In recent years, private market investing has evolved to meet the needs of a wider range of investors, especially those seeking access, transparency, and flexibility. One of the most innovative solutions in this space is the evergreen semi-liquid strategy.
What is an evergreen or semi-liquid strategy?
Iñigo Reparaz: These are open-ended vehicles designed to offer long-term exposure to private companies, which are only accessible through these solutions, while solving for many of the operational inefficiencies of traditional closed-end funds. Investors commit and fund their capital from day one, gaining immediate exposure to a diversified portfolio of private assets.
Alejandro Nimo: They also offer full capital deployment up front, without the traditional capital calls or long commitment timelines. As they receive distributions from the sale of portfolio companies, proceeds are reinvested into new opportunities. This allows returns to grow over time through a compounding effect. Finally, the structure gives investors visibility into the underlying assets and offers a certain level of liquidity through periodic liquidity windows.
Iñigo Reparaz: One important aspect is the mitigation of the J-curve effect. Since investors enter a solution that already holds active investments, the return profile tends to be more stable from the outset, there is no long waiting period before performance starts to materialise.
What are the key benefits for investors?
Alejandro Nimo: From an investor's point of view, there are five standout advantages:
Immediate exposure: The capital is fully deployed from day one, no idle commitments or unexpected capital calls.
Compounding returns: As proceeds are reinvested, the investment grow naturally over time through the power of compounding.
Liquidity windows: While not fully liquid, these vehicles offer scheduled liquidity windows, usually quarterly, with notice and limits.
Transparency: Strong visibility into the underlying portfolio, which builds trust and aids decision-making.
Mitigated J-Curve: Thanks to fast-deployment strategies and portfolio maturity.
Iñigo Reparaz: From a practical standpoint, it is also much easier for Clients to plan their exposure to private markets. There is no need to manage irregular capital calls and distributions. It is a more intuitive and operationally efficient experience, especially for private Clients who value simplicity without giving up performance.
What are the main challenges for fund managers?
Alejandro Nimo: The biggest operational challenge is liquidity management. Managers must balance the need to keep the fund invested, maximising returns, with the responsibility to meet liquidity requests during these windows. Holding too much cash dilutes performance, but too little can compromise the fund’s ability to meet investor needs.
Iñigo Reparaz: That is why predictability is crucial. When structuring an evergreen strategy for the Clients of a specific institution, you gain better visibility into expected subscriptions and redemptions. That allows the investment team to manage liquidity efficiently and optimise deployment strategies.
Alejandro Nimo: We also use tools like lock-up periods to protect investors. Liquidity windows are typically subject to a maximum redemption limit of 5% of the fund’s NAV per quarter, which ensures that the investment strategy is not disrupted by excessive withdrawals. These mechanisms help maintain stability in the portfolio and protect the long-term interests of all investors.
Why Mirabaud launched an evergreen semi-liquid strategy?
Alejandro Nimo: This decision was based on three core beliefs:
A strong commitment to long-term investing, which aligns perfectly with an evergreen structure.
A desire to offer Clients access to institutional-quality private market opportunities.
A focus on delivering solutions that match our Clients’ profiles, particularly those who want simplicity, visibility, exclusivity and a certain level of liquidity.
Iñigo Reparaz: At AltamarCAM, our objective was to design a solution that combines exclusivity, efficiency, and alignment with Client needs. By combining Mirabaud’s close relationship with their Clients and our expertise in private markets, we have created a strategy that delivers the best of both worlds, private equity returns with more accessible features.
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Final thoughts
Alejandro Nimo: Evergreen strategies are not here to replace traditional closed-end funds, but they do provide a compelling alternative. They are particularly useful for investors looking for more flexibility, without giving up the attractive returns of private market investments.
Iñigo Reparaz: They allow for long-term private market exposure with fewer operational hurdles. We believe they will become an increasingly important tool for both private and institutional investors.
