A $2.3 billion continuation vehicle for a single asset

The manager held a transmission asset in a 2016 vintage fund that had four years of remaining life and a capital program extending well beyond it. Selling was value-destructive; holding was not possible.

The advisory committee had approved one continuation vehicle previously and had been unhappy with the process. Its stated objection was not the price but the sequence: it had been asked to bless a valuation it had no part in commissioning.

We structured the process backwards from that objection. The valuation adviser was appointed by the advisory committee, not the sponsor, and its scope was agreed before any buyer was approached.

Conflicts disclosure was drafted at the outset and updated as a standing document rather than assembled for the consent solicitation. Every economic interest of the sponsor and its personnel in the continuing vehicle was disclosed in the same document, including those that would not have required disclosure.

We negotiated the rollover terms so that electing investors received the same economics as the new capital, which removed the most common source of post-transaction complaint.

Investors representing 61 percent of commitments elected to roll, which was materially above the manager's expectation. No investor raised an objection to the conflicts process.

The advisory committee adopted the appointment protocol as standing practice for future sponsor-led transactions.