Fund Formation and Operation
Fund sponsors must confront numerous challenges in the formation and operation of private investment funds. Our team provides help and guidance to both new entrants and established firms on all fund formation and operational issues.
We can advise you on the formation of private investment funds of all sizes, with any structure, objective and strategy. This includes everything from devising fund structures and offering terms, to navigating the tax and regulatory schemes applicable to a fund and its investors, drafting offering, governing and subscription documents, negotiating with fund investors, coordinating closings and handling all post-closing matters. We also provide ongoing counsel during the lifespan of an investment fund.
Co-Investments
We advise fund sponsors and private fund investors on the offering and structuring of direct and indirect co-investments in collaboration with our corporate transactions team and our tax experts. Direct co-investments are investments by an LP of a flagship fund directly into the portfolio company’s holding company structure (typically at the topco level). Indirect co-investments are investments by an LP into a special purpose “fund of one asset” vehicle that invests pari passu alongside a flagship fund.
We also advise managers on deal-by-deal offerings – these are transactions that are neither part of a primary fundraise of a blind pool fund nor a true co-investment, but are often used by managers to bridge the gap between successive fundraises. They are also offered by fundless sponsors.
Internal Investment Firm Matters
We provide specialist advice for principals on the establishment of investment firms (including spinouts), as well as the issues confronting existing firms. This encompasses entity structures, operating agreements and governing documents, internal governance and economic arrangements, taxation, carried interest, bonus pool and other incentivization schemes, employment and benefits, succession planning, separation matters and regulatory compliance. In addition, we counsel on the acquisition and sale of minority and majority stakes in investment firms, seeding and revenue sharing arrangements with third-party investors and joint ventures between independent sponsor groups and management teams.
Regulatory Compliance
Another important component of our advice is in regulatory compliance matters, which include applicable securities, investment adviser and commodity trading adviser registration and licensing requirements, the updating of regulatory filings, compliance policies and procedures, compliance with environmental, social and governance disclosure legislation (such as the EU SFDR and the UK SDR), securities and commodity futures regulatory matters, regulatory examinations, audits, investigations and enforcement proceedings, as well as anti-money-laundering. We regularly deal with the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the National Futures Association (NFA), the Financial Industry Regulatory Authority (FINRA), the Financial Conduct Authority (FCA) in the UK, the Australian Securities & Investments Commission (ASIC) and other regulatory authorities.
Investor Representation – Investments in Private Funds
We have a dedicated team representing private fund investors across asset classes, transaction types and geographies. Our client base includes sovereign wealth funds, pension funds, funds of funds, foundations, universities, endowments, family offices, high-net-worth individuals, banks and insurance companies.
We advise private fund investors across the full spectrum of fund types. Our lawyers perform diligence tailored to the needs of the client, from high-level reports and reviews to extensive legal, tax and commercial due diligence, negotiation of the terms of investments (including side letters), guide clients in the completion of subscription materials and satisfaction of Know Your Customer (KYC) and anti-money-laundering requirements, and provide written summaries of fund terms. Our lawyers also advise on post-investment on all follow-up matters, such as secondary transfers, “most favored nation” side letter elections, participation in co-investment opportunities and reviewing amendments to fund structures, among other things. Similarly, we also assist institutional investors in structuring seeding and revenue sharing arrangements with emerging managers.
Sovereign Wealth Funds
Sovereign wealth clients can rely on us for both the legal skills and the level of sophistication that is critical to this area. We have advised dozens of governments and sovereign enterprises on issues related to the investment, management and administration of sovereign wealth. For more than three decades, our lawyers have handled complex transactions, provided advice and resolved legal disputes involving state‐owned investment funds in more than 70 countries around the world. We are privileged to have been able to serve among the principal legal advisers for some of the largest sovereign wealth fund investors in the world, including several from GCC countries, as well as from Korea, Southeast Asia and North America.
Customized “Funds of One” and Managed Accounts
Our clients can tap into our extensive experience in structuring fully customized “funds of one” (including private equity funds, funds of funds and hedge funds) and managed accounts.
For sponsor clients, we take the lead in devising structures, drafting governing and operating agreements, subscription documentation and managed account agreements and negotiating agreements with counterparties and other service providers. In this regard, we have negotiated opposite some of the world’s largest institutional investors.
For institutional investor clients, we review, comment on and negotiate the terms of the private offering memorandum, the governing and operating agreements, subscription documentation, the investment management agreements, side letters and agreements with counterparties.
Secondaries
We advise sponsor clients and institutional investor clients on the range of transactions that comprise secondaries in the private funds market.
For sponsor clients, these can take the form of sponsor-led (or GP-led) secondaries where a fund managed by a sponsor sells assets to a continuation vehicle managed by the same sponsor. We help clients carefully navigate the structures and processes these transactions require to manage and mitigate conflicts that arise. We advise in close coordination with our corporate transactions team to provide an integrated service to clients.
For institutional investor clients, we advise on the sale of private fund interests (whether a single interest or a portfolio) that may arise due to the need for liquidity, portfolio rebalancing or other strategic shifts that may influence an institutional investor. We guide our clients through these transactions, advising on term sheets, purchase and sale agreement negotiation and the completion of transfer agreements with the relevant GPs, supported throughout by our tax team. We also advise buyers in the secondary market on single asset, portfolio and stapled transactions, and investments into GP-led opportunities.
