Hellman & Friedman LLC, a Delaware limited liability company (“H&F LLC”), and Hellman & Friedman LP, a Delaware limited partnership (“H&F LP”), together establish and, with various of their affiliates, provide investment advisory services to pooled investment vehicles that are exempt from registration under the Investment Company Act of 1940, as amended (the “1940 Act”) and whose securities are not registered under the Securities Act of 1933, as amended (the “Securities Act”) (the “Funds”). H&F LP is the manager of such Funds and has engaged H&F LLC, through a subadvisory agreement, to assist H&F LP with certain of such advisory services. The affiliates through which such advisory services are provided include the general partners of the Funds (each, a “General Partner”). Such affiliates are each under common control with H&F LP and H&F LLC, as defined under the 1940 Act. Certain of these affiliates are formed for tax, regulatory or other purposes in connection with the organization of the Funds. H&F LP and H&F LLC, together (where the context permits) with the General Partners, their affiliated management companies and other affiliates that provide advisory services to the Funds, are referred to in this brochure collectively as “H&F.”

H&F was formed in 1984 and raised its first institutionally-sponsored private equity partnership in 1987. H&F is headquartered in San Francisco, with additional offices in New York and London. H&F LP is owned indirectly through holding companies by its partners and H&F LLC is owned by its members, none of whom are principal owners.

H&F is focused on making large-scale private equity-related investments in the developed markets. Across sectors, H&F generally seeks high quality businesses with defensible competitive positions, strong economic growth profiles, and an orientation towards higher growth. H&F seeks to build a concentrated portfolio of scale investments in its core sectors of expertise, including: software; financial services; internet & media; business & information services; healthcare; insurance & insurance services; retail & consumer; and energy & industrials. H&F continually seeks to identify new industries or sub-sectors that meet its investment criteria. Although the primary focus of each Fund is on private equity investments, H&F also may from time-to-time recommend other types of investments consistent with the respective Fund’s investment strategy and objectives.

H&F’s advisory services consist of investigating, identifying, and evaluating investment opportunities, structuring, negotiating, and making investments on behalf of the Funds, managing and monitoring the performance of such investments and disposing of such investments. H&F serves as the investment adviser, sub-adviser, general partner and/or ultimate general partner to the Funds in order to provide such services. H&F provides investment advisory services to each Fund in accordance with advisory or sub- advisory agreements (each, a “Management Agreement”), the limited partnership agreement (or analogous organizational document) of such Fund (each, an “Organizational Document”) and/or side letters with limited partners of the Funds (“Limited Partners” and, collectively, with the General Partners, “Partners”) (“Side Letters,” and together with the Management Agreements and the Organizational Documents, the “Governing Documents”). Investment advice is provided directly to the Funds and not individually to the Limited Partners. Investment restrictions for the Funds, if any, are generally established in the Governing Documents or offering documents of the applicable Fund. As of December 31, 2019, H&F managed a total of $48,868,800,000 of client assets, all of which is managed on a discretionary basis. please register to get more info

H&F generally charges the Funds a management fee, which is generally based initially on total Limited Partner commitments to the applicable Fund. Certain Funds may be charged a management fee that is based on the cost of investments. In addition, certain Funds and certain other vehicles are not required to pay management fees, including certain Funds that are comprised primarily of current and former employees and/or friends of H&F (“Associates Funds”) and certain deal-specific co-investment vehicles that are established by H&F to invest alongside one or more Funds (any co-investment vehicles, whether deal specific or otherwise, “Co-Investment Vehicles”). Following the earlier of the first fiscal quarter after the commencement of operations of a successor fund or termination of the commitment period for a Fund (i.e., generally the sixth anniversary of the commencement of operations of such Fund unless earlier terminated), the management fee is reduced to a lower percentage based on the cost of investments held by such Fund.

