Typical Private Equity (PE) funds do not satisfy the needs of active investors. Investors provide money or “hard” commitments (i.e. binding) to a typical PE fund at the beginning of the fund’s life. Thereafter the fund team receives a comfortable working environment for making deals and formally reports to the investors usually only upon exit from all the portfolio companies of the fund (typically 5+ years). This model is not suitable for active investors who are used to controlling their resources and participating in the investment decision making process.
W1 Partners was created in order to address this market inefficiency. W1 Partners is a "pledge fund" in substance, a model of the relationship between the fund and investors successfully applied in the US and European markets. In a pledge fund, unlike typical PE funds, each investor may choose whether to take part in a particular investment opportunity and provide capital on a deal-by-deal basis.
W1 Partners assists in finding the best market opportunities and delivering the safest and most favorable tools to realize the full potential and to meet the individual preferences of each Investor. The table below summarizes the key advantages of W1 Partners:
|Typical PE funds||W1||Explanations|
|Commitments||Hard||Soft||Investors only indicate the amount of capital they intend to invest but they do not have legally binding obligations to fund their capital commitment|
|Decision on particular transactions||Fund Team||W1 Investors||Each Investor receives a seat on the investment committee and makes the decision whether or not they participate in a particular deal|
|Profit distribution||Long-term (upon exit from all the portfolio companies)||Instant (upon exit from each particular company)||Profit distribution on each exit event (without waiting for exit from all investments of the fund)|
|Legal structure||Complex (group of companies)||Simple, novel and effective||Unique structure is used – Segregated Portfolio Company (Cayman) – one legal entity with segregated portfolios (“cells”) inside it|
|Investment geography||Usually local markets||Worldwide||Wide partnership network with international and institutional players|
|Access to portfolio companies||Absent or minimal||At the Investor’s discretion||Open access to portfolio companies (within the scope of W1’s authority)|
|Investors influence over the fund||Minimal||Significant||Investors receive the right to participate in the fund’s life during all stages (from investment strategy development to exits from investments)|