Introduction
As evergreen and semi-liquid fund structures continue to gain momentum across private markets, managers are increasingly challenged to balance investor expectations for liquidity with the realities of long-term, illiquid investments.
At the 10th Annual European Fund Finance Symposium, our Global Head of Risk Advisory, Nirvani Soodkeo, joined fellow panellists to discuss how GPs, LPs, lenders and legal advisers are adapting to the evolving demands of open-ended funds. We recapped the discussion and expanded on key themes below:
Panel overview
The panel examined the structural and operational considerations shaping today’s evergreen market, including liquidity risk management, leverage strategies throughout the fund lifecycle, multi-currency share class hedging and the evolving relationship between fund managers and lenders.
A recurring theme throughout the discussion was that managing liquidity requires a holistic approach. Financing, fund structure, legal documentation and risk management are increasingly interconnected, making collaboration across disciplines essential.
Key discussion themes
Structuring evergreen funds for liquidity
Panellists explored how European semi-liquid vehicles are designed to help balance investor redemption expectations with long-term investment strategies. Discussion centred on the use of liquid asset pockets, NAV facilities as an additional liquidity tool and the importance of clear investor disclosure to ensure expectations are aligned with the semi-liquid nature of these products.
Financing through the fund lifecycle
The panel discussed how financing strategies evolve as evergreen funds mature. Early-stage vehicles may initially rely on repo-style financing before transitioning to revolving credit facilities as portfolios expand.
From a lender’s perspective, minimum liquidity covenants and loan-to-value borrowing base tests remain fundamental components of facility design. The discussion also highlighted that securing financing at scale increasingly depends on strong institutional relationships rather than pricing alone.
Legal considerations remain integral
Panellists highlighted the importance of close collaboration between fund finance lawyers and fund formation specialists. Regulatory requirements and redemption mechanics have a direct impact on facility design, making legal expertise an essential component of structuring resilient evergreen vehicles.
Spotlight: Hedging and liquidity risk
Nirvani Sookdeo focused on how foreign exchange risk intersects with liquidity management in evergreen fund structures.
She explained that hedging programs typically operate across two levels: asset-level hedging, which protects underlying investments back to the fund’s base currency and share class hedging, which converts base currency returns into investors’ preferred currencies. While both are designed to reduce currency risk, they also introduce liquidity considerations that require careful management.
A central challenge fin hedging evergreen structures lies in the mismatch between long-dated, illiquid assets and the monthly or quarterly liquidity investors expect. This directly influences hedge tenor decisions. While shorter hedge tenors better align with redemption cycles, they also require more frequent hedge rolls, each creating settlement events that can generate cash outflows.
These pressures become particularly significant during periods of market stress, when FX volatility and increased investor redemptions often occur simultaneously. Recent redemption activity across several evergreen credit funds illustrates how these dynamics can compound, reinforcing the need to integrate FX liquidity into broader liquidity planning.
Looking ahead
As evergreen strategies continue to evolve, the discussion reinforced that resilient fund structures rely on more than access to capital alone. Successfully navigating future market conditions will require integrated approaches to liquidity management that bring together financing, legal, operational and risk management expertise.
