Zombie funds are just one of the current alternative investment woes plaguing investors. As much as $100 billion of private-equity investments, about 6 percent of the $1.5 trillion invested in the sector, is trapped in zombie funds, according to a recent article in the Wall Street Journal.
The label refers to a private–equity fund structure which has surpassed its anticipated lifespan, typically 10 years, and has no imminent prospects of being closed. The difficulty lies in valuing and selling off its assets due to a non-responsive market appetite.
Investors are dissatisfied since the fund remains in force, collecting fees and locking up capital in a virtual dead-zone with no end in sight. The managers of zombie funds are unhappy as well. They struggle to find profitable exit strategies, and jeopardize their ability to raise capital for new deals.
Solutions to the zombie problem have to address both investor and manager concerns. Investors want assurance that they are getting full and impartial information about the assets in the fund. Managers want to get out from under the dead weight and maximize the remaining value in the fund.
In September AltResources released a white paper with solutions to the zombie problem that utilize the best of internal and external resources to achieve goals for zombie funds such as finding an acceptable valuation, monitoring performance and keeping costs low.
Please access the whitepaper at
AltResources is a leading provider of trusted, independent administrative services for private equity, venture capital and buyout funds and other closed-end, committed capital structures, including energy, infrastructure, mezzanine and real estate. The firm provides a range of accounting, tax and compliance services customized to meet the needs of each client through an experienced team of professionals and state-of-the-art technology.
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