October 29, 2026 · 5 min read
What Is a Tender Offer Fund? Definition, How It Works and Examples
How a fund that does not trade on an exchange lets you sell your shares back, who decides when, and what happens if many investors want out.
- Private equity & funds
Tender offer funds are investment funds registered with the SEC that do not trade on an exchange. You buy shares at the fund’s net asset value. You can sell them back only when the fund’s board chooses to make a tender offer, an offer to buy a set amount of shares from all holders. They suit investors who can leave money in for years.
These funds often hold assets that are hard to sell quickly, such as private company shares, private equity funds or private loans. That is why the fund cannot promise to pay you back on demand. If you put money into one, your access to it depends on the board’s decisions, and an offer may cover only part of what you want to sell.
20 days
Minimum time a fund’s tender offer stays open, counted in business days
Pro rata
How shares are bought when holders offer more than the fund will take
Board
Who decides whether and when a tender offer fund buys back shares
5%–25%
Share of stock an interval fund must offer to buy back at each set date, for comparison
What Is a Tender Offer Fund?
A tender offer fund is a closed-end fund registered under the Investment Company Act of 1940, the US law that governs funds sold to the public. The Act splits funds into two groups. An open-end fund, such as a mutual fund, issues shares you can redeem, meaning sell back to the fund, on any business day. A closed-end fund is any fund that does not offer that right.
Some closed-end funds list on an exchange, so holders sell to other investors. A tender offer fund does not list. Brookfield, an asset manager, describes it as a closed-end fund that gives access to less liquid investments. It can sell new shares continuously at net asset value (NAV), the value of its holdings minus its debts, divided by its shares. Its board decides when to buy shares back.
The name comes from how it buys back. Section 23(c) of the 1940 Act lets a closed-end fund buy its own shares on an exchange, through tenders open to all holders, or as the SEC permits. With no exchange listing, the fund uses tenders. This is a different event from a company tender offer in which a private company or an investor buys shares from employees.
How a Tender Offer Fund Buys Back Shares
Each buyback follows Rule 13e-4, the SEC rule for tender offers made by a company or fund for its own shares. The rule names registered closed-end funds directly. The fund files a Schedule TO, the SEC form that sets out the offer, and sends the terms to holders.
- The board sets the termsIt decides how many shares to buy, usually as a share of the fund, and the price, usually NAV on a set date.
- The offer stays openAt least 20 business days. If the fund changes the amount it seeks or the price, at least 10 more business days.
- You can change your mindYou may withdraw shares you offered at any time while the offer is open.
- Everyone gets the same dealThe offer must be open to all holders of the class, and each gets the highest price paid to any of them.
- Too many shares means a cutIf holders offer more than the fund will buy, it takes the same fraction from each of them.
- Payment comes promptlyThe fund pays for accepted shares, or returns the rest, promptly after the offer closes.
The rule sets how an offer runs. It does not make the fund hold one. A board may skip a quarter or offer to buy back less than holders want. That is the main difference from an interval fund.
Tender Offer Fund vs Interval Fund: How Buybacks Differ
An interval fund is also an unlisted closed-end fund. It follows a separate SEC rule, Rule 23c-3, which makes it buy back shares on a fixed schedule. The table compares the two on who decides, how often, how much and how you get paid.
An interval fund promises a schedule. A tender offer fund gives its board the choice each time
As of October 2026 · 17 CFR 240.13e-4; 17 CFR 270.23c-3; Brookfield glossary
Tender Offer Fund Example: Selling Back 1,000 Shares
You own 1,000 shares of a tender offer fund that invests in private companies. NAV is $25.00 a share, so your stake is worth $25,000. The fund has 40,000,000 shares. Its board offers to buy back 5% of them at NAV.
Illustrative example with invented numbers. Real offers state their size, pricing date and any fee in the offer documents
Illustrative · proration per Rule 13e-4(f)(3), as of October 2026
You asked for $25,000 and received $16,650, or two thirds. The other 334 shares wait for the next offer, and the board decides when that will be. If NAV falls before the pricing date, the cash you get falls with it.
Tender Offer Fund Rules as of October 2026
US federal rules for funds registered with the SEC. A private fund that is not registered follows its own documents
As of October 2026 · 15 USC 80a-5, 80a-23; 17 CFR 240.13e-4; 17 CFR 270.23c-3
Common Mistakes with Tender Offer Funds
- Expecting a buyback every quarterNo rule requires one. Read the fund’s stated intent and its record of past offers in its reports.
