Active Investment Management in Funds of Funds

Kensington has adapted the active investment management approach employed by successful private equity fund managers to its own business, as an investor in funds. Kensington views each of its portfolio fund managers as key business partners, and typically works very closely with them throughout the life of their funds. The Kensington team seeks to understand the specific investment strategy and style of each of its portfolio fund managers, initially as part of a due diligence review and then on a continuing basis as their strategies evolve in response to market developments. It is Kensington’s business to know what kinds of investments are sought by each of the fund managers in its portfolio. The knowledge base derived from this kind of close contact with a broad portfolio of top performing private equity fund managers has tremendous value to Kensington, which can be leveraged for the benefit of our investors in a variety of ways:

Pro-Active Co Investment

Kensington professionals see strong deal flow of direct investment opportunities. Whenever Kensington identifies a promising investment opportunity, the business can be quickly matched to the most suitable private equity fund manager within a Kensington portfolio for a joint review and analysis of the opportunity. When a direct co investment initiated by Kensington is completed, it frequently leads to board representation and a continuing active role in the portfolio company. Kensington has often been a preferred co investor of private equity fund managers because of its ability to add this type of tangible value.

Emerging Fund Managers

Kensington has experience initiating and helping to develop new private equity fund managers and welcomes the opportunity to evaluate new teams. With the benefit of strong market knowledge and expertise, the Kensington team is uniquely positioned to identify and support the entrepreneurial efforts of these emerging managers. Experience shows that many first-time fund managers are not positioned to succeed, but in some cases very strong new investment teams emerge, and can be valuable long-term additions to a Kensington portfolio.

Secondary Fund Opportunities

When a limited partner investor in a private equity fund changes strategy, and therefore wishes to sell its position, the general partner of that fund must approve the sale. Kensington’s active management approach of a funds of funds portfolio provides unique visibility into the overall market and a strong platform for sourcing of secondary fund investment opportunities.

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