Partners Group Rejigs Evergreen Fund After Redemption Cap
(Bloomberg) — Partners Group Holding AG is revamping a key fund hit by a wave of redemption requests as the Swiss investment firm seeks to strike a balance between investors demanding their money back and those wanting to stay.
The firm plans to turn one of its private equity flagship funds, the €6.6 billion ($7.4 billion) Global Value SICAV, into an “umbrella” fund overseeing two portfolios, according to a statement on Friday.
One portfolio, called “distributing fund,” will seek to generate liquidity by selling assets, which it can use to meet redemption requests. The other, labeled “compounding fund,” will focus on making investments, aiming at higher returns for those investors who are willing to remain.
The move “increases the options for investors to engage with Partners’s private capital portfolio approach,” Barclays analysts including Michael Sanderson and Hafsa Yasir said in a note.
Partners Group said it would carve out assets into the two portfolios based on when they were acquired. The distributing fund will receive older assets, while the compounding one focuses on new investments.
Shares fluctuated and were up as much as 1% in Zurich trading. The stock is down about 39% this year, making it the worst performer in the MSCI Europe Financials Index, which has 84 members.
Influenced by Timing
Private equity performance is heavily influenced by the timing of deals, with investments made near the peak of the market at the end of the low interest rate-era when valuations soared most likely to be impaired now rates are far higher.
It added that it planned to make “an additional material commitment to the compounding fund from its balance sheet alongside new institutional clients.”
Partners Group, one of Europe’s largest private capital managers, moved to cap withdrawals from the Global Value SICAV strategy in June, as investor anxiety that gripped private credit vehicles earlier this year began to spill over into other asset classes. The firm has about $186 billion in assets under management, of which 29% are in evergreen vehicles.
The Baar, Switzerland-based company is a pioneer of evergreen funds, which operate indefinitely and typically allow investors to withdraw at least a portion of their investments quarter-by-quarter rather than locking up the capital for a set period. It has more than 30 such funds across five asset classes, Bloomberg News has reported.
In Friday’s statement, the firm said investors will have the option to retain their current exposure to the Global Value SICAV strategy, convert shares from the distributing fund to the compounding fund, or redeem shares in one or both sub-portfolios. New investors will be able to subscribe to the compounding fund, which is “rightsized to support efficient portfolio management and investment deployment.”
The revamp of the evergreen strategy is in line with the guidance Partners Group gave for its assets under management, it said.
The proposed move to an umbrella fund is subject to shareholder approval.
“We have worked closely with our distribution partners as we prepared for this evolution, and they are supportive,” said Roberto Cagnati, partner and incoming chief executive officer.
–With assistance from Jack Sidders.
(Updates with analyst note in fourth paragraph and shares in sixth paragraph.)
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