Glossary · Fundraising

What is a PPM?

A private placement memorandum, or PPM, is the offering document that tells prospective investors about a fund’s strategy, terms, risks and manager.

In practice

The PPM is usually issued with the LPA and subscription agreement, and its summary of terms is meant to track the LPA, which controls if the two conflict. Much of it is written to meet securities-law disclosure duties, which is why the risk factors and the conflicts-of-interest section run long. Managers sometimes call it an offering memorandum or confidential information memorandum.

An example

Round numbers, not a real fund

Say a manager launches a $500 million fund. Before an investor signs, it receives the PPM, which sets out the strategy, the fees and the risks of losing money.

Why it matters

It is where a manager must disclose the risks, which is why investors and their lawyers read it closely.

A definition, not advice; where usage varies the entry says so. Something wrong? Tell the desk.

Related terms

LPAThe limited partnership agreement, or LPA, is a private fund’s main contract. It sets the fees, carry, investment limits and the rights of the manager and the investors.
DDQA due diligence questionnaire, or DDQ, is the standard list of questions investors send a manager to assess its team, process, controls and compliance.
Side letterA side letter is a separate agreement between a manager and one investor that gives that investor terms beyond the fund’s main documents, such as lower fees or extra reporting.
Rule 506(b)Rule 506(b) of Regulation D lets a fund raise unlimited money privately, without general solicitation, from accredited investors and up to 35 sophisticated non-accredited ones.
First closeA first close is the first time a fund accepts investors’ commitments and gets going, even though it keeps raising money toward its full target.

The terms, in the news each morning.

FundOps Daily carries the day’s fund closes, deals and moves across private markets. Free, seven days a week.