The Standards Board for Alternative Investments (SBAI) has published a memo on co-investments which was developed by the Standards Board’s Governance Working Group.
The Standard Board’s Co-investment memo sets out the processes investment managers need to put in place to address key governance and compliance challenges that can arise when granting investors the right to co-invest. The memo also covers structuring considerations and issues in relation to fee, expense and cost allocation.
Jessica Ross, Head of Customized Investments at Albourne Partners, said: “The best way for managers to address conflicts of interest and risks that can arise through co-investments is to adopt a co-investment policy which establishes procedures addressing the entire process from the allocation decision all the way through to the liquidation of the co-investment. The memo sets out these process steps, including suitability assessment of the co-investments opportunity, an investor eligibility framework, structuring considerations and the allocation/disposal approach.”
Currently, the Governance Working Group is reviewing a number of other topics, including investment manager committee structures and fund Director conflicts of interest. The findings of these reviews will be published in the coming months as part of the SBAI Toolbox.
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