On Friday 2 October 2026, Partners Group announced that it is proposing to split its €6.6Bn flagship Global Value SICAV (“PGGV” or the “fund”) Evergreen into “distributing” and “compounding” funds, respectively. This comes on the heels of capping redemptions from the fund in June 2026. Partners Group had also capped redemptions from its ~ $15Bn US Evergreen vehicle, Partners Group Private Equity Fund, LLC (PGPEF).

In October 2025, the EDHEC Infrastructure and Private Assets Research Institute (EIPA) released a paper on private equity Evergreens that addressed precisely the liquidity and cash flow risk that exists in these vehicles. In fact, both the Partners Group Private Equity Fund, LLC and the CPG Carlyle Commitments Fund, LLC, (CPG) were used as examples of changing liquidity dynamics. CPG announced in December 2025 that it would begin winding down the fund, while PGGV is contemplating a major structural change in its vehicle, effectively moving a large portion of assets to a harvesting portfolio that will no longer accept new capital.

Why Would Partners Group Do This?

Creating two sub-funds, with 75% of assets moving to the distributing fund, and 25% to the new compounding fund seems like a drastic measure. The press release provides limited detail on the motivation other than to say that the two funds “will be formed based on different pools of investment vintages”. This illustrates how fragile an evergreen structure can become once it enters net-redemption mode. While an Evergreen fund can cap redemptions at 5% per quarter, the signal to the market is that there is a long queue of investors looking to exit. That means future realisations in the portfolio and new investor subscriptions will be used – in part – to fund redemptions, rather than increase NAV (net asset value) per unit by investing in new opportunities. This exacerbates the fund’s existing liquidity stress by discouraging new investors while signaling to existing investors to head for the exit door. Moreover, many Evergreen vehicles have unfunded commitments to underlying funds that must be honoured to avoid default.

In short, Evergreen funds can suffer from a negative feedback loop as redemptions surge, subscriptions dry up, and unfunded liabilities remain. The proposed solution in this case appears to be to move a large chunk of assets to a distributing fund that will provide liquidity upon their eventual realisation, while making no new investments. This leaves a much smaller compounding portfolio that will no longer shoulder the liquidity pressures associated with the legacy portfolio. One possible interpretation is that the restructuring is also intended to support a greater focus on secondary investments. The fund’s increasing secondary allocation and its substantial unfunded liabilities make the liquidity issue particularly relevant. While direct investments remain the largest part of the overall portfolio of the fund (46% as of 31 July 2026), there was a noticeable increase in secondary allocations in 2024 and 2025. They accounted for 54% and 53% of investments during those years. Because LP-led secondary purchases not only involve the purchase of existing assets, but the assumption of future capital calls for fees and investments, there are significant unfunded liabilities (over €2Bn as of 31 December 2025). A fund that is in net redemption mode threatens the viability of a secondaries evergreen strategy. By splitting the funds in this way, the compounding vehicle has a better chance of attracting new investor money, stabilising the smaller fund, and allowing the fund to grow again. The fact that an experienced operator of private-equity evergreen funds is facing this situation highlights just how much risk is in these vehicles.

How Did We Get Here?

Figure 1 shows the annual total returns of PGGV since 2010. The weak returns since 2022 are not surprising given the inflation shock and higher cost of capital environment we find ourselves in. Set against strong global equity markets and a proliferation of high performing private equity evergreen funds focused on secondary investments, it is not surprising redemptions have surged. This followed three unusually strong years (2019-2021) that led to elevated investor subscriptions. In fact, approximately 42% of the fund NAV is attributable to investments from the 2021/22 vintages . With a weak exit environment and poor recent returns, it is difficult to see how the fund could stabilise without drastic action. The launch of Evergreen funds by major General Partners (GPs) such as KKR, Blackstone, EQT, among others, has only added to the competitive pressures.

What Can We Learn From Valuations?

It is somewhat confounding that despite the weak exit environment, valuations have remained this elevated. While PGGV does not disclose the level 3 inputs in its annual reports, their flagship SEC registered US fund, PGPEF, does. It has a similar asset mix and many cross-holdings with PGGV. Figure 2 shows the weighted average multiple of the direct private equity portfolio by year. In its latest annual report (31 March 2026), the EV/EBITDA multiple reached 17.5x.

One should not assume that PGPEF precisely captures the valuation trend at PGGV but it is indicative given the cross-holdings. Further, Partners Group’s listed UK investment trust, Partners Group Private Equity Limited (PEY.L) showed a weighted average EV/EBITDA of 17.33x for its equity investments as of 31 December 2025 . Valuations at these levels, despite the higher cost of capital environment, suggest that the funds have their work cut out to exit investments at or near current valuations.

What Do Listed Markets Say About Valuations?

Partners Group’s UK listed investment trust, Partners Group Private Equity Limited (PEY.L) provides an interesting market valuation reference for private assets. It currently trades at a huge 40%+ discount to NAV . There is overlap of investments between PEY.L and PGGV. Table 1 below shows that 6 of the top ten investments are in both funds’ portfolios. The reasons for the large discount may be impacted by factors beyond private asset valuation including the relatively illiquid nature of the vehicle and closed-end fund discounts but it is nonetheless instructive. The current discount is among the widest since the inception of the vehicle.

In effect, an investor desiring exposure to a broad collection of Partners Group portfolio companies could do so by buying the listed units at a 40%+ discount to NAV, or subscribe to their various Evergreen funds, paying full NAV. There is clear disagreement between listed market valuations and the reported NAVs.

What Conflicts or Issues Does This Create?

