Due Diligence of an Investment Fund

Client

A large PE firm in Japan

Challenge

• Evaluate the proposed investment on different factors, including
• The Investee Fund’s ESG compatibility
• Investment returns, past performance, compliance, etc.
• Investee Fund’s theme and sector investment, including the priority sector
• Management and experience
• Draw a very detailed analysis through DD with a to-the-point recommendation based on the test of pre-defined criteria

Approach

• Key boxes to be ticked
• Integrity and background checks
• Business strategy and market position of portfolio companies
• Sponsors
• Fund management abilities and experience
• Financial management strategy
• Overall impact strategy
• Governance
• Current and past financial performance
• Risk Analysis
• Opportunities for growth of portfolio companies
• Dissect the findings to majority of the investee funds’ portfolio companies
• Identifying existing and emerging players
• Market share
• Product offerings
• Pricing strategies, etc.
• Conduct interviews with Fund managers
• Collect Impact Data
• Check for ESG
• Prepare a detailed DD report for the PE firm for its decision on potential investment

Results

• Facilitated decision to invest $500 mn for the first tranche
• Laid out a clear understanding of the possible risk, returns, ROI, etc. based on a set of criteria
• Checked out ESG, Impact and other social criteria