Private equity has become the place not to be seen. The market is flooded with assets, and the prospect of selling into a buyers' market at a discount of anywhere up to 25% is about as appealing as root canal treatment. The fact that many investors have already watched the value of their investments dwindle over the last year is certainly no anesthetic.

Given such unappealing conditions, borrowing against the assets via a securitization has become an idea whose time has arrived. "If an institutional investor in a private equity fund needs liquidity, for allocation reasons or general dissatisfaction with the state of its private equity fund investments. . . if somebody's going to lend against a portfolio at a reasonable value, it becomes interesting," said Larry Graev, president and chief executive of New York-based merchant banking firm the GlenRock Group LLC.

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