Flipping the Script
Standard due diligence checklists are designed to evaluate a fund’s strategy, market positioning, and track record. However, for Latin American investors—especially AFPs and large family offices—that is only half the battle. The other half is assessing whether the international GP actually understands the operational and regulatory reality of taking Latin American capital.
Have you closed with a LatAm LP before, and what were the friction points?
If a GP answers "no," you know you will be paying for their learning curve. If they answer "yes" but can’t identify where the side letter negotiations bogged down, they likely didn’t learn from the experience. A prepared GP knows exactly where the regional friction lies.
What side letter clauses have you granted, and do MFN rights apply?
You need to know what precedents exist in the fund. If a GP has already granted favorable fee breaks or reporting frequency to a European pension fund, you need to ensure your commitment threshold triggers those MFN rights so you aren’t left with sub-optimal terms.
Can your reporting format meet our internal committee’s requirements?
Regulated LPs have zero flexibility on reporting. If the GP’s back office cannot output data in a format that satisfies your local regulator or investment committee, the relationship will be an operational nightmare from day one.
What is your realistic timeline considering our 3 to 6-month approval process?
Many international GPs expect rolling closes to happen in a matter of weeks. When dealing with AFPs or institutional family offices, the approval process is lengthy. A GP pushing for an unrealistic close date demonstrates a fundamental lack of understanding of your governance structure.
Who on your team understands our regulatory context?
If the GP only sees the size of your check but doesn’t have anyone on the Investor Relations or legal team who comprehends your local regulatory constraints, every future negotiation will be an uphill battle.