Surprised no-one has picked up on the timing in the cycle of...

Surprised no-one has picked up on the timing in the cycle of unlisted asset valuations, and the risk transfer from CD4 onto CD1/CD2, and to a lesser extent CD3.

CD1 and CD2 are in late harvesting mode, with more mature assets, weighted toward more staid industries, which would broadly be prone to less downside risk from falling valuation multiples for illiquid assets (due to significant increases in PE funding costs for leverage).

CD4, is still in deployment mode, being late to the party, has less mature assets, with more investments in 'ritzy' industries such as software, and has likely paid higher multiples on average for its investments. Therefore its beta (sensitivity) to downside revaluation is much higher than CD1/CD2.

CD3 is somewhere in between CD1/2 and CD4.

Considering the weight of money in CD4 is several times CD1 or CD2, what is being proposed is effectively a risk transfer from the unlisted CD4 unitholders onto the CD1/2/3 listed unitholders. The problem is exacerbated by PE GPs typically undertaking subjective valuations on a quarterly basis, and those valuations typically lagging transaction conditions by several months.

Therefore, if the transaction goes through, there is a good chance that by the time the first redemption window opens in Dec-23, the NAV/NTA will have been written down (potentially double digit %), and that CD1/CD2/CD3 holders will also be holding some of the bag for CD4 losses, which I'd expect would be worse in % terms than what they have at the moment.