$300 million fund-of-funds

Background

KIMC’s client was a $300 million fund-of-funds group within a Top 10 North American financial services firm requiring multiple services on short-notice and within tight timeframes.

Engagement

Over a six month period, KIMC assisted in providing outsourced due diligence services. KIMC evaluated and provided an investment recommendation for a fund investment opportunity. This included:

  • An analysis of past performance at a company-by-company portfolio level
  • Interviews with the General Partners
  • Supplied and non-supplied third party reference calls
  • Review of the fund’s legal agreements

The final recommendation was provided in a format conforming to the client’s investment recommendation process and procedures.

Assessing an underperforming fund investment situation.

  • At the request of the Limited Partners, and with the cooperation from the fund investment in question, KIMC provided an in-depth, unbiased review of the General Partner (GP) and its fund.
  • KIMC’s assessment included an evaluation of the GP’s skills and capabilities, performance and exit probabilities of each portfolio company, and an analysis of the existing legal agreements to determine the options available to the fund’s Limited Partners (LP). KIMC then presented the findings, options and recommendations to the LP Advisory Board.
  • Subsequently KIMC was hired as a supplementary GP to manage out the fund’s life. In its first 12 months, KIMC restructured the fund management, reduced operating expenses and follow-on financing requirements, provided strategic support and sourced fresh capital for identified portfolio companies with high prospects, and generated liquidity event exits within the portfolio.

Reviewing the existing private equity program.

  • KIMC worked closely with the client to review their existing internal processes and procedures, actively participating in strategy sessions and program development.
  • As a result, monitoring protocols and reporting templates were updated to conform to current industry best practices.

Summary of Value Add

  • Flexible and responsive to short-term needs
  • A trusted independent expert that can create consensus in difficult situations (a catalyst for change)
  • Supplementary GP for a venture capital fund’s post-investment period
  • Ability to work both collaboratively and independently of the client team and funds under review
  • Implementation of fund management best practices