Recommendations according to factors that the fundraising team should consider and address during its initial planning. Doing so will help to ensure that the GP will be able to keep its promises to investors and operate the fund with due skill, care and diligence. A well-structured fund, with an adequate level of financial and operational resources, will be better placed to satisfy the needs of LPs and create a strong foundation for the operation and management of the fund after closing.
Recommendations
Explanation The due diligence process that the GP conducts prior to investing in a portfolio company is critical. The information obtained during the process, together with GP's own knowledge and expertise, forms the basis for any investment decision. The due diligence process examines a broad range of aspects
Recommendations
Explanation It is important that fundraising does not continue indefinitely as this may prevent GP from implementing the fund's investment strategy while continuing to commit resources to marketing. There may also be time constraints imposed by certain laws and regulations. Between the initial closing and the final closing,
Recommendations
Explanation The fundraising team can make forecasts of likely performance in the fund's chosen sectors, target IRR and money multiplier. However, it is very easy for such material to be misread or mislead potential LPs, particularly in light of changing circumstances or if material is presented selectively. Recommendation
Recommendations
Explanation Prospective LPs will expect detailed track record information to be provided by GP as part of the due diligence process. It is an important part of acting with integrity that the track record accurately represents the past performance of GP and is both complete and accurate. It is possible
Recommendations
Explanation The issue of responsible investment is of great importance to the industry. As society grapples with the sustainability agenda, the consideration and management of ESG opportunities and risks in the investment process is becoming increasingly important for both GPs and LPs to ensure the long-term performance of investments. In
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Explanation Presentations and information provided by the fundraising team that influence LPs' decisions are often subject to the laws of all jurisdictions in which a fund is advertised. These laws often apply to information provided to LPs regardless of the media through which it is communicated. In certain circumstances,
Recommendations
Explanation The terms of an investment in a fund will normally be the subject and result of negotiation. Given the diversity of potential LPs in private equity, some LPs may require specific terms, for example to meet their own regulatory obligations. LPs may also be interested in obtaining certain preferential
Recommendations
Explanation The fund documents should set out the key terms and conditions and provide the framework within which GP will operate the fund. The minimum requirements for fund documents will depend heavily on the jurisdiction and applicable regulatory requirements and should therefore be reviewed by legal counsel. Recommendation It is
Recommendations
Explanation It is typical today for funds to be issued with additional interim financing in the form of facilities secured by the undrawn commitments of LPs. Such facilities, which are provided at the fund level (as opposed to facilities at the individual asset level of the fund), are typically set
Recommendations
Explanation Because negotiations with potential LPs typically continue until the final closing of a fund, documents are typically revised on an ongoing basis to reflect those negotiations. However, certain key elements describing the offering and its essential features should remain constant. Limited partners (LP) are investors. A limited partner is
Recommendations
Explanation The definition of what constitutes money laundering and the application of anti-money laundering (AML) legislation can vary from jurisdiction to jurisdiction. However, there are general requirements and common principles relating to AML legislation, which are set out in the Financial Action Task Force (FATF), and these include not only