Provided by Leslie Cummins and Peter Tropper of the
International Finance Corporation
In this section you will learn more about:
Objectives of Investment Monitoring
The Investors in your Fund may have a fiduciary duty to their clients or Board members to monitor your progress, just as you have a fiduciary duty to your Investors to monitor the progress of the Fund’s investments. Therefore, your Fund’s Investors will monitor the progress of you Fund with an eye to assessing, inter alia:
- Risk
- Valuation Issues
- Compliance Issues
- Value addition Issues
- Quality of Reporting
- Changes and developments within the Fund Management team
- Maintaining and developing the Investor’s relationship with your Fund Management team
- Co-investment opportunities
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Issues to Consider
- Do you know what your Investors want and need to know during the Fund’s life?
- Are you meeting your Fund’s legal requirements in terms of reporting to Investors? Are you meeting industry best practices in terms of reporting to Investors?
- Are you holding Annual Investors’ Meeting and/or Advisory Committee meetings?
- Some Investors may monitor your Fund’s progress more actively than others. Active Fund supervision may involve monitoring the following, inter alia:
- Regulatory changes which might affect the Fund or its Investees
- Fund’s deal pipeline
- Fund’s investment and divestment pace and progress
- Fund’s valuation of its unrealized assets
- Governance: Annual meetings, various Investor Committees, etc.
- Changes within the Fund’s other Investors
- The Fund’s Co-investors
- Institution building of your Fund Management team:
- Who does what?
- Accountability, compliance, checks and balances in place
- Development of skills and core competencies
- Staff retention issues
- Internal culture: Information internally shared on a need to know basis, or broadly?
- Brand building
- Governance
- Any litigation pending?
- Plans for additional fundraising?
- Active supervision likely works in your favor. For instance, it may be motivating for your staff to know that the Fund’s Investors are following their work with interest. Also, your Fund’s Investors may be able to assist you with various situations.
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Documents
- Reporting from the Fund Manager to the Fund’s Investors is the key medium
- Annual Meeting materials
- Correspondence between the Fund Manager and the Fund should be recorded in your workflow systems
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