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Private Equity Pledge Funds: Benefits, Features, Pitfalls, Regulatory Concerns

Learn the Pros and Cons of These Industry Funds vs. Blind Pool Funds and How They Fit in the Current Regulatory Landscape

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Tuesday, October 31, 2023

Recorded event now available

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This CLE course will discuss features of pledge funds and the pros and cons of these industry funds compared to blind pool funds or the separately managed account model. The program will also address where the pledge fund fits in the current regulatory landscape.

Description

Specialization is changing the private equity market as industry-focused strategies increase in popularity. In recent years, the alternative asset market has paid increasing attention to fundraising alternatives, including a revival of interest in "pledge fund" structures.

As the fundraising market tightens and investors increase their interest in "direct" investments, fund sponsors have turned to pledge funds. These funds can present an attractive midpoint between the direct investment model and a fully committed blind pool and enable sponsors to have some certainty in funding their deals.

Similarly, investors that have moved away from the blind pool in favor of a more directed strategy can find the pledge model very attractive. Pledge funds allow investors to retain discretion over their investment decisions by opting in or out on a deal-by-deal basis.

Listen as our authoritative panel of practitioners discusses the benefits and pitfalls of private equity pledge funds and how they contrast with blind pool funds or the separately managed account model. The panel discussion will also include regulatory concerns associated with pledge funds.

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Outline

  1. Background and structure
  2. Terms and conditions
    1. Management fees
    2. Carried interest
  3. Pledge fund operations: timing and investment process
  4. Structuring pledge funds under the Investment Advisers Act

Benefits

The panel will review these and other vital questions:

  • What market factors have caused investors to look more closely at more direct investments?
  • What advantages do pledge funds present for investors?
  • How are sponsor management fees and carried interest structured for pledge funds?
  • How are pledge funds structured under the Investment Advisers Act?

Faculty

Schwartz, Phyllis
Phyllis A. Schwartz
Partner
Schulte Roth & Zabel

Ms. Schwartz focuses her practice on the structuring, formation and operation of private equity funds, including buyout...  |  Read More

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