Annex A · Anatomy of the gate
How the gating mechanism works
Semi-liquid vehicles offer periodic liquidity windows, usually quarterly, at NAV, capped at a percentage of the fund and subject to advance notice of 30 to 90 days. The 5% quarterly cap is a sponsor convention rather than a legal requirement, balancing investor liquidity expectations against the manager’s ability to fund redemptions without forced selling; the figure traces to the 1990s Rule 23c-3 ceiling for interval-fund periodic repurchases. The gate exists to protect remaining investors: the alternative to gating is selling illiquid assets at distressed prices to pay leavers, which transfers value from patient holders to exiters.
A.1 The funding stack in front of the gate
First · Natural portfolio cashLoan repayments, coupons, distributions and realisations feed the liquidity sleeve in ordinary conditions.
Second · Liquidity sleeveCash and near-cash, shorter-duration and mark-to-market assets held against redemptions. The gated Partners Group vehicle held 15% of NAV in cash and near-cash instruments.
Third · Credit facilitiesUndrawn revolving and subscription lines bridge redemption payouts. The same vehicle maintained a further 15% of NAV in an undrawn revolver.
Fourth · Asset and secondary salesPortfolio or participation sales raise cash without gating; one manager cleared a full-portfolio secondary trade and redeemed 30% of its fund.
Fifth · The gateRequests above the cap are prorated to the limit. The gate binds only once the layers above will not honour demand, or the manager chooses to preserve them.
Last resort · SuspensionFull halt of redemptions. Starwood’s SREIT tightened its cap from 5% to 0.33% of NAV monthly before suspending redemptions entirely in May 2026.
A.2 Gate mechanics by vehicle type
| Vehicle | Legal basis of liquidity | Gate mechanics when oversubscribed |
|---|
| Interval fund | Legally required periodic repurchase offers under a fundamental policy; board sets the amount within a 5 to 25% range; must hold liquid assets sufficient to meet the full announced offer | Pro-rata repurchase; an additional 2% of shares can be repurchased in a window without board approval |
| Tender offer fund | Discretionary liquidity determined by the board; offers need not follow a fixed schedule and vary with market conditions, demand and portfolio liquidity | Excess prorated so each tendering shareholder has the same percentage accepted, consistent with Rule 13e-4(f)(3) issuer tender mechanics |
| Non-traded BDC | Discretionary board-approved tender offers, typically capped near 5% of outstanding shares; boards retain authority to reduce or suspend repurchases, a right most offering documents expressly reserve | Board approval, filing of the offer, tender period; oversubscription prorated or the offer enlarged at board discretion |
| European open-ended evergreen (SICAV and similar) | Must embed at least two liquidity management tools in fund rules, from a menu including gates, extended notice, redemption fees, swing and dual pricing, anti-dilution levies and in-kind redemptions; suspensions, side pockets and lockups usable alongside | Contractual gate at the stated cap, board-administered, as in the Partners Group Global Value SICAV case |
A.3 What happens to the unfilled portion
Fund documents split two ways, and the difference determines the investor’s exit arithmetic. Some vehicles carry excess forward, rolling prorated remainders into subsequent windows. Others cancel outright: in the Partners Group structure, requests above the cap are prorated to the 5% limit and the remainder is cancelled rather than queued, so investors must resubmit in a future quarter with no priority; in Q2 that meant roughly 62 cents on the dollar filled and 38% cancelled. At a 5% quarterly cap, a full exit takes at least five quarters of uncontested requests, and longer whenever other investors are redeeming simultaneously.
Managers facing an oversubscribed window hold a menu: prorate to the cap, enlarge the offer (Blackstone lifted BCRED’s limit from 5% to 7.9% in Q1 2026), run a special distribution or secondary trade, or restructure the vehicle (Blue Owl’s BDC merger).
A.4 The regime change
Historically the gate almost never bound: over the five years to 2024, only 12% of private credit interval and tender-offer funds ever prorated a tender, with proration more common in tender-offer funds (21.1%) than interval funds (9.9%), and managers often avoided it by enlarging tenders in high-demand quarters. 2026 is the first period in which proration has become the operating norm across major managers simultaneously. The shift from gate-as-theoretical-backstop to gate-as-operating-mode is arguably the cleanest single indicator on the terminal.
