buyer and then leasing it back from them. This can provide a source of recurring revenue, which can be used to generate cash flow. Such arrangements can also provide tax benefits and may allow the fund to retain some control over the asset. Separating a portion of an asset and creating a new entity with an alternative ownership structure or investment strategy. This may be done to unlock additional value or to meet specific investor demands;
- Using the asset as collateral to secure a loan. This can be an effective way to generate cash without selling the asset outright; and
- Changing the use or purpose of the asset to unlock additional value. This may involve upgrading a property asset, or turning around a business to increase value.
The choice of single asset realisation strategy will depend on the specific circumstances and the objectives of the fund and its investors. It is important to carefully evaluate the potential costs and benefits of each strategy, and to seek expert advice where necessary.
"We work with key stakeholders to develop and execute asset specific realisation strategies with a view to optimising portfolio realisations within an agreed timeframe"
Insights
Overcoming Challenges in the Sale of Illiquid Assets
Illiquid assets such as real estate, private equity, and venture capital investments can be challenging to sell, and the process can be time-consuming and complex...
ESG Risk With Potential to Upend Funds?
ESG (Environmental, Social, and Governance) risks can also impact investment funds and potentially upend them. Investors are becoming...
