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ILPA Guidance on Subscription Lines of Credit

The Institutional Limited Partners Association (ILPA) released guidance regarding the use of subscription lines of credit facilities by private equity funds. ILPA outlines the risks and potential impact on limited partners. As with most potential conflicts, ILPA recommends better disclosure and greater clarity for their use. Subscription lines of credit are a great tool for […]

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I'm just a bill from Schoolhouse Rock

Financial Choice Act Passes the House

While the political lens was focused on the James Comey testimony, the House of Representatives passed the Financial Choice Act. The bill is big change to many of the Dodd-Frank. For private funds, the most interesting section is: TITLE IV—Unleashing Opportunities For Small Businesses, Innovators, And Job Creators By Facilitating Capital Formation. The Financial Choice […]

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The Positives and Negatives of A Subscription Credit Line

I came across two competing narratives on the use of subcription credit facilities for private equity funds: (1) Howard Marks of Oaktree Capital published a memo on subscription lines of credit for closed-end funds and (2) Eileen Appelbaum’s Private Equity’s Latest Con. Unlike hedge funds, private equity funds call capital from limited partners over time as investments […]

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Headline Risk

On Thursday, The Wall Street Journal published an article on conflicts between the top executives of some private equity firms and their personal investments: “Fund Kings Open Family Offices.” The article focused on two aspects of the executives’ wealth management: (1) distractions from activities outside the funds and (2) conflicting investments with the funds. On […]

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I'm just a bill from Schoolhouse Rock

Financial Choice Act 2.0 for Private Fund Managers

The Republican agenda is moving ahead to unwind much of the Obama Administration’s legislative and regulatory achievements. The first attempt to repeal the Affordable Care Act failed. Next up is raising the debt ceiling, tax reform and Dodd-Frank appeal. (I question how much Congress can take on at one time.) Jeb Hensarling, Chairman of the House […]

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Financial Choice Act

Congress is currently occupied with health care. That is just one item on the agenda for the Republican leadership in Congress and President Trump. All have mentioned in one way or another to undo some of the evils of Dodd-Frank. The big questions is how long will it take to move the American Health Care […]

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Co-Investments and the SEC

Last year, regulators from the Securities and Exchange Commission raised concern about co-investments. The statements were vague about what was bothering the regulators. Co-investments allow a private equity to lower its exposure to an investment and give others an opportunity to invest along side the fund at a discounted rate. It can be an opportunity to […]

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California’s Private Fund Disclosure Bill

California’s soon to be enacted new law, AB 2833, requires every California public investment fund to require its alternative investment vehicle fund managers to make disclosures regarding fees and expenses. AB 2833 mandates that that every California public investment fund (that includes CalSTRS and CalPERS) must make the following disclosures at least annually: The fees and […]

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Umbrella Registration

Continuing with my look at the changes to Form ADV, I spent some time looking at the new umbrella registration. One investment adviser (“Filing Adviser”) will be able to file a single Form ADV on behalf of itself and other investment advisers (“Relying Advisers”). This tackles the problem fund managers had when the manager was […]

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Don’t Charge Your Examination and Investigation Expenses to Your Funds

Most private fund documents allow the manager to charge the funds for expenses incurred in the operation of the funds. Most investors expect and most managers charge the funds for some of the legal expenses and consulting expenses. The Securities and Exchange Commission though Cherokee went too far in charging the funds for expenses related […]

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