In addition to the management fee and carried interest described herein, break-up, consulting, merger and acquisition, financial advisory, investment banking, commitment, transaction, monitoring, directors’ or other similar fees, whether paid in cash, in-kind or other equity, are from time-to-time charged by H&F and/or its senior advisors, which, for the avoidance of doubt, include senior operating advisors (collectively, “Senior Advisors”), with respect to an investment or proposed investment by a Fund (such fees net of all related expenses, collectively, “Other Fees”). The amount and timing of Other Fees received by H&F, its personnel and/or its Senior Advisors are generally specified in the agreement or other documentation governing the applicable transaction. Notwithstanding the foregoing, Other Fees do not include (i) amounts paid to any individual Partner of H&F LLC and/or H&F LP (collectively, “H&F Executives”) or other H&F personnel, including Senior Advisors (collectively, such H&F Executives, Senior Advisors and other H&F personnel being “H&F personnel”) in his or her capacity as director (including advisory boards or similar positions) or trustee of any concern that is not a portfolio company of the applicable Fund, (ii) the value of any stock options or other similar rights received by any H&F personnel prior to an investment by such Fund or acquired by any such H&F personnel after the disposition of an investment by such Fund, (iii) any amounts paid by a former portfolio company, such as directors’ fees a former portfolio company pays to H&F personnel who remain on the company’s board of directors following the Fund’s disposition of its investment in the portfolio company and (iv) any fees and other amounts paid to any consultants, operating advisors (which, for the avoidance of doubt, shall expressly exclude any Senior Advisors) and other service providers retained by or on behalf of such Fund or and/or its portfolio companies, in each case, who are not then current H&F personnel (provided, that they may be former H&F personnel, or current or former employees or executives of portfolio companies of such Fund, prior Funds or successor funds) and are not bound to provide services on an exclusive basis to H&F (“External Advisors”) (which may include equity or equity-related interests) for services to or on behalf of such Fund or its portfolio companies (which may include serving on the board of directors of one or more portfolio companies). These Other Fees may be substantial and may be paid in cash, in securities of portfolio companies or investment vehicles (or rights thereto) or otherwise. In addition, in the case of an investment with one or more other investment firms (a “Consortium”), agreements have been in the past and may in the future be in place with portfolio companies that provide that upon the sale of such portfolio company, Other Fees are accelerated and the present discounted value of such fees are paid to members of the Consortium, including H&F, at such time. Since the monitoring agreements may have prolonged terms (often exceeding ten years and/or subject to automatic extensions and renewal), the financial effect of such acceleration may be substantial, particularly in the event such circumstances occur early in the life of the Fund’s investment in such portfolio company. Notwithstanding the foregoing, in the event of an initial public offering or other partial disposition, monitoring fees may continue to be paid so long as the applicable Fund continues to hold an other than de minimis position in such portfolio company and H&F continues to provide the monitoring services. In any case in which H&F receives Other Fees, H&F will in all circumstances reduce the amount of management fees paid by the applicable Fund in an amount equal to 100% of Other Fees attributable to such Fund. The manner of such reduction is set forth in the Governing Documents of the applicable Fund. To the extent any Other Fee is attributable to a portfolio company held by more than one Fund and/or Co- Investment Vehicle, for purposes of calculating any management fee reduction, such Other Fee is allocated among the applicable Fund(s) and Co-Investment Vehicle in proportion to their interest (or prospective interest) in the portfolio company. As described below in more detail, certain Funds (e.g., Associates Funds) or certain Co-Investment Vehicles may pay reduced or no management fees. If a Fund or Co-Investment Vehicle does not pay management fees, any reduction in management fees in respect of Other Fees will not benefit such Fund or Co- Investment Vehicle. The portion of such Other Fees allocable to Co-Investment Vehicles or Funds that do not pay management fees may, at H&F’s sole election, be retained by H&F or offset management fees paid by the Funds in the applicable Fund family that do pay management fees. In addition, to the extent a Co-Investment Vehicle pays management fees, H&F may, in its sole discretion, retain the portion of Other Fees allocable to such Co-Investment Vehicle. For purposes of this brochure, a “Fund family” means a group of Funds that are raised simultaneously and contractually required to invest together, such as Hellman & Friedman Capital Partners VII, L.P, and its affiliated parallel funds, Hellman & Friedman Capital Partners VIII, L.P. and its affiliated parallel funds or Hellman & Friedman Capital Partners IX, L.P. and its affiliated parallel funds. From time-to-time, H&F will, in its discretion, disclose to a Limited Partner the amount of Other Fees allocated to the Fund in which such Limited Partner has invested in account statements or other similar periodic reports delivered to Limited Partners. In many cases with respect to the implementation of the arrangements described above, there is not an independent third-party involved on behalf of the relevant portfolio company. In such circumstances, a conflict of interest exists in the determination of any such fees and other related terms in the applicable agreement with the portfolio company. Consistent with the Funds’ Governing Documents, H&F incurs expenses, and a portfolio company generally will reimburse H&F for such expenses (including without limitation, expenses for certain entertainment, meals, travel, deal, search firm and other consultancy expenses) incurred by H&F in connection with its performance of services for such portfolio company, including services as a board member or observer of such portfolio company or services of H&F operating or other investment professionals. In addition, the terms of the applicable Governing Documents generally provide that the Funds will reimburse H&F for out- of-pocket costs and expenses (excluding unreimbursed travel and entertainment) incurred by H&F in connection with consummated or unconsummated transactions. All such reimbursements are different from Other Fees and thus are not subject to the management fee offset arrangements described above. As used throughout this brochure, “travel and “travel- related” expenses shall be deemed to include, without limitation, commercial and non- commercial transportation costs (including first class or business class travel, costs of commercial first class equivalent rates for chartered or private planes, and private car travel), lodging and accommodations.

