Ann: Merger Proposal - CD Private Equity Fund Series, page-9

On the limited information available, it's not obvious that the proposed merger will materially benefit CD1 holders.

CD1's remaining assets are quite mature. I was hitherto looking forward to them being realised over the next few years and the NTA value being distributed.

The proposed merger will see our exposure to mature assets being greatly diluted by exposure to the assets of CD2, CD3 and the unlisted CD4 which are, to differing degrees, at an earlier stage of the investment cycle. The final capital call of CD4 was made as recently as June. It is hard to see how distributions of the size made in recent years by CD1 can be replicated any time soon in the proposed merged vehicle.

The main benefit of being in an unlisted open ended fund should be the availability of a redemption facility at something resembling NTA. The announcement doesn't indicate whether there will be one; let alone how it will work.

The costs per unit in the merged fund should be lower than in a small one like CD1. However, as no details are provided, it's impossible to work out what weight should be given to any cost savings in making an overall assessment of the merits of the proposed merger. The limited partnership underlying CD1 ceased paying management fees to the general partner earlier in the year. This is another benefit of the maturity of CD1 which will be shared in any merger.