John Lore, managing partner of Capital Fund Law Group, joined Alyne on The Reg Tech Report to discuss investment strategies and the current investment ecosystem in RegTech, specifically in the U.S.  

During this informative Podcast, Mr. Lore offers insights on PE and VC investment activity and strategies, from broad activity to specific tech segments, and how the compliance industry continues to grow as regulations continue to expand.

We ask hedge fund managers five main questions to determine who can invest in their fund. Many prospective fund managers mistakenly believe that the “accredited investor” standard is the only required investor accreditation standard for their investors. 

A Private Placement Memorandum (“PPM”), also known as a private offering document and confidential offering memorandum, is a securities disclosure document used in a private offering of securities by a private placement issuer or an investment fund (collectively, the “Issuer”). From an investor’s point of view, the purpose of the PPM is to obtain needed information about the Issuer and its securities, both good and bad, to make an informed decision about whether to purchase the security. The investor wants to know the parameters of investing in the Issuer and the potential rights, risks, and rewards of its investment. For the Issuer, the purpose of the PPM is to provide the necessary disclosures about the risks, strategies, management team, investment criteria, and other information about its securities to protect itself and its managers against claims of misstatements or omissions.

Your legal counsel will prepare six core documents, which are necessary to launch the fund: (i) a private placement memorandum, (ii) a limited partnership agreement, (iii) a subscription agreement, (iv) an investment management agreement, (v) a general partner operating agreement, and (vi) a management company operating agreement.

Other services and documents that are also generally completed include the formation services of the limited partnership, the management company, and the general partner; drafting the management company operating agreement; preparing and filing the Edgar registration; drafting and filing state and federal Form D notice filings; and as necessary, preparing and filing any state or federal registrations or exemptions (or other necessary fund formation documentation).

New York houses many of the world's largest real estate private equity funds and is among the most cities for real estate fund managers. Nearly one-fourth of the largest 100 real estate fund managers globally are headquartered in New York City (PERE June 2019 Report).

One of the most important aspects of forming a real estate fund is to set the terms of the investment. When properly structured, real estate fund offering documents contain terms that adequately protect the fund sponsor and are attractive to investors.  Real estate fund terms are driven by the fund’s strategy, the market trends within the fund’s specific asset class, and the particular needs and objectives of the fund. It is crucial that the investment fund legal counsel have an in-depth understanding of current investment market trends and how those trends affect the strategy the fund will employ.