Raising capital is a challenge for both entrepreneurial and institutional real estate companies. Finding equity on a deal-by-deal basis can be successful, but it consumes great time and resources. As a result, there comes a point in the growth of a development and investment firm when equity is better raised through the formation of an investment fund.
Freeborn has extensive experience in structuring and forming private equity, venture capital and real estate funds, and negotiating the related documentation on behalf of both fund sponsors and investors. Our clients have formed private funds ranging in size of $15 million to $1 billion to invest in all types of asset classes, and we have negotiated investment (whether on a direct basis, through a joint venture or parallel fund, or through a fund-to-fund investment) aggregating in excess of $1 billion into various institutional third party funds.
Combining the expertise of our Corporate and Securities, Tax, Finance and Real Estate practice groups, we assist fund sponsors in analyzing the many structural, tax and governance issues that arise in connection with the formation of a private fund, including the myriad of tax and structural issues that are unique to tax exempt investors. We also have represented various foreign investors in adopting tax advantaged strategies in connection with real estate fund matters, including the use of off-shore structures and parallel vehicles in the making of an investment in a U.S. real estate fund.
We regularly assist our clients in front-end structural matters, including the economic and governance provisions of the fund. We thereafter perform the requisite due diligence, prepare the private offering memorandum and accompanying materials, draft the limited partnership or limited liability company agreement and subscription materials, and negotiate the subscription line credit arrangements. We will coordinate legal matters for the initial and subsequent closing and coordinate regulatory matters in connection therewith.
Additionally, we negotiate on behalf of the fund with lead or other substantial investors in customized economic or governance terms often embodied in side letters or other side-by-side investment vehicles. When our fund clients are investing on a fund-to-fund basis, we assist in negotiating specific investment rights and benefits, including, preferred economics, investment limitations, advisory committee representation, co-investment rights, clawback provisions, rights of transfer, and removal rights. We also help clients determine and manage the different investment platforms including programmatic joint ventures, separately managed accounts, subscription formats and other similar structures.
If and to the extent required, we coordinate and advise fund sponsor clients through the SEC and state(s) investment adviser registration process. This entails, generally, preparation of form ADV and applicable policies and procedures manuals and documents, and discussion with regulatory authorities. Additionally, we will assist in on-going compliance matters.
We also have considerable experience in representing fund sponsors in the formation of, and clients investing in, non-real estate private equity funds, including venture funds, buyout funds, growth equity funds and mezzanine funds. These funds range in size from $50 million to $1.5 billion.