AIF Lock-in, Tenure and Exit

Closed-ended AIFs are built around a stated tenure, but the economic exit may take longer. Portfolio companies may not sell on schedule, borrowers may restructure and the fund may enter an extension or liquidation period. An investor should plan for the longest permitted path, not the marketing midpoint.

Tenure, extension rights and liquidation mechanics appear in the PPM and contribution agreement.

A unit transfer may require manager consent, eligibility checks and an available buyer.

Distributions generally depend on asset exits or repayments, not on the investor’s personal need for cash.

A stated eight-year fund can remain economically unresolved beyond year eight.

Secondary buyers may demand a discount.

In-kind distributions can leave the investor holding an illiquid security directly.

Before acting, answer five questions in writing: map base tenure, extensions and liquidation periods; check transfer restrictions and costs; ask when in-kind distribution may be used; model no liquidity until the outer date; and do not allocate emergency or near-term goal money.

The correct liquidity assumption is that the capital is unavailable until it is actually distributed.