SCOPE:
One of our original clients from June 1981 asked us to start managing its private equity portfolio on a discretionary basis. Of their total program assets of $10 billion, EnnisKnupp was to allocate 5% (approximately
$500 million) to private equity infrastructure with a low risk tolerance.
APPROACH:
We approached helping our client start a program devoted to infrastructure investments by studying four major areas:
- Policy and pacing
- Program development
- Investment management
- Reporting and monitoring
RECOMMENDATIONS:
Policy and Pacing. We began by assessing the client’s risk profile and developing an investment policy statement specific to infrastructure.
Then, we outlined a comprehensive investment process designed to ensure a successful infrastructure program as part of its private equity allocation.
Program Development. We recommended pacing and sub-asset allocations, evaluated appropriate investment vehicles and conducted extensive due diligence on multiple investment opportunities and selected managers.
Investment Management. In addition to assuming complete discretion over the infrastructure portion of the client’s private equity portfolio, we also provide them with a detailed legal review of every prospective investment. We participate in the closing process to help ensure that our client’s best interests are well represented; and we track both cash flows and valuations on an ongoing basis.
Reporting and Monitoring. We monitor all of the managers that we have selected on behalf of our client, participate on advisory boards as needed, attend annual meetings, and provide our client with quarterly reports tailored to their needs. In addition, we develop and implement educational programs for the client and provide regular portfolio reviews.
OUTCOMES:
To date, we have deployed $400 million in infrastructure investments on a discretionary basis. By assuming discretion over the client’s infrastructure portfolio, we enable our client to focus their limited resources on other aspects of its investment portfolio.