Banking and Treasury for Secondaries Funds: Acquisition Financing, Multi-Fund Cash Flow, and Liquidity Management

Secondaries treasury management requires coordinating acquisition financing for LP interest purchases, managing liquidity for unfunded commitments inherited with LP stakes, processing distributions from numerous underlying funds, tracking capital calls across portfolio requiring funding, and maintaining adequate cash buffers given unpredictable timing of underlying fund activity. The CFO establishes banking relationships supporting acquisition financing, implements cash forecasting across diverse underlying funds, and optimizes liquidity balancing adequate buffers against cash drag.

Acquisition Financing

LP interest acquisitions often utilize bridge financing pending capital calls from secondaries fund investors. Subscription credit facilities secured by investor commitments provide acquisition funding flexibility. Facilities enable closing acquisitions immediately upon opportunity identification while calling capital quarterly in larger batches reducing administrative burden. The CFO negotiates facility terms, manages draws and repayments, monitors covenants, and ensures compliance with investor restrictions on leverage duration or amounts.

Multi-Fund Cash Flow Coordination

Holding LP stakes in multiple underlying funds creates complex cash flows. Capital calls from various funds require funding within tight deadlines (typically 10-15 days). Distributions from underlying fund exits provide cash inflows with uncertain timing. The CFO forecasts expected capital calls and distributions based on underlying fund communications, maintains liquidity buffers absorbing timing uncertainty, processes capital calls and distributions efficiently, and reports cash flow activity to secondaries fund investors showing sources and uses across portfolio.

Unfunded Commitment Management

Acquired LP interests often include unfunded capital commitments requiring future funding when underlying funds make capital calls. The CFO tracks unfunded commitments across all holdings, forecasts deployment timing based on underlying fund investment pace, ensures adequate reserves or investor capital availability, and monitors commitment expiration providing relief from funding obligations. Underestimating unfunded needs risks forced asset sales or defaults on commitments damaging relationships.

Key Takeaways

• Subscription facilities enable acquisition flexibility: Bridge financing allows immediate acquisition closing while managing investor capital call frequency improving LP experience.
• Multi-fund cash flow is unpredictable: Capital calls and distributions across numerous underlying funds with varying timing demand substantial liquidity buffers.
• Unfunded commitment tracking is critical: Inherited commitments require systematic monitoring and liquidity planning preventing defaults from inadequate preparation.
• Cash management is more complex than primary funds: Coordinating cash across multiple underlying funds creates operational intensity beyond single-strategy primary fund treasury.