Three Brexit considerations for fundraising GPs

UK private equity firms in fundraising mode should expect investors to quiz them on the potential impact of Brexit on their structure, investment strategy, and returns, and prepare accordingly, lawyers say.

UK-based private equity firms seeking to raise capital for their funds should prepare for tough questions from investors on the potential impact of Brexit on their businesses, lawyers told PEI's sister publication pfm.

“Managers should expect investors to verbally ask them about Brexit and need to get their stories straight,” said Nicholas Holman, co-head of Hogan Lovells’s investment funds practice.

Here are three Brexit considerations for fundraising GPs.

1. Where would you move your fund if the need arises?

Though the UK government has not yet begun Brexit negotiations, “[GPs] should be able to tell investors that they have analysed the implications of Brexit and have worked out…where they would or would not be likely to move the fund,” said Holman.

Managers who want the flexibility to move a UK fund should consider adding this to their LP agreement, said Eamon Devlin, managing partner at MJ Hudson.

“If a manager is about to start fundraising for an onshore UK fund, then it is sensible for them to consider having a mechanic in the fund documentation that allows them, during the life of the partnership, to relocate the fund to a different jurisdiction if that is what the manager thinks is in the best interests of the overall fund and its LPs,” Devlin said.

– Read more by visiting pfm.