7.6 Core components of disclosure for a strategic investment fund

BOX 7.6

Core components of disclosure for a strategic investment fund

Fund overview

• Ownership – Size of fund – Source of capital – Ownership structure

• Policy purpose and investment approach – double bottom line mandate – Financial and economic targets – Funding, withdrawal, and spending rules – investment policy, including eligible investments and restrictions – investment strategy

• Legal framework – Legal basis and structure – Fund domicile – Legal relationship between the strategic investment fund and other sovereign bodies (if any)

• governance framework – division of roles and responsibilities between governing bodies, and selection procedures – clarity on fund’s operational independence – internal vs. external managers – Preferential treatment offered to any investors – Professional and ethical standards – related party transactions and management of conflicts of interest

• risk management framework

Key developments

• commentary on key developments, investment and activities, performance, and material changes

Detailed list of assets

• information on individual investments including ownership stake, geographic location and sector, holding period, currency denomination, valuation methodology, and total returns

Fund performance

• information required to assess fund performance, including total commitments and paid-in capital, total investments, cumulative distributions to investors, cumulative management fees drawn, total net asset value, gross and net internal rate of return, and economic impact assessment

Audited fund financial statements

• Fund income statement, balance sheet, cash flow statement, summary of accounting standards, and valuation policy

Compensation structure: Provides insight into the incentive structure for the fund’s management

• general partner fees • carried interest • Fund operating expenses borne by investor (audit, tax, legal, and so on)

Debt facilities

• Leverage policy • identity of entities providing facilities; key terms, drawdowns, and interest incurred

Sources: World Bank, based on European Union 2011; Invest Europe 2018; IWG 2008.

agencies from having to reinvent the wheel by developing their own standards (World Bank 2014). However, iFrS are not universally adopted. as shown in table 7.1, both marguerite and the nigeria Sovereign investment authority adhere to iFrS, whereas FOnSiS, 25 iSiF, and india’s national investment and infrastructure Fund (niiF) follow local or regional standards.

Best practice dictates that the SiF be audited by an independent, well-reputed firm under the supervision of the board’s audit committee (Oecd 2016), although public capital SiFs are sometimes audited by the state comptroller and