Just responding to your last line, which is a common misconception.

If CVs were purely financial engineering to ‘squeeze’ more carry (which is usually all rolled into the CV by the GP anyways), why would any of the very sophisticated LPs buy into these CVs? The truth is, as the previous commenter noted, that the assets rolled into CVs are usually highly attractive ‘crown jewel’ assets for which both the GPs and LPs believe there is an attractive exit on the horizon, usually within 3-5 years.

It’s a good article but admittedly misses some of the nuance of how people in the industry view these deals.

The key thing to note is that they’re a versatile product in a GP’s toolkit and can be used to achieve a variety of goals: to retain sponsor ownership of an asset, to provide investors with liquidity, to provide a reset of management fees (so they’re paid as a % of the new increased value), and to provide a carry crystallisation event and an opportunity for carry going forward to be reallocated in a more appropriate way if there have been team changes.

Each deal will be driven by its own dynamics and there is no one size fits all reason as to why a CV may be the product of choice.

Most of the single-asset deals that have made headlines in the last year or so have involved top-performing assets rather than middle-performing assets – and that is where a CV can shine as the transaction structure of choice. Multi asset CVs often do admittedly involve one or two “gems” packaged together with one more assets that need more time before optimum pricing can be achieved (AKA middle-performing assets). And as the market develops it’s inevitable that there will be increasing numbers of CV deals out there where the quality of the asset doesn’t really lend itself to this type of transaction.

We’re not in 2008; I can’t see that the existing global risks (war in the middle, Russia/Ukraine, US debt climate change) are sufficient to avoid selling investments on a public market altogether.

What I suspect (but can’t prove) is that private equity funds use these to squeeze more carried interest out of middling-performing investments where institutional investors aren’t convinced to buy at overvalued IPO prices.