Private Investment Funds
Morgan Lewis combines comprehensive knowledge and a keen grasp of risk management and regulatory issues affecting the private investment funds industry to advance the diverse objectives of many of the world’s most sophisticated institutional investors and fund sponsors. We guide our clients in the formation of funds, and investments into funds, in virtually every major private funds jurisdiction around the world.
In an era of heightened regulatory and investor scrutiny, we drive deals forward with an interdisciplinary approach that utilizes the resources of our internationally recognized SEC-registered fund group, along with the insights of 20-plus high-ranking alumni of the SEC, FINRA, IRS, and other oversight bodies. This coordination results in efficient, comprehensive, and effective guidance on all fund investment activities.
Scope of Practice
Practicing in a majority of our U.S. offices, as well as our London, Paris, Frankfurt, Beijing, and Tokyo offices, the Private Investment Funds Practice advises the general partners, investment advisers, brokers, investors, administrators, and custodians of all types of funds, including:
- Hedge funds
- Private equity funds
- Funds of funds
- Venture capital funds
- Mezzanine funds
- Distressed debt funds
- Clean-tech funds
- Corporate governance and activist funds
- Infrastructure funds
- Real estate funds
- Hybrid funds
We also represent clients in “seed” investor arrangements, managed account arrangements, joint venture structures, and other complex investment structures.
We work closely with clients to achieve their business objectives, which often involve the following:
- Structuring participation by pension funds, financial institutions, and nonprofit organizations in both U.S. and international funds
- Ensuring compliance with regulatory limitations on investments in funds by regulated entities (such as banks and insurance companies) and on investments by funds targeting regulated industries (such as the telecommunications industry)
- Minimizing taxes for non-U.S. persons subject to taxation in the United States
- Ensuring compliance with relevant U.S. laws such as the Securities Act of 1933, the Investment Company Act of 1940, the Investment Advisers Act of 1940, ERISA, and the laws of various international jurisdictions, including the EU’s developing Alternative Investment Fund Manager Directive (AIFMD)
Representation of Fund Sponsors
We advise clients on the formation and operation of the full spectrum of private investment funds. Our interdisciplinary practice brings all of our varied disciplines and experience to focus on the complex business, tax, and regulatory issues associated with fund management. We have represented fund sponsors from the four corners of the globe, including Canada, Japan, Singapore, Hong Kong, Korea, the PRC, Latin America, Europe, and the Middle East.
We advise on all aspects of fund organization, domicile selection, exemption from registration, and fee and compensation structures. We provide our sponsor clients with in-depth knowledge of market terms in order to assist them in successfully negotiating balanced and attractive terms with investors. We counsel our clients through all the stages of investment, encompassing transactions on global equity and fixed-income markets; derivatives; leveraged acquisitions and recapitalizations; tender offers; going-private transactions; management buyouts; public offerings; seed, early-stage, and growth-stage venture financings; mezzanine financings; and other special situations.
We work together with attorneys in our Investment Management and Tax Practices to provide comprehensive regulatory and tax support to our fund sponsor clients. We counsel clients on regulatory, U.S. investment company, investment adviser, broker-dealer, commodity trading, and securities markets law. Our Frankfurt, Paris, and Tokyo offices also provide support for regulatory matters in those countries.
Private Equity/Venture Capital Funds
We regularly advise private equity and venture capital fund sponsors on a variety of legal matters, including portfolio investments and the formation of new funds. The funds we represent pursue all major investment strategies, including buyouts; distressed assets; and mezzanine, real estate, infrastructure, healthcare, energy, venture capital, and other sector funds.
For venture capital firms, Morgan Lewis plays a strategic role in the day-to-day operations of such firms, guiding them on their path to success. Our experience within industry-specific areas, including clean technology, energy, software, wireless technology, Internet, and life sciences, provides us with a depth of knowledge concerning portfolio companies that venture capital firms require. By representing these portfolio companies, we understand the strategies essential for success—those that will lead to a return on a client’s investment.
We have one of the largest international hedge fund practices. Our attorneys represent six of the 10 largest hedge fund managers (based on assets under management). We also serve more than 250 additional hedge fund managers, more than 30 of which manage assets greater than $1 billion.
Our success is due to the skills and experience of, and the strong client relationships maintained by, our hedge fund attorneys. In particular, we draw upon our firm’s deep bench of talent in the areas of fund formation, litigation, tax, ERISA, fiduciary, commodities regulation, federal and state banking and insurance laws, state securities laws, non-U.S. securities laws, and regulatory law. We represent all types of domestic and offshore hedge funds, including customized and captive funds, crossover funds, funds of funds, and master-feeder funds.
The growth of pooled investment vehicles is one result of the increased demand for money management services, which has produced dramatic growth in all sectors of the investment management industry. At the core of the industry, however, are investment advisers that manage mutual funds, pension plans, insurance company separate accounts, institutional separate accounts, and high-net-worth and other private accounts. We represent dozens of investment advisers of all sizes and types, both foreign and domestic, before the SEC and state regulators.
Funds of Funds
We provide a full range of legal services to our funds of funds clients, ranging from those involved with broad-based, multistrategy, and multimanager funds to funds with more focused funds tailored to specific strategies with a smaller numbers of managers. We assist funds of funds investing in private equity, hedge, and other types of funds. Our attorneys advise on formation issues, securities and regulatory matters, tax matters, and ERISA matters.
Our team works at the heart of the secondary fund industry, serving as a trusted source and a leader in representing secondary funds as well as institutional investors purchasing and selling private fund interests.
We offer one of the most comprehensive secondary fund legal practices in the world, based on our varied experience and our involvement in a broad range of market instruments and international assets. Our attorneys represented our secondary fund clients in more than 350 transactions in 2009.
Our clients trust us to consistently look out for both their long- and short-term interests, whatever the transaction. We are adept at structuring innovative secondary market transactions and in assessing the legal issues and market terms for virtually every type of fund, secondary acquisition, and sale of direct investments, public or private, as well as contractual arrangements with intermediaries.
Representation of Investors
We have the United States’ top practice representing institutional investors investing into private investment funds, including hedge funds, private equity funds, funds of funds, venture capital funds, mezzanine funds, distressed debt funds, clean-tech funds, corporate governance and activist funds, infrastructure funds, real estate funds, and hybrid funds. We have represented domestic U.S. institutional investors, as well as a broad array of non-U.S. investors from Asia, Canada, Europe, and the Middle East. Members of our team have represented lead investors in private fund investments since 1987, when we assisted a public pension plan in making one of its first “alternative” investments. We currently represent a significant number of the largest (based on dollar commitments) and most active investors in the world in a broad range of private investment funds. We have represented investors in more than 300 private investment fund transactions in each of the last five years. Morgan Lewis’s Private Investment Funds Practice was ranked the #1 Most Active Law Firm in the United States based on the number of private funds worked on for limited partners in the Dow Jones Private Equity Analyst (2010).
Our representation of these clients includes not only analyzing and negotiating fund documentation, but also working on special assignments such as assisting in the launch of their hedge fund programs, forming “captive” funds of funds and co-investment funds, and structuring the equity component of complex “warehouse” financing facilities. We also represent many of these clients in their managed accounts, direct equity and debt investments, and secondary transactions.