Frequently asked questions

The structure provides liquidity without giving up any upside (no fees outside of cash interest and small origination fee).  Currently the discounts on secondary LP position sales are 10% - on the very low end - and up to 40% for lesser known fund managers.   LP financing allows LPs to receive liquidity without having to accept these discounts and maintain full upside of position.

We provide financing for private fund LPs and GPs within a variety of asset classes (venture capital, private equity, private credit, real estate).  On the LP financing side, the LP stake would be the collateral.  On the GP financing side, future carried interest would be the collateral.

Use cases vary based on needs of LP and GP, primary use cases we’ve seen are:

LPs

• Capital calls without the need for cash
• Increasing fund commitment (with knowledge they can receive ~33% of their investment back as needed)
• Portfolio re-allocation and diversification

GPs

• GP capital commitment for new funds
• Diversification and other liquidity needs

We have several GPs that are considering bringing this into their LPAs if capital calls are missed by a certain amount of time (e.g., 2 weeks).  In this case, the financing would automatically step in and LP could pay off with no prepayment penalty.

Right now: $1 - 50M.
Future product: $100K minimum (not final)

LiquidLP would foreclose upon your pledge of LP interest (10 day process), then seek collection through sale of the interest to the GP or another party, or through the redemption process. LiquidLP may only collect up to its principal balance plus fees and interest. Any excess proceeds from sale would be repaid to Borrower.

Yes, these loans are personally guaranteed by the borrower.

Yes, LiquidLP can take several LP positions as collateral.  This will increase the liquidity available to LPs while providing more attractive terms compared to single position collateral.

There is no prepayment penalty and the borrower can pay off at any time.

• Partnership agreement – We typically request both the PPM and LPA.
• Audit from the previous year – Prior 3 years of audited financials plus most recent report (usually quarterly).
• K1 from the Fund – Request prior 3 years.
• Most recent account statements (to verify existing account balance and track how it has changed over time)
• Fund-level DD: Marketing materials, DD Memos, sample transactions, etc. (to understand the fund strategy)
• Personal financial statement of the borrower (i.e. LP)
• Can the fund take out a loan against their interest?

There are options available at the fund-level including NAV and subscription lines of credit.  We would not be lending to the fund specifically but could lend to the GPs.

We are focused on North America.

There is no specific fund size minimum though our minimum loan size amount is $1M which would imply a LP or GP position stake of ~$3M+.

We do underwrite the diversity of LP base and Borrower’s percentage ownership. Ex. $10M fund with a $7M LP is a concern.

Yes, we require GP or manager consent for the pledge of the LP position.