H&F also, from time-to-time, engages and retains External Advisors who include, among other persons, former H&F personnel and who, from time-to-time, receive fees, allocations and other amounts (which may include equity or equity-related interests) for services to or on behalf of the Funds or their portfolio companies (which may include serving on the board of directors of one or more portfolio companies). Such fees and allocations are generally paid by the applicable portfolio company and/or the applicable Fund (although in certain unusual circumstances, H&F may elect to pay the fees and compensation of such External Advisors). Such amounts, fees or other compensation received by such persons are generally retained by such persons and are not deemed paid to or received by H&F and such amounts will not be subject to the management fee offset arrangements described above.

Subject to the applicable Governing Documents, the Funds and/or, for the benefit of the Funds, H&F has in the past, and may from time-to-time in the future, charge a co-investor or a Co- Investment Vehicle financing fees and/or interest costs for borrowings on their behalf or for the time period between the closing of the applicable Fund’s investment in a portfolio company to the date of the transfer of interests in such portfolio company. However, subject to the applicable Governing Documents, the applicable Funds (and not co-investors or Co-Investment Vehicles) generally bear all financing facility costs, other than financing fees or interest with respect to specific transactions. In addition, H&F may charge a co-investor or a Co-Investment Vehicle monitoring, transaction, consulting, merger and acquisition, financial advisory, investment banking, commitment, monitoring, directors’ or other fees. In each case, such fees and/or costs do not constitute Other Fees and thus are not subject to the management fee offset arrangements described above. From time-to-time, H&F (in its sole discretion) agrees that all or a portion of a transaction, consulting, merger and acquisition, financial advisory, investment banking, commitment, monitoring, directors’ or other fees payable by an actual or prospective portfolio company or a Fund be paid to an unaffiliated third party (“Third Party Fee”), such as a consultant, advisor, finder, broker, co-investor and/or investment bank. In such event, as the Third Party Fee is not a fee received by H&F, H&F is not required under the terms of the applicable Governing Documents to offset management fees payable by a Fund in respect of such Third Party Fee. For a discussion of material conflicts of interest created by the receipt of such fees and reimbursements, please see Item 11 below. The precise amount of, and the manner and calculation of, the management fees for a Fund are set forth in the applicable Governing Documents of the applicable Fund. The fee structures may only be modified pursuant to an amendment to the Governing Documents. Fees may differ from one Fund to another, as well as among Limited Partners in the same Fund.

Management fees are payable on a quarterly basis by the Funds generally in advance in equal installments on each quarterly fee date, as set forth in the applicable Governing Documents. Management fees are paid by the Funds out of called capital, borrowings from a Fund’s credit facility or undistributed proceeds, all of which (other than as provided in a Fund’s Governing Documents) shall reduce remaining capital commitments.

To the extent that a Governing Document of a Fund providing for the payment of management fees is terminated and not otherwise replaced, management fees that have been prepaid will generally be returned on a prorated basis.

Management fees paid by a Fund will be reduced by the amount of fees incurred by the Funds in connection with the organization of such Fund that exceed a limit specified in such Fund’s Governing Documents (“Organizational Expenses Cap”). As some Funds do not pay management fees, any such reduction will not benefit such Funds.

