A continuation fund 's financing at launch combines: (a) new LP equity from anchor and follow-on investors; (b) rollover equity from existing LPs choosing to extend; (c) asset-level debt, often refinanced from the prior fund; (d) NAV facility at the CV level for working capital and bridge financing. Coordinated closing across all sources.
Coordinating the continuation fund financing stack
New equity sourcing: anchor investor (typically the lead LP that prices the transaction) plus follow-on LPs. Placement firm runs the marketing, helps with fairness opinion, and coordinates LP-side diligence. Anchor commitment typically 30% to 50% of the new equity raise.
Rollover equity from existing LPs: existing LPs in the predecessor fund are offered the choice to take cash distribution (status quo at fund termination) or to roll their capital into the CV. Roll percentages vary widely, sometimes 40% to 60% of existing LPs roll, sometimes much lower. The roll process is structurally complex (LPs in the prior fund vote on the transaction, and rollover LPs become CV LPs at the same NAV the new investors paid).
Asset-level debt: senior CRE debt on the predecessor fund's assets. At CV launch, the debt is typically refinanced with new debt placed at the CV level. Refinancing is necessary because most senior CRE loans require lender consent for change-in-control. Engaging the senior lender early (90+ days before CV launch) is essential.
NAV facility at CV level: provides working capital for the CV and bridge financing for any incremental capex or debt-repayment needs. NAV facility is sized against the CV's portfolio (the assets transferred from the predecessor fund). Pricing reflects the CV's portfolio quality, not the predecessor fund's history.
Coordinated closing event: all financing components close simultaneously, new equity contributions, rollover equity transfers, senior debt refinancing, and NAV facility funding. The closing is more complex than a typical fund launch because it integrates a transaction (asset transfer) with a fund launch (capital raise).
Sponsor playbook: a typical CV launch takes 9 to 18 months from inception to closing. Engage NAV-facility lender, asset-level debt counterparty, anchor LP placement firm, and tax counsel in parallel during the planning phase. Sequence the closing checklist to align all financing sources for the same closing date.
Sources
- Private Funds Statistics (Form PF Aggregate Data) · U.S. Securities and Exchange Commission · 2025-Q3
- Subscription Credit Facility Reporting Template and Capital Call Practices · Institutional Limited Partners Association (ILPA) · 2025
- Comptroller's Handbook: Leveraged Lending · Office of the Comptroller of the Currency · current