Yale and Harvard are cashing out billions in PE holding

Welcome to this week's Capital Call - your Wednesday dose of private market insights without the jargon. At OneFund, understanding market shifts is crucial for making informed investment decisions.

Pour yourself something nice and dive in. 

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🧠 THE BIG IDEA

The Continuation Revolution

After three years of limited distributions, private equity has found its rhythm through continuation vehicles. For the first time since 2015, sponsors' distributions to LPs exceeded capital contributions in 2024.

Yale University is finalizing the sale of nearly $3 billion in PE holdings. Harvard's following with a $1 billion selloff. When institutions that invented the endowment model start moving this decisively on continuation deals, the market has shifted.

GP-led transactions hit $84 billion in 2024, nearly doubling from $45 billion in 2023. Secondaries fundraising reached $52.1 billion in Q1 alone. The difference today: these aren't crisis sales. Today's market lets GPs extend their winners while LPs who need cash can get it.

The evolution from crisis tool to exit option has created a new playbook for managing private market exposure.

📈 MARKET MOVERS

💷 UK Chain Maker Renold Snapped Up in $254M PE Play: MPE Partners' 50% premium takeover of Manchester-based Renold highlights PE's appetite for industrial assets. The 82 pence per share offer sent shares soaring 78% year-to-date, proving operational businesses remain targets. See the details

🏈 PE Enters the Game: $500M Fund Targets College Sports: Velocity Capital and Elevate launched the Collegiate Investment Initiative, marking PE's entry into US college athletics. Following a $2.8B settlement allowing athlete compensation, the fund will modernize venues and expand NIL platforms. Read the analysis

🏢 REITs Under Institutional Siege: Broadstone 85% Owned: Broadstone Net Lease shows how institutions now dominate retail-friendly sectors. With Vanguard (15%) and BlackRock (10%) leading the charge, this concentration makes BNL's stock price sensitive to institutional trading patterns. View the details

🔍 DEEP DIVE

The Art of the Continuation: Why Everyone's Talking About CVs

PE exits once meant IPO or sale. Those days are gone. The continuation vehicle has become private equity's third way - and the numbers show why everyone's paying attention.

GP-led transactions hit $84 billion last year, nearly doubling from $45 billion in 2023. Greenhill predicts these vehicles will account for 20% of all PE exits going forward. That's not a niche anymore - it's an exit route.

The Process Works as follows:
Think of it as options for LPs. When a fund nears its end but still holds a star performer, the GP creates a new vehicle to buy that asset. Existing LPs get three choices: take cash now, roll into the new fund, or split the difference.

The GP invests capital alongside new investors, putting skin in the game. Those Yale and Harvard sales? They're taking the cash option - not because they're worried, but because they're rebalancing after a decade of PE allocation.

The Performance Story
HarbourVest studied these transactions from 2008-2024 and found they outperformed buyouts by 0.3x while taking 30% less risk. Makes sense when you think about it - GPs are cherry-picking their assets, not rolling the dice on new deals.

More than 80% of the top 100 PE firms have now done at least one continuation deal. The market's grown up too. Management fees have settled around 1%, and valuations are now practice.

Is it perfect? No. Some LPs grumble about quick decisions. Valuation disputes happen. But when Greenhill says these will be one in five exits going forward, that's the normal taking shape. LPs get liquidity when they need it. GPs keep their winners longer. New investors access assets.

The evolution from crisis tool to exit option has created a new way to think about PE liquidity. And judging by those Yale and Harvard moves, even the money in the room is taking notice.

🧰 TACTICAL TAKEAWAYS

• Position for the Liquidity Rotation. With secondaries fundraising up 30.9% year-over-year, LPs have options. Consider keeping powder dry for GP-led opportunities in assets rather than rushing into blind pools.

• Embrace Volatility as a Value Driver. Tariff uncertainty has created valuation disparities in years. Focus on middle market opportunities with cross-border exposure - think US-based manufacturing and services.

• Make AI Operational, Not Optional. 87% of businesses using AI report revenue improvements. Portfolio companies without AI integration strategies risk being left behind. Start with automation, not moonshots.

🗳️ COMMUNITY POLL

🧵 WEEKEND READS

(Because some light market analysis pairs wonderfully with Saturday coffee)

• 🎯 When Jamie Dimon Speaks, PE Listens - Apollo and General Atlantic bowed out of early recruiting after JPMorgan's CEO called the practice "unethical." The story: AI threats and deal slowdowns make this an easy concession.

• ⚠️ What's the Biggest Risk Facing Private Equity? - Top buyout bosses reveal their concerns at SuperReturn. Apollo's Sambur warns of AI disrupting software portfolios, while Brookfield's Yu says firms relying on multiple expansion are doomed.

• 📊 Family Offices Embrace the PE Paradox - Two-thirds of billion-dollar family offices plan to increase PE allocations even as public equities drop to just 19% of portfolios. The twist? 74% are exploring crypto following regulatory clarity.

• 🏥 Oregon Draws the Line on PE Healthcare - The nation's toughest anti-PE healthcare law prohibits non-physician ownership of medical practices. Following Steward Health's collapse, the three-year phase-out signals growing regulatory backlash.

👋 WANT IN?

In these turbulent times, understanding the nuances of private market investments is more crucial than ever. Schedule a discovery call with OneFund further discuss private equity and the current market.

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The OneFund Team

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