To the extent provided in the Governing Documents of the Funds, H&F will pay out of management fees its own operating expenses incurred in connection with the management of the Funds (which, for the avoidance of doubt, exclude those expenses borne directly by the Funds as described below). Such operating expenses to be borne by H&F include, without limitation, expenditures on account of salaries, wages, benefits and other expenses of H&F’s partners, members, employees and Senior Advisors (which, for the avoidance of doubt, does not include carried interest described in Item 6 below), rentals payable for space used by H&F or the Funds bookkeeping services, equipment, unreimbursed travel and entertainment and any out-of-pocket costs and expenses incurred in causing H&F to register as an investment adviser under the Investment Advisers Act of 1940 (as amended, the “Advisers Act”) and the maintenance of such registration (including costs and expenses relating to the preparation and filing of Form ADV and Form PF). To the extent provided in the Governing Documents of the applicable Fund, each Fund will bear all fees, costs, expenses, liabilities and obligations related or attributable to its operations, business or actual or prospective investments (to the extent not borne or reimbursed by its portfolio companies or prospective portfolio companies), including without limitation: (i) real property or personal property taxes on investments; (ii) taxes, fees or other governmental charges applicable to the Fund on account of its operations, including, without limitation, in connection with any tax audit, investigation, settlement or review of the Fund; (iii) borrowings, other indebtedness of or guarantees made by the Fund or the General Partner on behalf of the Fund or in furtherance of an investment, including, without limitation, principal, interest and any fees and expenses with respect thereto and the arranging or attempted arranging thereof; (iv) fees and expenses incurred in connection with financing sources and the maintenance of bank, brokerage, depository, trustee or custodian accounts; (v) all expenses incurred in connection with the resolution of the Fund’s existing, prior or potential portfolio companies’ claims, disputes, litigation, governmental inquiries, investigations or proceedings (including, without limitation, any actual, threatened or otherwise anticipated litigation, mediation, arbitration or other dispute resolution process, including, without limitation, any judgment, other award, settlement or fines entered into in connection therewith; provided that the indemnified parties shall not be entitled to payment by the Fund of any such expenses related to resolution of claims or disputes involving existing or potential portfolio companies if they would not be entitled to indemnification pursuant to the applicable Governing Documents); (vi) expenses incurred by H&F in serving as the partnership representative; (vii) activities or proceedings of the members or observers of the Advisory Board (including, without limitation, any reasonable costs and expenses incurred by members or observers in attending or otherwise participating in meetings of the Advisory Board, as well as certain costs and expenses of legal counsel as provided for in the Governing Documents); (viii) any third-party fees, costs or expenses incurred in connection with the preparation, distribution or filing of Fund-related or investment-related financial statements, tax returns or other reports, tax estimates, Schedule K-1s or other administrative, informational or similar reports, or other information, including, without limitation, fees and costs of the independent certified public accountant incurred in connection with the annual audit of the Fund’s books and any other third-party service providers and professionals related to the foregoing; (ix) directors and officers liability, errors and omissions liability, general partner liability, cybersecurity liability, professional and other insurance premiums and expenses for the Fund and H&F; (x) any annual Limited Partner meeting or other periodic or special meetings of Limited Partners (including, without limitation, reasonable travel expenses of the senior operating advisors and H&F’s or any portfolio company’s partners, members and employees to attend such meetings); (xi) any third-party fees, costs or expenses incurred in connection with legal, tax, accounting, audit, advisory, consulting, administration (including, without limitation, fees and expenses associated with the Fund’s third-party administrators, if any, and expenses relating to maintaining the books and records of the Fund), appraisal, investment banking, broker, dealer, finder, underwriting, loan administration, private placement, agent, valuation, certification, research (including, without limitation, data and information service subscriptions, related systems whether maintained on-site or otherwise and services from data providers and data management software), information, anti-money laundering, custodial, depository, trustee, record-keeping, public relations and other professionals and services, including legal fees and expenses incurred in connection with prosecuting or defending administrative or legal proceedings relating to the Fund brought by or against the Fund or H&F or their partners or members (provided that the indemnified parties shall not be entitled to such legal fees and expenses if they would not be entitled to indemnification pursuant to the applicable Governing Documents); (xii) any out-of-pocket expenses incurred in connection with the Fund’s legal and regulatory compliance with U.S. federal, state, local, non-U.S. or other law and regulation related to the activities of the Fund (including regulatory expenses of H&F in connection with the operation of the Fund and legal fees and expenses), including, without limitation, reports, disclosures, filings and notifications prepared, distributed or filed in connection therewith, including without limitation expenses relating to filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including without limitation Form 13F, Form 13H, Section 16 filings, Schedule 13D filings and Schedule 13G filings), reports to be filed with the U.S. Commodity Futures Trading Commission, reports, disclosures, filings and notifications prepared, distributed or filed in connection with the European Union Alternative Investment Fund Managers Directive and any forms, schedules, filings, information or other documents prepared with respect to the Foreign Account Tax Compliance Act, in each case relating to the Fund’s activities; (xiii) the Fund’s compliance with applicable laws and regulations; (xiv) all costs and expenses relating to the Fund’s registered office and agent; (xv) all costs and expenses arising out of the Fund’s indemnification obligations pursuant to the Governing Documents of the applicable Fund; (xvi) any activities with respect to protecting the confidential or non-public nature of any information or data of the Fund; (xvii) amendments to, and waivers, consents or approvals pursuant to, the constituent documents of the Fund; (xviii) compliance with the provisions in side letters entered into with Limited Partners that are not affiliates of the General Partner, other than “most favored nations” provisions; (xix) unreimbursed costs and expenses incurred in connection with any transfer or proposed transfer of any Limited Partner’s interest in the Fund; (xx) expenses (other than unreimbursed travel and entertainment expenses) of H&F related to attending trade association meetings, conferences or similar meetings in connection with the evaluation of specific investment opportunities; (xxi) risk management assessments; (xxii) any other fees, costs, expenses, liabilities or obligations approved by the Advisory Board; (xxiii) all advisory, consulting, brokerage, interest, custodial, accounting, legal, financing, regulatory, tax (other than any corporation expenses) and other similar fees, costs, expenses, liabilities and obligations relating or attributable to the sourcing, development, investigation, structuring, organization, negotiation, financing, refinancing, bidding, acquisition, holding, managing, operating, hedging, restructuring, trading, settling, taking public or private, selling, valuation, winding up, liquidation or disposition of actual investments or potential investments or any investments considered by the Fund or seeking to do any of the foregoing, whether or not such activities are successful (including, without limitation, all amounts attributable to co- investments (or incurred in connection with the formation and negotiation of Co-Investment Vehicles), whether or not the applicable transactions are consummated, and any reverse breakup, termination and other similar fees), in each such case to the extent not borne or reimbursed by a portfolio company or prospective portfolio company; (xxiv) all organizational costs, fees and expenses incurred by or on behalf of H&F in connection with the raising, formation and organization of the relevant Fund family, the General Partner and other related affiliates, including, without limitation, legal, accounting, registration, filing and other fees and expenses incident thereto, travel expenses (provided, that any air travel shall not exceed commercial first- class equivalent rates) and meals incurred by H&F and the costs of establishing and maintaining any web-based portal used to disseminate information to prospective Limited Partners (“Organizational Expenses”), up to the applicable Organizational Expenses Cap, as well as all Or ganizational Expenses in excess of the applicable Organizational Expenses Cap; provided that the management fees will be reduced by 100% of any Organizational Expenses paid by the Fund in excess of the applicable Organizational Expenses Cap; and (xxv) all extraordinary expenses, expenses of forming, organizing and operating any alternative investment vehicle and any general partner or management entity related thereto and all costs, fees, and expenses incurred by the General Partner (or its designee) in connection with the terminating, winding up and dissolving the Fund, any alternative investment vehicle and their respective general partner or management entities at the end of the Fund’s or such alternative investment vehicle’s term and the liquidation of the assets of the Fund, such alternative investment vehicle and their respective general partner or management entities, specifically including but not limited to legal and accounting fees and expenses. From time-to-time, the General Partner of a Fund may create certain “special purpose vehicles” or similar structuring vehicles for purposes of accommodating certain tax, legal and regulatory considerations of Partners or the transaction (“SPVs”). In the event the General Partner creates an SPV, consistent with the Governing Documents of the Fund, the SPV, and indirectly, the investors thereof, will typically bear all expenses related to the organization, formation, maintenance and other expenses incurred solely for the benefit of the SPV.

