There are economies of scale in oversight: While 10 or 20 basis points spent on oversight costs for a very large institutional investor might be prudent, that may be woefully inadequate for a smaller entity that is pursuing a high equity and highly diversified strategy.
For investors such as pension funds, buying a stake in a listed entity may appeal if their internal rules stop them investing directly in private-equity or hedge funds.
In late August, the entity acquiring Delphi's assets offered holders of Delphi bank debt a deal to buy certain equity interests and notes in the new company and the opportunity to make new loans to it.