What’s inside
- Summary and thesis
- Fund, company, instrument, amount, deal team, the decision sought, and the thesis in five or six lines.
- Key terms
- Instrument and ranking, tranches, pricing, tenor, security, covenants, information rights and exit.
- Financials, returns and downside
- Three-year financial summary with leverage and coverage, plus base, downside and stress returns.
- Risks and due diligence
- Risk register with mitigants, and diligence status by area: financial, legal, commercial, tax, operational, ESG, KYC.
- Conflicts and fund limits
- Conflicts for the manager, sponsor, deal team and IC members, and checks against PPM concentration limits.
- Recommendation and IC decision
- The deal team’s recommendation, then each member’s vote, conflicts, conditions and the memo version voted on.
Preview
| Section | What goes in it |
|---|---|
| Key terms | Instrument, amount, pricing, tenor, security, covenants, exit |
| Risks and mitigants | Each risk with likelihood, impact and mitigant |
| Due diligence | Status and open points by workstream |
| IC decision | Votes, conflicts declared, conditions, memo version |
An outline of the 11 sections in the template.
How to use it
- 1Write the thesis last, once the terms, risks and diligence are clear, and keep it short.
- 2Show the downside honestly: the IC needs to see what happens if things go wrong, not just the base case.
- 3Check the deal against the fund’s investment and concentration limits in the PPM and record the result.
- 4Collect conflicts from every IC member before the meeting, not during it.
- 5Freeze the memo version before the vote and record that version in the decision block.
A template tells people the rules. A workflow makes them happen and keeps the evidence. Averoic runs processes like this as configured workflows, with a record of who did what and when.
Sample template. Adapt it to your own policies, Board approvals and applicable regulations. It is not legal or regulatory advice. Free to use and adapt within your organisation.
Frequently asked questions
What is an investment committee memo?
The document a fund’s deal team prepares to present a proposed investment to the investment committee. It sets out the thesis, terms, financials, returns, risks, diligence findings, conflicts and the recommendation.
What should an IC memo include for a private credit fund?
For a credit deal, focus on the instrument and security, covenants and headroom, cash-flow coverage such as DSCR, downside and recovery scenarios, and the information rights that will let you monitor the borrower after disbursement.
Why record the memo version in the IC decision?
Memos often change after the first draft. Recording the version voted on shows investors and auditors exactly what the committee approved.