Special Situation funds can originate from a broad range of industry sectors/asset classes – which are generally identified by an investment manager as a ‘unique opportunity’ or ‘distressed’ assets - which generally arise in economic cycles.
That said the investment manager (general partner) would then seek to market the unique opportunity/special situation to outside investors (limited partners), to share the ‘pain and gain’ of the special situation fund.
Examples of special situation funds may include;
- Purchasing companies who are particularly ‘distressed’ or insolvent – but have a strong business case and management team.
- Investment into under-performing businesses, going through a cyclical change
- Untapped development potential
- Temporary Dislocation (E.g. management change, litigation, economic factors)
- Debtor in Possession financing (DIP financing)
- Insolvency / Pre-Pack purchases
Special Situation funds often make investments that gives them ultimate control, so that the fund and management team can steer the acquired business unit with specialist expertise.
As Special Situation funds are illiquid funds, with lock in periods ranging from 2 – 5 years; they are suited towards investors who are familiar with such practices given the investment risks involved.
That said, Special Situation funds are highly popular and rewarding ventures – such the right opportunity arise.
Special Situation Fund Launch - Why XCAP?
Unlike other regulatory hosting platforms and European AIFM platforms, we are specialist in Special Situation Fund launches and EU AIFM hosting, thus we specialise in what we know. Rather than be a generalist regulatory hosting platform, we offer bespoke services to private equity/special situation funds, complete with integrated solutions such as custodians, fund administrators and legal support where required, offering a true ‘plug and play’ solution.
Being a true specialist, allows us to add genuine value to our clients, from a corporate finance advisory and capital raising point of view, to offering assistance in managing risk and compliance.
Special Situation Funds - How XCAP can help?
Whether you are a seasoned professional in distressed and special situation funds, or looking to launch your first fund – we offer a complete platform for Special Situation Funds that will allow you to ‘plug and play’ your fund, from structuring, legal documentation, launching, regulatory cover and capital raising.
Our service include, but not limited to;
- Fund Structuring & Set Up
- Fund Offering Memorandums
- Legal Counsel/Support on Taxation, Investment Management Agreements and corporate structures for the General Partner (GP).
- Integrated Fund Administration & Auditing
- FCA Regulatory Hosting (FCA Appointed Representative)
- European AIFM/ManCo Hosting for the Fund
- European Passporting to all 29 EEA States
- Corporate Finance & Capital Raising
- Risk Management / External Risk Committee
Launching a Special Situation Funds
We have helped launch private equity and Special Situation funds ranging from 5 million GBP, to over 100+ million GBP for clients ranging from family offices, HNWs and institutional PE platforms. As a rule of thumb, we recommend 5 million GBP/EUR/USD to be a minimum when launching a Special Situation fund, in order to cover the operating costs of the fund and general partner.
Some funds launch with less, however this does skew the Total Expense Ratio (TER) of the fund, which is not ideal.
If you are interested in launching your Special Situation funds or operate within Corporate Finance Advisory and want a quote – please visit our bespoke ‘Xchanging’ platform by clicking here.