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With the uncertainty around how long the COVID-19 pandemic will last we don’t know if legacy vintages will suffer more than funds in the market. With that, what questions should LPs be asking today? According to John Ward, Managing Director in Duff & Phelps’ Alternative Asset Advisory practice, they should be asking “How are they overviewing, how are they managing, how are they monitoring the actions of their portfolio companies, if people cannot travel? Start with ... open questions like that and find out where it goes.”
John went on to say “Many of the BCP plans that people put out were based on a limited outage – whether an electrical outage, weather-related outage – the assumption would be that they would either be able to get back into the office soon or that they would re-form as a collective company in a temporary space again. But in this case, the outage is not limited to a city, country or even region and most probably was not foreseen in companies’ business continuation plans.”
“In a year or two from now, when it comes time to test your portfolios, one of the scenarios that you’re going to be able to duplicate and see how your portfolio does, is going to be the great coronavirus scenario of 2020” according to John.
Read the full article here.