How to securitize private equity

Abstract

A collateralized fund obligations (CFO) is a type of securitization. In any securitization, a discrete pool of assets is used to collateralize an issuance of debt securities (notes, asset-backed securities or ABS) and to provide the cash needed to pay back principal and interest on the ABS. In a CFO, the asset is a portfolio of private equity interests. This article explains a CFO structure and how to reconcile the confidential world of private equity with a publicly listed vehicle.