An investor must be concerned to ensure each Investee Company, its subsidiaries and Key Principals are conducting business to the highest standards of corporate governance - the smart investor is aware of issues before they become a major problem which could place their investment at risk.
Investors, especially those with limited internal resources, are increasingly realizing the need to take more robust, proactive but often discreet actions in respect of their multi-million dollar investments to support standard asset management processes. This is particularly true for fund managers that have raised funds from institutional investors (such as pension funds and government-linked investors), who are now expecting and demanding far higher levels of integrity in their investments, more transparency and greater investment security.
A private equity investor typically has some form of audit rights, theoretical access to “the books” and a seat on the board of directors of the Investee Company. However, investors often have limited real access to relevant information; being informed early only of positive news, whilst negative information is often withheld or massaged. International Risk business intelligence services assist investors monitor potential investment risks, especially in less transparent emerging markets.
Our Approach
It is critical for investors to be fully aware of all key developments within or impacting an Investee Company and its subsidiaries, and of any other business interests of the key principal/s of the Investee Company that may present a potential conflict of interest. Equally, investors should be alert to other off-balance sheet risks which could pose a risk to their investments, such as issues with a key supplier of the Investee Company.
Post Investment Monitoring is an extension of International Risk’s well known Investigative Due Diligence services. There are two key facets to the process that offer investors flexibility and reassurance:
- On-going discreet business intelligence monitoring and regular reporting on the investment – including the key people and the entities involved
- Focused, discreet and customised investigations to clarify specific issues of concern/potential concern regarding the investment as issues are uncovered, either during International Risk’s regular post investment monitoring process, or arising from the investor’s own monitoring of the investment.
Key Points of Inquiry
The key points of inquiry during post investment monitoring are client and/or investment-specific, but most frequently cover:
- Changes to the corporate structure
- Reputational issues with associated entities (e.g. vendors, suppliers, competitors, trade bodies, etc)
- The business interests of the key principals
- Litigation involving the company or associated individuals
- Pertinent labour issues
- Bribery or corruption-related concerns
- Regulatory issues that could impact upon the investment
- Environmental or social compliance issues
Customised Investigative Services
During our bespoke post investment monitoring, or by virtue of the investor’s internal monitoring processes, issues may be identified that raise concerns about the investment that require focused, discreet investigation.
To address such concerns International Risk can provide the client with a focused investigative service to address the identified issues. Such a service is quick to commission, and can be completed efficiently, effectively and economically. Most importantly, it will enhance the investors’ ability to ensure higher levels of integrity in their investments and greater investment security.
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