Additionally, please see Item 6 below regarding “carried interest” that certain Funds pay.

In the event that H&F chooses to use a broker-dealer to effect portfolio transactions relating to a particular Fund, such Fund will incur brokerage and other transaction costs. For additional information regarding brokerage practices, please see Item 12 below. please register to get more info

With respect to the Funds, a portion of the profits of each Fund is generally allocated to its General Partner as “carried interest.” Each General Partner is a Related Person (as defined in the 1940 Act) of H&F LP and H&F LLC.

Certain Funds are not required to pay carried interest or management fees, including certain Associates Funds. Certain Co-Investment Vehicles are also not required to pay management fees or carried interest. In addition, certain Funds may not pay carried interest due to the underperformance of such Funds’ underlying portfolio investments. The payment by some, but not all, Funds or Co-Investment Vehicles of carried interest may create an incentive for H&F to disproportionately allocate time, services or functions to Funds or Co-Investment Vehicles paying carried interest. Generally, and except as may be otherwise set forth in the Governing Documents of the Funds, this conflict is mitigated, at least in part, by (i) certain limitations on the ability of H&F to establish new investment funds, (ii) contractual provisions requiring Funds within the same Fund family and related Co-Investment Vehicles to purchase and sell investments contemporaneously, including Associates Funds, (iii) each investing Fund within the same Fund family generally being required to invest pro-rata based on commitments and/or (iv) contractual provisions and procedures setting forth investment allocation requirements. Please also see Item 11 below for additional information relating to how conflicts of interests are generally addressed by H&F. please register to get more info

