Media Mentions
Schulte partner Phyllis Schwartz featured in Private Equity Law Report article, “Offering Process, Key Fund Terms and Regulatory Considerations of Co‑Investments and Pledge Funds”
September 12, 2024
Schulte Roth & Zabel partner Phyllis Schwartz was featured in a recent article in the Private Equity Law Report that explores the critical nature of access rights and the preparation of fund documents in relation to offering co-investments and pledge funds. Phyllis shared her perspective on the essential terms for negotiation within these documents and examined regulatory aspects that General Partners (GPs) should keep in mind.
There has been a question as to whether a GP has a fiduciary duty to offer co‑investment opportunities to all LPs (Limited Partners) if any LP was receiving a co‑investment opportunity, Schwartz noted. Fund documents generally make it clear that co-investment opportunities can be offered to some and not all investors, and side letter provisions have evolved from acknowledging that LPs in PE funds have an interest in participating in co‑investments to granting priority rights, she explained.
In regards to side letters addressing co-investment access rights, Phyllis noted that side letters sometimes provide that if an LP turns down their co‑investment right – or, in a pledge fund, if the investor does not take up the investment opportunity – then the GP or an affiliate may pick up that portion.
Read the full article to learn more here.
Related People
Related Insights
Alerts
On Aug. 19, 2024, the US Securities and Exchange Commission (the “SEC”) charged Obra Capital Management, LLC (“Obra Capital”) with violations of Rule 206(4)-5 under the Investment Advisers Act of 1940, otherwise known as the “Pay-to-Play Rule” (the “Rule”), arising out of a $7,150 campaign contribution made by an individual prior to joining Obra Capital.[1] This campaign contribution was made to a government official in Michigan who had influence over hiring investment advisers for the Michigan Public Employees’ Retirement Fund (the “Michigan Pension Fund”), which was an investor in a fund managed by Obra Capital (the “Obra Fund”). Notably, the Michigan Pension Fund had been an investor in the Obra Fund for several years prior to the hiring of the individual who made the contribution. And perhaps even more notably, this campaign contribution was made several months prior to the individual becoming a “Covered Associate” (as defined by the Rule[2]) of Obra Capital. By virtue of Obra Capital continuing to provide investment advisory services for compensation to the Obra Fund in which the Michigan Pension Fund was invested after hiring the individual, Obra Capital violated the Rule and agreed to pay a $95,000 fine to settle the charges.
Alerts
On Aug. 19, 2024, the US Securities and Exchange Commission (the “SEC”) charged Obra Capital Management, LLC (“Obra Capital”) with violations of Rule 206(4)-5 under the Investment Advisers Act of 1940, otherwise known as the “Pay-to-Play Rule” (the “Rule”), arising out of a $7,150 campaign contribution made by an individual prior to joining Obra Capital.[1] This campaign contribution was made to a government official in Michigan who had influence over hiring investment advisers for the Michigan Public Employees’ Retirement Fund (the “Michigan Pension Fund”), which was an investor in a fund managed by Obra Capital (the “Obra Fund”). Notably, the Michigan Pension Fund had been an investor in the Obra Fund for several years prior to the hiring of the individual who made the contribution. And perhaps even more notably, this campaign contribution was made several months prior to the individual becoming a “Covered Associate” (as defined by the Rule[2]) of Obra Capital. By virtue of Obra Capital continuing to provide investment advisory services for compensation to the Obra Fund in which the Michigan Pension Fund was invested after hiring the individual, Obra Capital violated the Rule and agreed to pay a $95,000 fine to settle the charges.