It is not yet clear what assets will be transferred to the distributing fund and what the asset mix will be between the two funds. One would expect the compounding portfolio will be comprised of the assets and strategy that Partners Group believes will work in the long run. This is likely to be more secondaries focused, but will await further disclosures for direction. I can think of several questions or conflicts that will need to be addressed:

New Investors in “compounding” fund: The new structure creates an opportunity for new investors. By moving a large part of the slow moving portfolio to another vehicle, new investors can participate at NAV based on more recent asset purchases. Who wants to buy into a PE portfolio valued at or near 17.5x EBITDA in the current cost of capital environment? Evidently, not many. And that was a key issue. For new investors, this creates an opportunity to buy into a cleaner portfolio that may have less valuation risk and more potential for upside if positive subscription momentum ensues. A secondaries evergreen strategy requires net contributions as the fund takes on unfunded liabilities through secondaries purchases.

Existing Investors in “distributing” fund: This is clearly a tough pill to swallow for existing investors. With a large part of their investment moving to a distributing portfolio, there is likely little upside and a lengthy wait for realisations. Assuming the assets moved into this vehicle transfer at the latest valuations, the question is what is this portfolio really worth? This becomes a fund that is not bringing in fresh capital, thus no new accretive investments will be made. This makes the vehicle very similar to the listed vehicle (PEY.L) that trades at a material discount to NAV. Moreover, many of the investments are held by multiple Partners Group funds, meaning that decisions around realisation are not decisions of this fund alone. This also raises the question of what happens to other Partners Group Evergreen vehicles with similar strategies and issues, such as its flagship US Evergreen fund.

There will also be many questions surrounding the management and incentives associated with the distributing portfolio. What will the fee structure look like? With no new deals and managing to exits, one would think the fees would be materially less than an active fund. Will the management of this fund have an incentive to drive realisations? Or will the fee structure encourage holding onto assets to extend a management fee stream. It may open the possibility for a bulk or several bulk secondary sales. Presumably investors in this vehicle do not want to wait years for exits and may prefer accepting a discount today to move on rather than wait it out. Will investors and management be on the same page here?

Valuations: It will be interesting to see if there is a valuation reset in the distributing portfolio. With no new subscriptions and investments, the only value creation potential is through exits at greater valuations than the current marks. Given the valuation multiples in Figure 2, the exit and current rate environments, this may prove challenging. This would be an opportune time to revisit the valuations of the assets set aside for harvesting. It will provide insight into the valuation practices and accuracy at Evergreen funds. Done well, investors should be provided with an asset by asset list of any valuation changes that take place as part of the separation into two funds. But any sort of reset will raise concerns about past incentive fees collected.

Incentive Fees: By splitting the two funds, it may have implications on incentive fees. With negative returns (-5.0%) through H1 2026, it is clear the overall fund is not in line for incentive fees. Once the fund is split, presumably this will get reset. The compounding fund may be eligible to earn incentive fees from a fresh NAV that may not have been earned if the fund remained as one. If the legacy assets moving to the distributing fund are eventually marked down, this may be ring-fenced from the new compounding fund. As one fund, the former impairments or losses may have offset the gains in the latter. This is particularly important if the compounding fund is pursuing a secondaries strategy. Secondaries strategies can produce short term gains and incentive fees due to the use of the practical expedient, or investee funds NAV. The fund manager should be very clear about how this will be treated going forward.

What Other Options Exist?

Without further disclosure, it is difficult to know what other options existed or were pursued. It is clear that the status quo was untenable. New investors were not going to commit to the fund and the ongoing liabilities and redemptions would pressure the vehicle leading to a vicious cycle. In 2023, Blackstone’s real estate vehicle (BREIT) faced a similar redemption issue and addressed it by finding an investor (University of California) to make a large investment to stabilise the vehicle. This came with preferred economics and downside protection. Whether such an option existed for PGGV is unknown at this point. But the proposed solution of splitting the fund effectively allows new investors to bypass a large pool of assets with uncertain outcomes, to focus on a smaller set of presumably more recent investments. In effect, a large percentage of investor holdings are proposed to be relegated to a harvesting portfolio with an uncertain timeline and path to liquidity, and a listed market reference point suggesting ultimate realisations may come in well below existing NAV.

Broader Implications

This episode highlights a significant vulnerability in private-equity evergreen funds. Despite a structure that allows the manager to cap redemptions (or even gate) to preserve liquidity, the presence of large redemption requests creates a destabilising environment in a fragile vehicle structure. Beyond this case, investors may wonder if this can happen to the longest standing, most experienced Evergreen fund manager, with well developed processes and valuation procedures, what does it mean for others? Beyond Evergreen funds, it raises questions about valuations in private markets and just how benign stale and smoothed valuations are. PGGV’s monthly return stream since inception produces an annualised volatility of just 5.6%, relative to global equities that are closer to 15% and small cap equities, which can approach 20%. The smoothing of returns and low volatility provides a false comfort to investors, who are then exposed to sudden tail events. At the end of the day, the equity risk embedded in leveraged private equity investments remains. Smooth valuations do not remove the risk. The risk manifests itself via sudden markdowns or as in this case, a proposed fund restructuring. All of this points to a need to move to marked-to-market pricing in private assets that better reflects the inherent riskiness of the asset class.

 

References

• Press Releases – Partners Group | Partners Group evolves established private equity evergreen strategy to offer greater investor flexibility
• EDHEC Infra & Private Assets| Evergreens: The Tree That Never Sheds – A Closer Look at Performance, Risk, and Valuation Practices in Private Equity Evergreens 
• CPG Carlyle Commitments Fund 2026 Annual Report
• Partners Group splits flagship private equity fund as clients demand cash
• Global Value – Marketing Presentation – Partners Group
• Partners Group Private Equity Limited 2025 Annual Report
• 2 October 2026 close of £6.94 vs last reported NAV of £11.58 as of 31 July 2026
• Reuters | Blackstone offers backstop to lure University of California in redemption-stricken REIT