A recent senior hire by global alternatives giant Kohlberg
Kravis Roberts & Co (KKR) from CLSA Capital
Partners (CLSA) has brought the spotlight on a
significant clause in investments funds documentation – key
person event. The purpose of such key person event provision is to
ensure that the members of the fund management
(GP) team critical to the fund's functioning
devote substantial business time and attention to the fund. Failure
to devote the requisite time can result in serious consequences for
the GPs.
Recently, KKR appointed John Pattar, CEO of CLSA's largest
real estate fund, Fudo Capital III. Being a key person at Fudo
Capital III, his exit has triggered consequences for the live funds
in the CLSA platform. In the instant case, the GP team pre-empted
the triggering of key person provisions due to Pattar's exit
and cancelled the remainder of the investment period, effectively
limiting its ability to call for around USD 350 million out of the
USD 1 billion
