As private markets continue to grow, corporates that do not normally consider themselves to be money managers could explore harnessing the power of private capital markets to pursue their objectives through a corporate-sponsored fund (CSF). As the CSF operates within the broader corporate construct, careful consideration is needed to ensure that potential conflicts of interest are mitigated and to properly position the respective vehicles under the applicable regulatory regimes. In a guest article, Skadden partners John M. Caccia, Greg Norman and Anna Rips look at some of the key aspects of CSFs and the related considerations for private and listed sponsors seeking to include private capital within their business evolution toolkit. Specifically, the article provides an overview of CSFs; the role that sourcing plays in the identification of investment opportunities; ways that assets can be pre-identified and allocated to a CSF at its launch; the structure of affiliate services; and the importance of an autonomous investment manager. For additional commentary from Skadden attorneys on CSFs, see our two-part series: “Overview, Key Terms and Unique Governance Issues
” (Jun. 22, 2021); and “Manager- and GP-Level Governance; Credit and Infrastructure Fund Issues
” (Jun. 29, 2021).