SCOPE:
One of our endowment clients requested that EnnisKnupp analyze their existing private equity program and develop recommendations for enhancing it. Of their total $200 million in program assets, 10% or $20 million was allocated to private equity with a risk tolerance level of medium.
APPROACH:
To assist our client, we approached the process by conducting in-depth evaluation and making recommendations in four major areas:
- Policy and pacing
- Program development
- Investment management
- Reporting and monitoring
RECOMMENDATIONS:
Policy and Pacing. We began with an assessment of the client’s risk profile. Then, we reviewed and updated the existing investment policy statement for private equity. We recommended a specific investment process to find excellent “dislocation” opportunities created by the ongoing credit challenges in the financial markets.
Program Development. We evaluated multiple investment vehicles in the distressed credit space, conducted due diligence on those opportunities which we felt possessed high potential, and ultimately presented our research to the Board for its approval.
Investment Management. We provided a detailed legal review on every proposed investment to the client.
Reporting and Monitoring. We established a comprehensive monitoring process for all of the fund managers overseeing our client’s investments.
OUTCOMES:
As of July, 2009, we had deployed $10 million to multiple distressed managers for our client’s private equity program. In addition, we actively participate in the investment closing process to help ensure that our client’s best interests are well represented, and we track both cash flows as well as valuations on an ongoing basis. We provide our client with quarterly performance reports tailored to their needs and conduct ongoing portfolio reviews on a regular basis.