What do you do when you’re part of an industry that has levered up $100’s of billions of dollars in investor capital and paid a handsome premium for pretty much every asset available all while “excess cash sits on the sidelines” because there are just no deals left to do at remotely attractive valuations? Well, if you’re Investindustrial, a European private equity fund founded by Italian dealmaker Andrea Bonomi, then you simply raise a new fund to buy all the investments of your old fund.

And while that may sound like a joke, unfortunately it’s very true. As the Wall Street Journal points out today, Bonomi has recently raised $800mm to buy assets that he initially acquired via a $1.1 billion fund originally raised in 2008. 

All of which raises a number of important questions like how exactly are valuations set for such a deal in the absence of a distinct buyer and seller negotiating a fair, market clearing price? Presumably Bonomi tested the market for his assets but simply didn’t like the valuations he was offered? If so, how could new Limited Partners ever possibly get comfortable with the valuations paid for assets being purchased from the old fund? After all, the ole “mark to model” methodology didn’t work out so well for the Dallas Police and Fire Pension, among others.

And then there is the question of fees. Surely, LPs wouldn’t be willing to pay ‘2 & 20’ for the runoff of an existing portfolio? If so, sign us up.

Of course, according to the WSJ, Bonomi’s effort to buy his own prior investments has nothing to do with gaming fees but is rather just a creative way to be more competitive with sovereign wealth funds that don’t have term limitations on their funds…and if you believe that then Bonomi, a man who typically only sells assets to himself, would very much like to offer you the once in a lifetime opportunity to buy some ocean front property in Oklahoma.