- Assuming you can sell everything at onceIf many holders want out, each offer fills only part of your request.
- Confusing it with an employee tender offerA fund buys back its own shares. In an employee tender, a company or investor buys shares in a private company.
- Treating it like an interval fundAn interval fund must buy back on a schedule. A tender offer fund leaves that to its board.
- Ignoring the pricing dateYou agree to sell before NAV is set. The value can move between the two dates.
A tender offer fund lets you buy into hard-to-sell assets at NAV, and its board decides when you can sell back. Plan as if your money could stay in for years.
The Terms This Page Uses
- Tender offer fund
- An unlisted closed-end fund that buys back shares only through tender offers its board chooses to make.
- Closed-end fund
- A fund whose shares holders cannot redeem on demand. Some list on an exchange, others do not.
- Open-end fund
- A fund, such as a mutual fund, that buys back its shares from holders on request.
- Interval fund
- An unlisted closed-end fund that must offer to buy back 5% to 25% of its shares at set intervals.
- Net asset value
- The value of a fund’s holdings minus its debts, divided by its shares.
- Tender offer
- An offer to buy a set amount of shares from all holders at a stated price for a limited time.
- Pro rata
- In proportion. In an oversubscribed offer, each holder sells the same fraction of what was offered.
- Schedule TO
- The SEC filing that sets out the terms of a tender offer.
What People Ask About Tender Offer Funds
It depends on the board. No rule sets a schedule. Check the prospectus for the fund’s stated plans and its reports for past offers. The board can still skip an offer.
No. Both are unlisted closed-end funds. An interval fund must offer to buy back 5% to 25% of its shares every three, six or twelve months. A tender offer fund has no fixed schedule or amount.
The fund buys pro rata. Each holder who offered shares sells the same fraction, and the rest stay in the fund until a later offer.
Yes, while the offer is open. Rule 13e-4 lets you withdraw at any time before it closes.
Managers use them to offer less liquid assets, such as private equity or private credit, to individual investors. The fund’s documents say who may invest. Read them, and the risks they list, before you commit money.
Where Every Rule on This Page Comes From
Every rule was last checked on October 29, 2026. All rules are US federal rules for funds registered with the SEC. The worked example is invented. For the wider market these funds invest in, see our guides to private credit and general partners and limited partners.
- 01Cornell Law School LIICurrent text15 USC 80a-5(a): open-end and closed-end companies
- 02Cornell Law School LIICurrent text15 USC 80a-23(c): how a closed-end fund may buy its own shares
- 03Cornell Law School LIICurrent rule17 CFR 240.13e-4: issuer tender offers, incl. registered closed-end funds; 20 business days, withdrawal, pro rata, all holders, best price
- 04Cornell Law School LIICurrent rule17 CFR 270.23c-3: interval fund schedule, 5%–25% offers, 2% fee cap, notice and payment dates
- 05Brookfield Private Wealth10.29.2026Glossary: tender offer funds as unlisted closed-end funds; repurchases at the board’s discretion
This page explains how a market works. It is not investment advice, not a recommendation of any security, strategy or company, and not an offer to sell or a solicitation to buy anything. Private companies may never list or be acquired, positions in them can be illiquid for years, and the entire amount invested can be lost. Figures are accurate as of the dates shown and change. Requirements for investor status, and the tax treatment of a private holding, differ by jurisdiction — the jurisdiction is named wherever this page discusses either. Prepared by the AXEVIL Capital research team.
What closed on the private market in the past two weeks
The rounds that priced, the tender offers that opened and the listings that filed — with the structure of each deal and the date on every figure. Written by the team that reads the paperwork.
Where to go from here
Private markets & secondariesWhat Is a Tender Offer? Definition, How It Works and ExamplesTender offer explained: an open offer to buy shares from many holders at a set price for a limited time. How private-company tenders work and who can sell.
Private equity & fundsGeneral Partner (GP) vs Limited Partner (LP): Key DifferencesA general partner runs a fund and carries its liability. A limited partner supplies capital and is liable only for it. Roles, pay, control and risk compared.
Private credit & alternativesWhat Is Private Credit? Definition, How It Works and ExamplesPrivate credit is lending to companies by investment funds, on terms negotiated with the borrower. Strategies, returns, risks and how investors get in.