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To: Les H who wrote (49970)	12/30/2025 10:00:06 AM
From: Les H	Respond to of 51213

Private equity firms sell assets to themselves at a record rate So-called continuation vehicles set to account for a fifth of sales by the sector in 2025 Financial Times Critics say continuation funds risk Ponzi dynamics Submitted by raymond.frenke… on Tue, 20 May 2025 Continuation funds, once a post-crisis workaround for expiring vehicles in weak exit markets, are booming and find themselves at the centre of growing criticism. Critics warn they distort valuations, mask losses, and edge dangerously close to Ponzi-like dynamics. Continuation vehicles first gained traction in the aftermath of the global financial crisis, offering private equity firms a way to extend holding periods when exits were scarce. General partners (GPs) can retain control of “trophy” assets a little longer; limited partners (LPs) may either roll over or exit; new investors enter at a negotiated price. In theory, everyone wins. But critics, such as Rachel Wasserman, a Canadian corporate lawyer at Wasserman Business Law, warn that continuation vehicles are “getting uncomfortably close” to Ponzi territory. “The returns are built on recycled capital, not real performance,” she told Investment Officer. “LPs who don’t roll over their interest are not being paid out by business growth,” she said. “They are being paid out by the dry powder cash of the GP to replace them.” In her view, this mimics a return profile based not on realised gains, but on recycled capital. Despite the concerns, continuation funds are moving into the mainstream, particularly in Europe. According to Investec’s PE Trends 2025 survey, nearly half of private equity managers in the UK and Europe expect to use continuation funds as an exit route over the next 24 months. That compares with 54 percent who still see trade sales as the most likely channel. Continuation funds a tool for delaying losses... Critics say continuation funds risk Ponzi dynamics \| Investment Officer CMS