What is the subscription period?

The subscription period is the period during which a manager can accommodate investors in his investment fund. It extends from the day of the first subscription to a buttock date. In principle, this date shall be 12 months after the opening, with the possibility to extend it beyond the agreement of the Advisory Committee.

The subscription period should not be confused with the fund-raising period. The management team will have started its fundraising well before the subscription period. This will only start from the first subscription in the fund, whereas managers will have already spent many months convincing investors to subscribe.

After this period, the fund will have reached its maximum commitment amount. He will no longer be able to admit any investor. If the amount raised is insufficient, it will have to do something to carry out its strategy. Investors do not want the subscription period to extend too long. Once their money has been admitted into the fund, they want the manager to focus on identifying opportunities and maximizing value. They fear that managers will be caught up in the madness of the greats by increasing the amounts subscribed further and further.

The manager must therefore find the right timing to start his subscription period. To wait too long, it risks losing the interest of its first investors; to rush too much, it could miss out on investors that are not yet ready. He can reassure himself that he will have one more year or more to finalize his fundraising. It is very rare for a fund to reach its ceiling at the first time, or even to be at its minimum target. The first lift is a lever to convince other investors, demonstrating the manager’s ability to convince.

Often the first lift will include strategic investors or sponsors whose attraction will be full. These first investors will be an argument in themselves to speed up fund-raising. A well-thought-out strategy will make the first call for a change, so that the manager does not have to run out of long negotiations with too many potential investors.

‍