H&F currently provides investment advisory services to the Funds, and the Funds are H&F’s only clients. Investment advice is provided directly to the Funds and not individually to Limited Partners in such Fund. Interests in the Funds are offered pursuant to applicable exemptions from registration under the Securities Act and the 1940 Act. H&F does not have a minimum size for a Fund, but minimum investment commitments are established for Limited Partners in the Funds, subject to waiver by H&F in its sole discretion. please register to get more info

Methods of Analysis and Investment Strategies
H&F has developed a focused strategy that seeks to align both the organization and its investment philosophy and investment process around the objectives described at Item 4 above. The foundation of H&F’s investment philosophy stems from a rigorous focus on the fundamental quality of the business as the primary driver of investment results. Across sectors, H&F generally seeks high quality businesses with defensible competitive positions, strong economic growth profiles, and an orientation towards higher growth. H&F seeks to build a concentrated portfolio of scale investments in its core sectors of expertise, including: software; financial services; internet & media; business & information services; healthcare; insurance & insurance services; retail & consumer; and energy & industrials. H&F continually seeks to identify new industries or sub-sectors that meet its investment criteria.

Since its inception, H&F has developed and continually refined its internal processes to help apply its investment philosophy. Importantly, these processes are incorporated into the evaluation of new opportunities, the value creation at existing investments, and the management of the overall portfolio. H&F believes that there are a limited number of businesses and opportunities that fit within its investment parameters, and has therefore designed its investment process to concentrate and dedicate resources when it identifies a situation that may be attractive.
Risks

Investing in Fund securities involves a high degree of risk. A Fund may lose all or a substantial portion of its investments. In addition, material risks relating to the investment strategies and methods of analysis described above, and to the types of securities typically purchased by or for the Funds, include (but are not limited to) the following:

No Assurance of Investment Return. H&F cannot provide assurance that it will be able to choose, make or realize investments in any particular company or portfolio of companies. There is no assurance that H&F will be able to generate returns for its Funds or that the returns will be commensurate with the risks of investing in the type of companies and transactions described herein. There can be no assurance that expected returns for the Funds will be achieved, or that a Fund will receive a return of its capital. Competition for Investments. The activity of identifying, completing and realizing on attractive investments that fall within a Fund’s objective is highly competitive and involves a high degree of uncertainty and will be subject to market conditions. The Funds encounter competition from other entities having similar investment objectives. Potential competitors include other investment partnerships and corporations, strategic industry acquirers, Limited Partners and other financial investors, including hedge funds, investing directly or through affiliates. Further, over the past several years, an ever-increasing number of private equity funds have been formed and many existing funds have grown considerably in size. Additional funds with similar investment objectives may be formed in the future by other unrelated parties. Some of these competitors may have more relevant experience, greater financial resources, a greater willingness to take on risk, and more personnel than H&F. H&F expects that competition for appropriate investment opportunities may increase, which may also require the Funds to participate in more auctions, the outcome of which cannot be guaranteed, thus reducing the number of investment opportunities available to the Funds and/or adversely affecting the terms upon which investments can be made. Participating in auctions will also increase the pressure on the Funds with respect to pricing of a transaction. For example, given the increasingly more competitive environment, H&F has found it more difficult to obtain buyer-favorable terms in a transaction, such as receiving indemnification from the seller for breaches of representations or warranties, the ability to terminate a transaction if financing sources become unavailable or unwilling to fund, or the ability to terminate the transaction if there has been a material adverse change in the company’s business prior to closing of the investment. In addition, H&F has found competitors for investment opportunities are willing to offer seller-favorable terms in a transaction, such as providing a “reverse break-up fee” and fund-level guarantees. In the event a financing-related closing condition is not available to a Fund or if a Fund is required to provide a reverse break-up fee or guarantee in connection with a potential investment, a Fund may become obligated to consummate a transaction on less favorable terms or may be required to fund the reverse break-up or similar fee in connection with a potential investment that is not made. There can be no assurance that a Fund will be able to identify or consummate investments satisfying its investment criteria. Likewise, there can be no assurance that a Fund will be able to realize the values of its investments or that it will be able to fully invest its committed capital. To the extent that H&F encounters increased competition for investments, returns to the Funds may decrease.

