What is Continuation Fund?
A continuation fund is a vehicle that allows a GP to roll select portfolio companies from an existing fund into a new fund, giving existing LPs the option to cash out or roll over, while new investors can buy in.
Continuation funds have become one of the most common forms of GP-led secondaries. When a fund reaches its end of life but the GP wants to hold one or more portfolio companies longer, they create a continuation vehicle. Existing LPs can sell their stakes (providing liquidity) or roll over into the new vehicle.
New investors — typically secondary funds — enter the continuation vehicle at a negotiated price. The transaction must be approved by the LPAC and is subject to an independent fairness opinion to protect existing LP interests.
Also known as: continuation vehicle, CV