Thank you so much for attending Dorsey's Private Funds Symposium 2019 on September 19, 2019. The half-day event brought together leading industry participants to discuss hot topics in private funds and private equity.
- Capital Raising – It was the year of the re-up. Successful managers are those who approach fund raising with humility and a focus on the human relationships but who can also differentiate themselves and demonstrate that they have stamina and consistency.
- Impact Investing – Institutional investors are carving out a second pool of assets from which to make impact investments in addition to their general private equity investments. However, some argue that many of the impact investment opportunities are simply “greenwashed” as it is difficult to get the yield investors are seeking from true impact investments.
- Private Equity Secondary Market – With investors chasing yield, saturation in the primary private equity market and outflow from other alternatives, like hedge funds, secondaries have continued to increase and have experienced strong performance.
- Side Letters – Both a recent DE Chancery Court case nullifying a side letter, and Cayman Grand Court case law, have reinforced the need for market participants to ensure that side letters are drafted carefully, and are specifically contemplated and authorized in both partnership agreements and subscription agreements in a manner that will override any amendment requirements in those documents. In all instances, do not forget the concept of privity of contract.
- Anti-Money Laundering – Responding to queries raised by the funds industry in Cayman, CIMA issued guidance notes relating to the 2017 AML Regulations, which emphasize a risk-based approach, requiring regulated and unregulated investment funds to appoint natural persons in the required roles of Anti-Money Laundering Compliance Officer, Money Laundering Reporting Officer, and Deputy Money Laundering Reporting Officer (DMLRO).
- Cybersecurity and Privacy – Be compliant with the Cayman Island Data Protection Law that will be effective September 30, 2019 and the California Consumer Privacy Act that will be effective January 1, 2020 and the EU’s GDPR already in effect; organize your internal corporate governance to include all company stakeholders in the protection of personal data with overall high level control and reporting, company-wide training on the protection of data, an audit process to ensure rules governing data are being followed; and establish protocols to respond immediately to a data breach.
- Cross Border Deals Terms / Insurance – we face a declining European deal market consistent with the downturn in global M&A activity. The US/UK “Trans-Atlantic” channel held up admirably through 1Q19, but now is also showing signs of strain (though TMT remains a relatively healthy sector for US/UK M&A). UK-based sponsors continue to look to the US for growth opportunities over the last several years and, more recently, US sponsors look to the UK for value in light of economic uncertainty in Europe and Brexit in particular. The Rep & Warranty insurance markets in the US and UK have developed in line with their respective legal paradigms, and that is reflected in the disparity in premium cost in the UK vs the US, leading to “hybrid” deals, where despite the location of assets, the parties desire US-style indemnities. Insurers are being required to respond to this need.
- Brexit Outlook – Brexit has affected deal flows and fund raising with ups and downs in activity over the past 3.5 years following various referendums, extensions and Prime Ministers; however there has been no regulatory impact on funds as Britain still remains in the EU. The industry must continue to brace itself for a “No Deal” and the regulatory impact EU-wide, hoping for transitional measures should this worst case scenario arise.
See below for the PFS 2019 materials:
UK Supreme Court Declares Prorogue Unlawful
Mezzanine Finance Practice at Dorsey & Whitney
Breathing Room? California Legislature Passes Two Major Amendments to California Consumer Privacy Act (CCPA)
CCPA Compliance Screening and Assessment Tools - Now Available
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We would like to express our appreciation for our panelists who helped make this year a success.