# VIDEO SCRIPT — UNDERSTANDING PRIVATE EQUITY FUND STRUCTURES
**Duration:** 4 minutes
**Example:** Summit Equity Fund I
**Style:** Practical, visual, simple English, realistic fund accounting examples.
## 0:00–0:20 — Introduction: Follow the money
**Visual direction:** Show investors, fund entities, a manufacturing company and an accounting dashboard. Animate money moving through the entities.
**Narration:**
“Imagine Summit Equity Fund I wants to invest in private companies.
But investors may invest through different entities. The fund may hold investments directly or through SPVs. Some investors may invest alongside the main fund, while certain investments may be tracked in side pockets.
In four minutes, let's see how these structures work and how they affect investment ownership and NAV.”
## 0:20–1:05 — Step 1: Master-feeder structure
**Visual direction:** Build the diagram from top to bottom. Use separate boxes and animated arrows.
**FLOW DIAGRAM:**
`Investors — Group A → Feeder Fund A ┐`
`Investors — Group B → Feeder Fund B ├→ Master Fund → Investments`
`Investors — Group C → Feeder Fund C ┘`
Then show:
`Master Fund → SPV → Apex Components`
Also display a second arrow from the Master Fund directly to another portfolio company, showing that an SPV is not always required.
**Narration:**
“First, the master-feeder structure.
Imagine some investors invest through Feeder Fund A, while others invest through Feeder Fund B.
These feeder funds invest their capital into a central vehicle called the Master Fund.
The Master Fund carries out the main investment activities. It may hold portfolio investments directly or invest through separate entities called SPVs.
For example, Summit's Master Fund invests in Apex Components through an SPV, while it holds shares in another company directly.
Why use master-feeder? It can help accommodate different investor groups, tax considerations or jurisdictions.
The key point: the feeder channels capital into the master, and the master holds or makes the underlying investments.”
**On-screen takeaway:** `Feeder = Investor entry point | Master = Central investment vehicle`
## 1:05–1:35 — Step 2: Standalone fund and SPV structure
**Visual direction:** First show a standalone fund. Then animate an SPV appearing between the fund and the portfolio company.
**FLOW A — Standalone fund investing directly**
`Investors → Summit Fund → Apex Components`
**FLOW B — Investment through an SPV**
`Investors → Summit Fund → SPV → Apex Components`
**Narration:**
“Now compare a standalone fund.
Here, investors invest in one fund, which can hold investments directly or through SPVs. There is no master-feeder arrangement in this simplified example.
An SPV, or Special Purpose Vehicle, is a separate legal entity used for a particular investment or purpose.
Suppose Summit invests ₹20 crore through an SPV to acquire shares in Apex Components.
The SPV holds the shares, and its accounts record the relevant assets, liabilities and transactions. The fund records its investment in the SPV, subject to the applicable accounting treatment.
An SPV may help organise ownership, financing or co-investors, but it also creates additional legal, tax and accounting requirements.”
**On-screen takeaway:** `Fund → SPV → Portfolio investment`
## 1:35–2:15 — Step 3: Co-investment — Main fund plus co-investor
**Visual direction:** Show Summit Fund and a separate co-investment vehicle investing in the same portfolio company. Keep the two investment paths visually distinct.
**FLOW DIAGRAM:**
`LPs → Summit Main Fund ─────→ Apex Components`
`Co-investors → Co-investment Vehicle → Apex Components`
**Narration:**
“Next, co-investment.
Suppose Summit's main fund invests ₹10 crore in Apex Components. A group of co-investors separately invests another ₹5 crore alongside the fund.
Both investment groups gain exposure to Apex, but their investments are recorded according to their own legal arrangements.
Now imagine the main fund's investment is valued at ₹12 crore, while the co-investors' investment is valued at ₹6 crore.
The main fund's investment contributes ₹12 crore to its NAV, assuming that is the appropriate carrying value. The co-investment vehicle has its own illustrative NAV of ₹6 crore before considering any other assets, liabilities or costs.
Combined, the two investments have a value of ₹18 crore. But do not automatically record ₹18 crore in the main fund's NAV. The co-investors' separate investment belongs in their own vehicle or accounts unless the reporting structure requires otherwise.
That distinction is important for fund accounting and investor reporting.”
**On-screen calculation:**
`Main Fund investment NAV = ₹12 crore`
`Co-investment NAV = ₹6 crore`
`Combined investment exposure = ₹18 crore`
## 2:15–3:05 — Step 4: Side pocket — Main portfolio plus separately tracked investment
**Visual direction:** Show a main fund portfolio dashboard split into two clearly labelled sections: Main Portfolio and Side Pocket. Use different colours and show separate NAV figures.
**EXAMPLE — SUMMIT FUND**
`Main Portfolio NAV = ₹80 crore`
`Side Pocket Investment NAV = ₹20 crore`
`Total Fund NAV = ₹100 crore`
**Narration:**
“Now let's understand a side pocket.
Imagine Summit holds regular portfolio investments worth ₹80 crore. It also holds a difficult-to-value private investment worth ₹20 crore.
Under the fund's governing documents and applicable policies, that investment may be allocated to a side pocket so its economics can be tracked separately for eligible investors.
The main portfolio NAV is ₹80 crore. The side-pocket NAV is ₹20 crore.
Together, the total fund NAV is ₹100 crore, assuming there are no additional liabilities or adjustments.
A side pocket is not automatically a separate legal entity. It may be a separate accounting allocation or investment class within the fund structure.
The purpose is to track the investment, its valuation changes and the economic interests of the relevant investors separately. The actual treatment depends on the fund documents and accounting policy.”
**Visual direction:** Animate the side-pocket investment value changing from ₹20 crore to ₹16 crore.
**Narration:**
“If that investment is revalued down to ₹16 crore, the side-pocket NAV becomes ₹16 crore. The combined NAV becomes ₹96 crore, assuming the main portfolio remains at ₹80 crore and there are no other changes.
This shows why side-pocket NAV needs separate tracking.”
## 3:05–3:40 — Step 5: Compare the structures
**Visual direction:** Display four small diagrams, one at a time, with a one-line purpose for each.
**Narration:**
“Let's recap.
Master-feeder: feeder funds channel investors' capital into a master fund.
Standalone fund: one fund holds investments directly or through SPVs.
SPV: a separate legal entity that may hold a particular investment.
Co-investment: other investors invest alongside the main fund, with separate ownership and accounting where applicable.
Side pocket: a selected investment or exposure is tracked separately under the fund's documents and policies.
These structures serve different purposes. They can sometimes be combined, but they are not the same thing.”
## 3:40–4:00 — Knowledge check and conclusion
**Visual direction:** Show the master-feeder diagram again, with the feeder highlighted first and the master highlighted second.
**Narration:**
“Quick question.
If investors put money into feeder funds, and those feeders invest into a central fund that makes the portfolio investments, what is this structure called?
Correct — a master-feeder structure.
The key accounting lesson is to identify which entity owns the investment, where its assets and liabilities are recorded, and whose NAV includes the value.
Next, we'll follow the capital from investor commitments and capital calls into the fund's bank account and investment ledger.”
**Final screen:** `Identify the entity → Track the investment → Calculate the correct NAV`
*All figures and entities are illustrative. Actual legal structures, NAV presentation and allocation methods depend on the fund documents, jurisdiction and applicable accounting policies.*