In addition, H&F’s investment strategies in certain sectors depends on its ability to enter into satisfactory relationships with joint venture partners or operating executives. There can be no assurance that H&F’s current relationship with any such partner or operating executive will continue (whether on currently applicable terms or otherwise) with respect to a Fund or that any relationship with other such persons will be able to be established in the future as desired with respect to any sector or geographic market and on terms favorable to such Fund.

Risk of Investment Concentration. The Funds participate in a limited number of investments and, in addition, certain of these investments may require equity investments that are larger than were required in H&F’s historical transactions. A significant portion of the Funds’ portfolio companies may be concentrated in a few industries, particularly software; financial services; internet & media; business & information services; healthcare; insurance & insurance services; retail & consumer; and energy & industrials. As a consequence, the aggregate return of a Fund may be adversely affected by the unfavorable performance of any single investment or industry. To the extent a Fund concentrates investments in a particular issuer, industry, security or geographic region, its investments will become more susceptible to fluctuations in value resulting from adverse economic or business conditions with respect thereto. Furthermore, if a Fund co-invests with other private equity funds, Limited Partners may have exposure to investments through more than one fund. In circumstances where H&F intends to refinance all or a portion of the capital invested in a transaction, there will be a risk that such refinancing may not be completed, which could lead to increased risk as a result of a Fund having an unintended long-term investment as to a portion of the amount invested and/or reduced diversification. Broad Investment Mandate. Except as described in the Governing Documents, there are no material limitations on the instruments, markets or countries in which the Funds may invest or the specific investment strategies that may be employed on behalf of the Funds. In light of the Funds’ broad investment mandate, the Funds may opportunistically make equity and/or debt investments that do not involve control or influence over the underlying portfolio company. Additionally, and while the Funds generally intend to focus on investments within the industries referenced herein and in the applicable private placement memorandum for such Fund, the Funds will be permitted to invest (and may actually invest) in any number of companies operating in a wide range of industries or activities. A Fund’s portfolio may be concentrated at various moments in time, including, for example, with respect to the number of investments included in the portfolio (which will be particularly limited when such Fund commences and ends its investing activities), the nature of such investments and the geographies or industry sectors represented by the companies in which such Fund invests.

Role of Investment and Operating Professionals. The success of the Funds will depend in part upon the skill and expertise of H&F’s investment and operating professionals. Should one or more of these individuals become incapacitated or in some other way cease to participate in the Funds, their performance could be adversely affected. There can be no assurance that such professionals will continue to be associated with H&F throughout the life of the Funds.

H&F’s ability to achieve the investment objectives of the Funds depends to a substantial degree on its ability to retain and motivate its investment and operating professionals and other key personnel, and to recruit talented new personnel. H&F’s ability to recruit, retain, and motivate its professionals is dependent on its ability to offer highly attractive incentive compensation. Current U.S. tax legislation (the “Tax Reform Bill”) requires the applicable General Partner to hold an investment for three years in order for the carried interest related to such investment to be treated as long-term capital gains for tax purposes. Further, Congress and certain state governments have considered legislation that would cause carried interest to be treated as ordinary income for income tax purposes or subject to higher rates of tax than under current law. Enactment of any such legislation could cause H&F’s investment professionals to incur a material increase in their tax liability with respect to their entitlement to carried interest. This might make it more difficult for H&F to incentivize, attract, and retain these professionals, which may have an adverse effect on H&F’s ability to achieve the investment objectives of the Funds. Separately, there is ever-increasing competition among private equity firms, financial institutions, investment managers and other industry participants for hiring and retaining qualified investment advisory professionals and operating professionals, and there can be no assurance that such personnel will not be solicited by and join competitors or other firms and/or that H&F will be able to hire and retain any new personnel that it seeks to maintain or add to its roster of professionals. Reliance on Portfolio Company Management Teams. Each portfolio company’s day-to-day operations will be the responsibility of such company’s management team. Although H&F will be responsible for monitoring the performance of each investment, there can be no assurance that the existing management team, or any successor team, will be able to operate the portfolio company successfully. The success of many of the Funds’ portfolio companies is heavily dependent on the management of such companies. There can be no assurance that the management of a portfolio company on the date an investment is made will continue to be affiliated with the company throughout the period the investment is held or that H&F and/or the portfolio company will be able to recruit and retain successor management teams capable of operating the portfolio company successfully. In addition, H&F will generally establish the capital structure of a portfolio company in which a Fund invests on the basis of financial projections for such company. Projected operating results will normally be based primarily on the judgment of the management of the portfolio company. In all cases, projections are only estimates of future results that are based upon assumptions made at the time that the projections are developed. There can be no assurance that the projected results will be obtained, and actual results may vary significantly from the projections. General economic conditions, which are not predictable, can have a material adverse impact on the reliability of projections.

