You work for a fund manager that spans venture capital, private equity, and private debt. Your firm
Question:
You work for a fund manager that spans venture capital, private equity, and private debt. Your firm has been approached by a long-standing investor client, a major U.S. foundation, that is newly interested in impact investing.
They are considering investing in a new fund, which your firm would set up and manage, and are looking for a compelling idea.
Here is what you know:
1. The foundation has a $1 billion endowment. It could invest in your new fund either as a mission-related investment (MRI) out of the endowment, or as a program-related investment (PRI) that does not seek to obtain risk-adjusted market rates of return.
2. It would be reasonable for the foundation to commit $2-5 million to this new fund.
3. Because of your prior relationship, the foundation is not concerned about this being a first-time fund. However, they want to understand in some detail how your firm would address the impact aspect.
4. The foundation's core areas of interest span social justice, worker well-being, food access, and education.
Write a sketch of a proposal or a set of talking points that your boss can use in suggesting a new fund that the foundation could be interested in investing in.
Make sure you include:
1. The fund's impact thesis and considerations on how the fund's concept would line up with the foundation's priorities;
2. Some thoughts on the structural aspects of the fund (such as, for example, the fund's size, type of investment, number of investments it will seek to make, the return profile, whether it would be an MRI or PRI fund, who else could be interested in investing in this fund, and so on - you don't need to touch on all of these); and
3. Anything else that would make the case for this fund being both a good fit for your firm (since your boss has to approve it) and an appealing offering for the foundation (since they ultimately would be the main investor into the fund)
Auditing Cases An Interactive Learning Approach
ISBN: 9780134421827
7th Edition
Authors: Mark S Beasley, Frank A. Buckless, Steven M. Glover, Douglas F Prawitt