Background

• $400 million regional economic development fund performing direct and fund investments
• Transitioning from a government sponsored entity into a standalone investment management company (IMC)
• At the beginning of the engagement, our client faced the following challenges:
  • An inability to attract senior investment staff until the transition to an IMC was complete
  • The need for updated policies and procedures to provide future stakeholders with comfort over their fiduciary responsibility
  • A misguided market perception of the “economic development” mandate of the fund

Engagement
Kirchner was engaged by the fund to assist managing the existing portfolio, actively source new investment opportunities and prepare the transition to an IMC. In working with the investment team and through an assessment of the existing portfolio, it was determined that, while the fund possessed domain expertise and a strong investment network, it lacked the skills necessary to crystallize value in the portfolio. In response we provided an interim Chief Investment Officer and Investment Manager. Over18 months, Kirchner  worked closely with the fund team to:

Maximize value in existing portfolio The fund portfolio was separated into top performers, companies in transition and companies to be salvaged. Strategic and operational issues were identified within each company. Legal documents were reviewed to highlight risks and weaknesses. A go-forward plan was then developed and executed for each investment.

Prepare for transition into an IMC An audit of fund internal processes and procedures resulted in a recommendation to adopt a set of new investment best practices. These were then implemented with us taking an active mentoring and monitoring approach throughout their adoption.

Provide Investment Management services Kirchner actively sourced deals for the fund and co-managed the investment process alongside the existing investment management team. We reached out to the investment community with an updated fund marketing message resulting in new investments brought into the economic development region.

Summary of Value Add

• Crystallize value within the existing portfolio
• Mentoring and guidance in day-to-day fund management
• Advisory role in monitoring and investment reporting
• Supplementary investment manager
• Generation of new, high quality, deal flow