Willow Tree closes $730M credit continuation vehicle led by HarbourVest

Willow Tree Credit Partners has closed Willow Tree Fund II-CV, LP and its parallel vehicles, a private credit continuation vehicle worth roughly $730 million. HarbourVest Partners led the transaction, joined by a syndicate of institutional investors and Willow Tree itself.

The vehicle acquires a diversified portfolio of about 130 securities — primarily first-lien loans and sponsor-backed companies — from the firm's late 2020/early 2021 vintage Fund II. Willow Tree keeps managing the portfolio while existing limited partners can either cash out or roll their exposure into the new structure.

"We saw an opportunity to provide our existing investors with optionality for liquidity while continuing to steward a portfolio we know deeply," said Tim Lower, founder and chief executive officer of Willow Tree. Continuation vehicles let managers hold onto quality assets past a fund's original life while returning capital to investors who want it.

Continuation vehicles, long common in private equity, are spreading into private credit as managers seek fresh ways to hold assets and hand liquidity to investors. Lower framed the tool as "increasingly important" across private markets — a structure that, when it works, serves existing investors, new capital and managers at once.