Typical Private Equity (PE) funds do not satisfy the needs of active investors. Investors provide money or “hard” (i.e. binding) commitments to a typical PE fund at the beginning of fund’s life. Thereafter the fund’s team receives a comfortable working environment for making deals and formally reports to the investors only upon the “exit” from all portfolio companies of the fund (usually 5+ years). This model is not suitable for active investors who are used to control their resources and participate in the investment decision making process.
W1 Partners was created in order to rectify this market inefficiency. W1 Partners is a "pledge fund" in substance, a model of relationship between the fund and investors that is new in Russia but is successfully applied in the US and European markets. In a pledge fund, unlike typical private equity 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 delivers the most favorable and safe instruments to realize the full potential and meet individual preferences of each Investor. The table below summarizes the key advantages of W1 Partners:
|Typical PE funds||W1||Comments on W1 model|
|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’s 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|
(upon “exit” from all the portfolio companies)
(upon “exit” from each particular company)
|Profit distribution on each “exit” event (without waiting for “exit” from all investments of the fund)|
(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)|