Private Fund Investments
Hills Stern lawyers have been representing investors in emerging markets funds for over 30 years, particularly development finance institutions (more than twenty DFIs in total). They have negotiated, documented and closed debt and equity investments totaling some $2.75 billion in capital commitments to more than 65 emerging markets private equity, venture capital, real estate, infrastructure and other funds. As a result, we have a keen understanding of market terms, negotiation strategies, and the diverse objectives, sensitivities and challenges of public sector investors in emerging markets.
Hills Stern delivers a comprehensive suite of services to meet the needs of our institutional clients, including:
- Negotiating the terms of private fund agreements, including limited partnership and operating agreements, subscription documents, side letters, and other pertinent fund-related documents.
- Providing support in establishing a robust legal review process, crafting standard form side letters, and furnishing analyses for internal investment committee approvals.
- Facilitating negotiations for co-investments, funds-of-one, side cars, and joint ventures.
- Providing portfolio monitoring services including assisting on most favored nation (MFN) elections, responding to requests for limited partner and LPAC consents, and reviewing amendments to governing documents.
- Advising on and negotiating the sale or acquisition of private fund interests within the secondary market, as well as navigating elections to liquidate or rollover private fund interests in sponsor-led secondary transactions.
- Assisting with fund terminations, liquidations, and final distributions, while also addressing matters related to general partner removals and breaches of governing documents.
Co-investments
Our attorneys have extensive co-investment experience, facilitating collaborative investment opportunities for institutional investors working with investment managers and fund sponsors globally. We understand the nuances of co-investment structures and provide strategic guidance to clients seeking to maximize the benefits of shared investments in the private equity space. We specialize in structuring and negotiating co-investment arrangements that foster strategic partnerships among investors.
We represent institutional clients on co-investment matters ranging from single asset co-investments to “funds of one” set up to co-invest as side cars in multiple assets from several related funds. Drawing on private acquisition as well as investment management expertise, these transactions often close under significant time pressure. In addition to review and negotiation of acquisition vehicle documentation, Hills Stern regularly conducts a “fatal flaw” review of the underlying investment documentation. Our co-investment experience ranges from early-stage venture capital to growth private equity and infrastructure investments.
Portfolio Monitoring
Hills Stern has extensive experience advising institutional clients on portfolio monitoring matters, including MFN election reviews; analysis of and recommendations on fund manager requests for consents and amendments; and the analysis of issues and options in connection with key person events, potential cause events, and fund restructurings. This depth of experience in advising on post fund-origination matters allows Hills Stern to provide its clients with efficient, seasoned counsel in managing issues and requests arising from diverse alternative asset portfolios.
Investment Program Development
Our attorneys provide guidance to institutional clients in the development of investment policies, side letter templates, review checklists, standardized agreements and compliance policies and procedures for their investment programs. These resources are designed to streamline internal and external processes, ensure policy conformity and maintain consistency in the origination and management of investment portfolios. Examples of our offerings include:
- Creating agreement issues charts (“matrixes”) designed to summarize key terms and pinpoint any gaps from investor expectations and market terms, accompanied by related practice guides to assist internal teams in utilizing the matrix effectively.
- Crafting side letter templates and related practice guides.
- Crafting template partnership agreements, investment management agreements, and subscription documents tailored for special purpose vehicles and funds-of-one.
- Creating template term sheets and agreements for direct debt and equity investments and co-investments.
In addition to these services, Hills Stern provides advisory support to institutional investors, including benchmarking best practices and contributing to new product development initiatives.
