The way it’s meant to be. Private equity fund directorship

APPOINTED TO THE BOARD OF THE GENERAL PARTNER OF A JERSEY PRIVATE EQUITY FUND INVESTING IN UK INDUSTRIALS

My involvement

A closed ended, un-listed private equity fund structured as a limited partnership controlled from Jersey. The portfolio of UK industrial/manufacturing, consumer and service businesses had been assembled and managed by a major UK bank investing its own funds. Following a take-over of the bank, the new parent decided to divest a majority portion of the investment risk. A secondary buyer was identified and the new fund, with the UK bank and the secondary buyer as its only two investors, was set up.

I was approached by the prospective London-based administrator prior to set-up and invited to join a board selection process. Subsequently offered and accepted appointment as a director of the fund’s general partner. An eight-year role. The GP board gave initial approval to the investment advisor’s procedures manual, categorising all investment transactions as “significant events” requiring prior GP board approval or as “minor events” requiring prior approval of any one GP board member.

All investment transactions were preceded by a written analysis and recommendation from the investment adviser to the GP. I attended ad hoc board meetings to consider each significant event, and quarterly board meetings attended by the investment adviser to consider among other things the investment adviser’s portfolio report and to ratify all minor events during the preceding quarter.

In between board meetings, my role included reviewing the investment adviser’s written analysis and recommendation for each minor event, following up with any questions for the investment adviser, and when the process was complete confirming to the administrator that I was happy for the minor event to be approved by the GP director supplied by the administrator, demonstrating independence of governance and a core role in Jersey in the income-generating activity. 

Outcome

This fund reached the end of its lifecycle in 2018, having divested all of its assets. The role demonstrated regular interaction between the GP board, the administrator and the investment advisor. Governance was effective and precise at board level, differentiating the transaction approval processes between significant events and minor events. All operational processes were fluid and the fund operated exactly as it was intended and without challenge.  The outcome exceeded investors’ expectations.