CV conflicts
Continuation vehicles have come under close examination in the CFA Institute’s latest series exploring ethics in private markets, according to our colleagues at Private Equity International. In a report exceeding 40 pages, the institute delves into the factors behind the growth of the CV market and outlines the potential conflicts of interest that these transactions can create.
"A fair process in establishing the CV is critical for its legitimacy," the report notes, adding that CVs can leave LPs feeling uneasy. The report cites an example in which an investment professional at a pension fund heard a secondaries firm discussing a “sweetheart deal” involving an asset the same LP was also exposed to on the primary side. The exec described having mixed feelings upon hearing about the transaction.
The report notes that CVs pose “heightened conflicts of interest” for GPs, who effectively sit on both the buyside and sellside of these transactions. It notes that GPs have strong incentives to pursue CVs because such deals can allow them to extend management fees or reset other economic terms.
“Continuation funds are designed to give investors choice: Those who want liquidity can cash out, and those who want to continue their investment can roll over into the new continuation fund. Many investors are happy to take the money, but some dismiss continuation funds as merely a transfer of economic benefits to the fund managers," Stephen Deane, senior director of capital markets policy at the CFA Institute, comments in the report.
"The GP sits on both sides of the deal, stands to reset carry and extend fees if successful, and may even improve the track record of the legacy fund – all factors that can give rise to conflicts of interest."
A competitive bidding process and negotiations with third-party buyers can help mitigate such conflicts. Other mechanisms – such as the GP’s fiduciary duty to act in the legacy fund’s best interests, LPAC approval and the reputational risk if a CV was run poorly – have also emerged as safeguards against conflicts.
The idea that CVs are rife with potential conflicts is nothing new, and investors continue to have mixed feelings about their use. Still, as these processes proliferate, the frequency with which LPs are exposed to those possible issues has accelerated. So too, then, has the onus on the GP community to ensure these conflicts are being managed responsibly.
HPS launches ABF partnership with Vistina
HPS Investment Partners, now a part of BlackRock, announced that it has formed a collaboration with Vistina for asset-based finance origination and securitisation.
Vistina, a subsidiary of London-based investment firm Hoplon Investment Partners, is comprised of two parts: Vistina Structured Credit Advisory and Vistina Advisory.
“This is a truly unique time in the market, where the applicability of asset-backed financing is rapidly evolving and expanding the addressable universe of borrowers that can access the unique benefits of a securitisation,” Robert Arsov, founder and CEO of Hoplon Capital, said in a statement. “The combined capabilities of Vistina, Hoplon and HPS create a leading player with a strong track record of innovation and execution for borrowers and investors alike.”
Alongside engaging retail, wealth and insurance investors, asset-backed finance has been one of the new hot trends over the last few years.
On top of the meteoric growth of private credit post-pandemic, the total addressable market for asset-backed finance is projected to range from $12 trillion to $20 trillion over the next decade, according to a 31 July research note by JPMorgan Private Bank.
Based in New York, HPS Investment Partners has $157 billion in assets under management and focuses on a range of non-investment grade credit investments. Originally a subsidiary of JPMorgan Asset Management, the company’s acquisition by BlackRock was announced in November 2024 and finalised on 1 July 2025.
