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You are in Indirect – Manager Selection, Appointment and Monitoring » Outputs and outcomes
In evaluating an attractive structured secondary opportunity, Fort Washington determined that the General Partner (GP) would be misaligned with the new Limited Partners if it sold the majority of its stake as part of the secondary transaction. Fort Washington expressed this concern to the GP and suggested the GP re-invest the majority of its holding. The GP refused.
Fort Washington decided not to invest in the opportunity.
In connection with the operational due diligence performed on a secondary investment opportunity during 2019, Fort Washington Capital Partners (FWCP) identified several governance-related control deficiencies of the fund manager that required remediation prior to the closing of the transaction. FWCP recommended that the fund manager develop and implement a formal cash disbursement approval policy that included additional oversight and approval by general partners as well as enhanced segregation of duties within its online banking platform. FWCP also recommended that the fund manager implement additional controls over the review of its financial statements and investor reporting by the general partners.
After implementation of the control enhancements, FWCP performed on-site due diligence at the fund manager to ensure the controls were properly implemented. The issues were remediated and validated before FWCP invested. In the end, better cash controls were implemented to mitigate risk.