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Private Equity

Supporting the CFO of a Global Private Equity firm (c£30b AUM) in planning a new fund

Private Equity

Supporting the CFO of a Global Private Equity firm (c£30b AUM) in planning a new fund

January 17, 2023

Creating a new fund requires careful consideration of how reward and return on investment will be designed and pre-agreed. It is critical to clearly understand how different stakeholders will be affected under a range of potential scenarios.

The Credential

Tunneys worked with the CFO to create a financial model to accurately forecast the returns to general and limited partners from a new fund and developed a bespoke visual dashboard to show the complex interplay of various potential terms and to present the proposed optimised terms to the board and investors.

How We Helped

With the rapid growth of the Private Equity industry, top firms must continuously seek new ways to establish competitive edge in order to secure their position in the market. A core differentiator for many funds and investors is the particulars of how distributions will be made throughout the investment horizon. This can often be complex or counter intuitive and therefore requires careful planning and presentation.

Prior to engaging Tunneys, PrivateEquityCo* had prepared internal modelling to plan the potential particulars of their next fund however the modelling done was not sufficiently designed to clearly and simply explain the highly complex nature of the proposed fund in a way that would be appropriate for presentation to the board and investors.

Tunneys carefully reviewed the legal text setting out the fund particulars under consideration and considered the factors driving returns for each stakeholder group. We then worked closely with the CFO to determine and present the optimal contractual terms of the new fund with respect to limited and general partners providing clear and impactful dashboards, visualisations and summaries of the results.

Value Delivered

Developing a financial model to accurately calculate the implications of fixed and variable contractual terms and the complex interplay of multiple factors for planning future funds;

Enabling the general partners to understand and carefully decide upon the optimal particulars for the fund agreement with consideration to a variety of potential scenarios;

Providing an operating model for the fund which can be used to monitor and manage performance and obligations throughout the life of the fund; &

Enabling (non-technical) Investors to easily understand a highly complex mechanism through simple and intuitive visualisations and a dynamic dashboard for testing and understanding the impact and interplay of various factors and levers.

* all client names have been kept confidential.

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