Hawksford has had great success over the years helping managers launch their first private equity funds. Our position within Jersey’s wider ecosystem of multi-disciplinary experts and our established relationships with these trusted partners have enabled us to support many new managers, many of whom have gone on to launch much larger vehicles.
We’ve seen a wide range of challenges that new managers face on a daily basis, from the initial structuring and fundraising stages, through launch, day-to-day operations and governance, and ultimately through the exit process.
Below are some of the key challenges and considerations that my client and I discussed as being particularly important for any new manager.
Most new managers have an investment and fundraising strategy in mind. They are likely already an industry expert and will already understand the metrics to ensure future success, perhaps coming straight from a large private equity house with a well-established internal infrastructure in place.
Most new managers also understand that investors are looking to them for added value and growth opportunities, on top of already high expectations for financial returns.
To allow this added value to manifest, new managers need the necessary bandwidth to focus on managing the fund, especially if they are already faced with the regulatory authorization process and the relevant controls required.
Removing administrative burden through outsourcing allows the manager to focus on what they do best, raising and deploying funds, and improves operational efficiency.
For any new manager, budgeting, estimating costs and managing expenses can quickly become tedious tasks.
Finding a high-quality outsourcing partner allows a manager to dilute costs in terms of people, technology, process, and control environment. It takes the hassle out of difficult and costly back-office recruiting (something that has been exacerbated post-pandemic in the hybrid workplace), while ensuring access to the best technology platforms, processes and controls – all without the hassle. advance realization costs.
Hawksford has invested in its people, technology and processes to ensure we can fully support new fund managers; we quickly adapted our global offices to a hybrid working model, revamping our onboarding, training and mentoring processes.
Another key consideration is the fact that entry-level managers typically spend more time in the market when setting up targeted launch capital.
While most investors quickly realize that new managers will often provide a source of added value and growth opportunities, they are also aware that they will generally spend more time in the due diligence process, ensuring that they select the right partner capable of providing these opportunities.
Ensuring all the relevant documentation is in place, patience, differentiating factors, track record, etc., are all essential in getting an investor to cross the line, but additional comfort can come from selecting a high quality outsourced service provider. .
Investors will be reassured that the manager has a quality independent director in place from day one, especially given corporate governance.
Do not overlook the establishment from the outset of the appropriate administrative processes, procedures and infrastructure.
Hawksford has extensive experience in developing tailored solutions to meet the needs of new managers and their investors. We work closely with managers to help them achieve their goals, especially as investors become increasingly data-driven and demand greater visibility into fund performance.
Choosing a home is just as important as selecting a trusted, high-quality service provider. Choosing the right jurisdiction to domicile a new fund is crucial, and not just in terms of ease of operation or operational cost factors.
With its political and fiscal stability, and an unchanging outlook from a regulatory, legal and economic perspective, Jersey is a destination of choice for fund managers deciding where to locate their funds and/or management companies.
Although the international regulatory and legislative landscape is constantly changing, Jersey’s fund regime responds with agility, providing managers with a full range of regulatory options, in addition to providing significant flexibility for investors’ needs.
But managers still need someone to get it right and not let down when it comes to regulatory compliance, corporate governance, etc. – this is particularly the case for new managers, as they begin to build their reputation and establish a good balance sheet. .
Jersey offers an exceptionally broad pool of expertise across all disciplines, offering perfectly suited products and specialist vehicles, whatever the investment objectives.
Over the next few months, we’ll be revisiting this topic and highlighting what Hawksford sees as some of the key areas to consider when launching a new fund in a bit more detail.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.