SIFs Up! Negotiating a Single-Investor Fund

A single-investor fund (SIF) is an entity created at the request of, and designed specifically for, an investor or group of affiliated investors (and is also sometimes called a “fund of one”). SIFs have become increasingly common in the alternative investment space and provide an opportunity for larger investors to enjoy the benefits of a fund with the added ability to customize terms to their particular economic, regulatory, and other needs. Key issues to consider when entering into negotiations with a potential SIF investor include whether to establish a SIF or a separately managed account for a particular investor or investor group, to what extent a SIF will invest alongside other clients of the sponsor, whether the SIF investor triggers any specialized regulatory considerations, to what extent a SIF investor will receive “MFN” rights, whether to implement rebalancing when a SIF has multiple affiliated investors, and how to dispose of assets if a SIF is terminated early.

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