Typically, the transfer of fund interest (fund secondary) is subject to approval by the GP and may, additionally be subject to a right of first refusal for the GP or other LPs.
If a right of first refusal applies, the seller obtains offers for its fund interests itself or via a placement agent. Once the market price has been determined, the existing LPs or the GP, as the case may be, can exert their right of first refusal. Only when they declined or waived such right, the sale to the third party can take place.
At present, LPs may also be considering processing the secondaries via KfW Capital, the European Investment Fund (EIF) or other secondary funds. (Read more on the BMWI website.)
If there is a considerable number of LPs looking for liquidity or a tail-end fund cannot be liquidated as foreseen, GPs may consider GP-led secondary transactions. In such situations, all interests in the fund or the interests of all LPs looking for an exist are transferred in a process structured by the GP mostly with the support of placement agents.