Studio in Vienna
An art foundation looks to finance €10m for a studio acquisition without breaking the portfolio built to fund it for decades
14/07/26
Palette Haus is a German non-profit founded 25 years ago to fund and support budding artists in the region. Its primary activity is an annual grant programme: a two-year fellowship for up-and-coming artists, culminating in an exhibition of their work in a studio owned by the Foundation. Endowed by a consortium of eight local family offices, Palette Haus manages a portfolio of around €150m. Annual operations run at roughly €12m, entirely funded by distributions from the portfolio (about 8% of total value per year).
Given that aggressive drawdown requirement, CIO Lilian Brandt has spent years building a portfolio weighted toward private markets for stronger returns, reflected in an allocation of nearly 50% to private equity.
This year is different. In addition to its usual programme, the board has agreed to expand into nearby Austria and acquire a studio in Vienna. After taking into account government incentives and a successful fundraising campaign, Brandt is told an additional €10m is required from the portfolio by year end to help finance the acquisition (aside from the debt the Foundation is already taking on for the deal).
Background
Lilian is uneasy. The portfolio is already illiquid, and liquidating part of the private equity book looks like the only realistic path to €10m. She spends a few days reviewing the options and struggles to land on a clear recommendation for the board. The larger fund positions sit with hard-to-access managers who may not offer Palette Haus a spot in their next vintage if the relationship ends now. The smaller positions hold promising portfolio companies that could still become real winners, both for the funds and for Palette Haus alongside them.
Wanting an outside view, she brings in Joran Partners.
Joran's initial read matches Brandt's instinct: giving up promising or long-standing GP relationships to fund a short-term need could do lasting damage to the portfolio, and to what it can do for the Foundation's mission down the line. The team lays out two options:
Option 1: NAV loan against the €75m private equity book. Typical loan-to-value ratios in that market run 10–30%, so a €10m facility (against a broad, diversified portfolio) should be available on attractive terms
Option 2: Structured equity solution: bundle 2-3 fund interests and share future upside with a third party in exchange for €10m upfront
The board is not excited about taking on additional debt at this point given the acquisition, but they give Joran the green light to explore a structured solution.
Problem
Solution
| Vintage | Invested | Distributed | Residual NAV | MOIC | Expected total MOIC | Expected returns, next 5 years | |
|---|---|---|---|---|---|---|---|
| Buyout VI | 2022 | 15 | 15 | 7 | 1.5x | 2.2x | 18 |
| Buyout X | 2020 | 20 | 16 | 12 | 1.4x | 1.8x | 20 |
| Growth VII | 2019 | 20 | 24 | 17 | 2.1x | 2.5x | 26 |
| Total | 55 | 55 | 36 | 64 |
Brandt and Joran review the portfolio for funds that could fit a structured deal, preferring fully invested positions, so no risk of Palette Haus needing to fund further capital calls into the structure. They settle on three:
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Total | |
|---|---|---|---|---|---|---|---|
| Buyout VI | – | – | 7 | – | 6 | 5 | 18 |
| Buyout X | – | 6 | 6 | – | 8 | – | 20 |
| Growth VII | – | – | – | 6 | – | 20 | 26 |
| Total | 0 | 6 | 13 | 6 | 14 | 25 | 64 |
| Offer 1 | Offer 2 | |
|---|---|---|
| Payment timeline | €5m today + €5m in 12 months | €10m upfront |
| Total paid | €10m | €10m |
| Take rate | 25% | 27% |
| Distributions taken | €16m | €17m |
Joran takes the proposal to a select group of investors with a track record in structured equity deals.
Two final offers come back:
The trade-off is straightforward:
Offer 1 gives more of the upside (giving up €16m of future distributions instead of €17m) but delays half the capital by a year, with counterparty risk attached to that second tranche.
Offer 2 costs an extra €1m of distributions but delivers everything today, cleanly.
At Joran and Brandt's recommendation, the board takes Offer 2, preferring certainty and simplicity over the marginal upside of waiting on a second tranche.
Palette Haus funds the €10m it needs from the portfolio. It keeps its legal status as an LP in all three funds, preserves the GP relationships it has spent years building, and continues to benefit from the economic upside of three strong-performing positions.
Lilian books a ticket to Vienna to inaugurate the new studio.
Outcome
Disclaimer: This case study is for illustrative purposes only and does not constitute financial, legal, or tax advice. It is a hypothetical, simplified scenario intended to demonstrate how a secondary market transaction might be structured, and does not represent an actual client, transaction, or investment recommendation. The organizations, individuals, and figures depicted are fictional; any resemblance to real entities or persons is coincidental. Nothing in this case study should be relied upon in making an investment decision.