Institutional investors have been aggressively seeking out opportunities to direct and co-invest in recent years to have more control of private equity (PE) transactions and bypass hefty fees charged by commingled PE funds. These funds have a similar fee structure to that of hedge funds, typically consisting of a management fee (generally 2%) and a performance fee (usually 20%)[i]. Sovereign Wealth Funds (SWF) have not only sought out this control, but in the past year have surpassed US institutional investors in executing on this strategy.[ii] All of this activity begs the question, are there unique regulatory and professional liability exposures to PE firms that partner with SWFs?
Source: Guest Post: Underwriting Risk and Sovereign Wealth Fund Investment in U.S. Private Equity | The D&O Diary