SBAI Issues Guidance on Conflicts, Valuation and Structuring for Private Credit Fund Managers and Investors (Part One of Two)

The Standards Board for Alternative Investments (SBAI) recently published three memoranda pertaining to conflicts of interest, fund structuring and valuation in private credit strategies. The memoranda are intended to provide guidance to alternative credit fund managers and to highlight issues on which investors should focus in operational due diligence. This two-part series analyzes the key takeaways from the memos and presents insights from SBAI executive director Thomas Deinet. This first article provides general background on the SBAI and summarizes the conflicts of interest memorandum. The second part will examine the structuring and valuation memoranda. See our three-part series on hedge funds as direct lenders: “Tax Considerations for Hedge Funds Pursuing Direct Lending Strategies” (Sep. 22, 2016); “Structures to Manage the U.S. Trade or Business Risk to Foreign Investors” (Sep. 29, 2016); and “Regulatory Considerations of Direct Lending and a Review of Fund Investment Terms” (Oct. 6, 2016).

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