Private Fund Insights Blog

As in most industries, private fund sponsors are increasingly assessing and beginning to adopt artificial intelligence-powered tools to rapidly analyze large volumes of data, identify trends and patterns and to generally make more informed decisions both in connection with internal operations and management of their funds and for enhancing efficiencies at their portfolio companies. AI technology’s ability to process information from disparate sources, such as financial reports, news articles and social media, and to purportedly predict market movements and inform ...

In March, we discussed how net asset value loans are an effective and versatile tool for private investment fund managers, the use of which has ballooned in recent years. In response, the Institutional Limited Partners Association recently released guidance outlining best practices for both fund managers and LPs in approaching NAV loans. This post highlights key takeaways from ILPA’s guidance for consideration by fund investors and managers.

Potential Risks

While the ILPA guidance highlights a variety of beneficial use cases for NAV loans, it also warns they can create ...

Co-investments play an important role in alternative asset investments. A “co-investment” generally is a portfolio company investment made by an institutional investor, at its discretion, alongside a sponsor’s “blind pool” investment fund. This post describes some benefits and risks of co-investments, both to investors and sponsors, and some of the commonly negotiated terms.

Co-investments offer several advantages to institutional investors compared to traditional fund investments. Sponsors often charge reduced management fees and carried interest, if ...

The short answer is no. A private investment fund (whether a venture capital fund, private credit fund, private equity fund, hedge fund, fund-of-funds or other type of non-registered fund) is not legally required to have a private placement memorandum or other offering document. Producing a high-quality PPM takes a material amount of time, work and money for a fund sponsor, many of whom are eager to avoid the exercise to focus efforts and resources on other matters. Whether a sponsor must or should prepare a PPM is driven mainly by the expectations and requirements of the potential fund ...

Loans to private investment funds based on the net asset value of their respective portfolio investments (that is, total assets of such a fund less its liabilities) have become dramatically more popular in recent years, as have similar arrangements structured as senior equity rather than debt. NAV loans have existed for more than a decade, and their increased use coincides with growth in the private investment funds industry and related expansion in demand for capital solutions. This post provides background information on NAV loans, discusses key issues for consideration by fund ...

On August 23, 2023, the United States Securities and Exchange Commission (the “SEC” or “Commission”) adopted rules and rule amendments (the “PFA Rules”) under the Investment Advisers Act of 1940 (the “Advisers Act”)¹ that impose new requirements and obligations on investment advisers to private funds. In our prior blog posts on the PFA Rules, we briefly summarized the SEC’s additions to the regulatory landscape for private funds and provided a more detailed exploration of the new quarterly reporting requirements applicable to registered investment ...