Risks in Effecting Operating Improvements. In some cases, the success of H&F’s investment strategy will depend, in part, on the ability of H&F to restructure and effect improvements in the operations of a portfolio company. The activity of identifying and implementing operating improvements at portfolio companies entails a high degree of uncertainty. There can be no assurance that H&F will be able to successfully identify and/or implement such improvements or that such improvements, if made, will result in improved financial performance.

Investments in Debt. The Funds may invest in certain debt investments (subject to certain limitations in the applicable Governing Documents), which can create various risks for the Funds. For example, debt investments will typically not provide the holders with any governance rights, and so a Fund’s ability to influence the success of such investment may be significantly limited; further, H&F typically would not be able to implement a value creation plan for a company in which H&F solely invests debt. The effect of these investments will vary from jurisdiction to jurisdiction. For example, if a Fund purchases in the secondary market at a discount debt securities of a company in which a Fund has, for example, a substantial equity interest, (a) a court might require a Fund to disgorge profit it realizes if the opportunity to purchase such securities at a discount should have been made available to the issuer of such securities or (b) a Fund might be prevented from enforcing such securities at their full face value if the issuer of such securities becomes bankrupt. In addition, the market for selling debt may not be as liquid as the market for selling public equity securities, which may impair the ability of a Fund to sell the investment at the opportune time. A Fund’s investment may be in debt that is subordinate to other outstanding indebtedness of a portfolio company, which exacerbates the risk that the value of the investment will be impaired if the portfolio company does not perform. Finally, one of the fundamental risks associated with the Funds’ debt investments is credit risk, which is the risk that an issuer will be unable to make principal and interest payments on its outstanding debt obligations when due. A Fund’s return to its Limited Partners would be adversely impacted if an issuer of debt securities in which such Fund invests becomes unable to make such payments when due. Investments in Distressed Debt. The Funds may invest in distressed debt securities and instruments. Investments in distressed debt securities and instruments are inherently speculative and are subject to a high degree of risk. Companies experiencing financial distress are often those operating at a loss or with substantial variations in operating results from period to period. Companies experiencing financial distress may be involved in insolvency proceedings and have the need for substantial additional capital to support continued operations or to improve their financial condition and may have very high amounts of leverage. Distressed companies may have further inability to service their debt obligations during an economic downturn or periods of rising interest rates, may not have access to more traditional methods of financing and may be unable to repay debt by refinancing.

The value of distressed debt securities and instruments tends to be more volatile and may have an increased price sensitivity to changing interest rates and adverse economic and business developments than other securities and instruments. Distressed debt securities and instruments are often more sensitive to company-specific developments and changes in economic conditions than other securities and instruments. Furthermore, distressed debt securities and instruments are often unsecured and may be subordinated to senior debt.

Investments in Companies That Subsequently Are Subject to Bankruptcy. The Funds from time-to-time make investments in companies, including portfolio companies, that are experiencing or are expected to experience financial difficulties. These financial difficulties may never be overcome and may cause such portfolio companies to become subject to bankruptcy proceedings. Such investments, as well as other investments that are unsuccessful, could, in certain circumstances, subject the Funds to certain additional potential liabilities that may exceed the value of the Fund(s)’s original investments therein. For example, under certain circumstances, if a Fund is also a lender to a portfolio company, and is deemed to have inappropriately exercised control over the management and policies of a debtor, it may have its claims subordinated or disallowed or it may be found liable for damages suffered by parties as a result of such actions. In addition, under certain circumstances, payments to a Fund and distribution by such Fund to its Partners may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance, preferential payment or similar transaction under applicable bankruptcy and insolvency laws. Furthermore, investments in restructurings may be adversely affected by local statutes relating to, among other things, fraudulent conveyances, voidable preferences, lender liability and the bankruptcy court’s discretionary power to disallow, subordinate or disenfranchise particular claims. Need for Follow-On Investments. Following its initial investment in a given portfolio company, a Fund may decide to invest additional amounts in such portfolio company or may have the opportunity to increase its investment in a portfolio company. There is no assurance that such Fund will make follow-on investments or that such Fund will have sufficient capital to make all or any of such investments. In addition, as described in “Allocation of Investment Opportunities Among Clients and Allocation of Co-Investment Opportunities” below, some or all of a follow-on investment opportunity may, in certain circumstances, be allocated to a successor fund family. Any decision by a Fund not to make follow-on investments or its inability to make such investments may have a substantial negative effect on a portfolio company in need of such an investment, may result in a lost opportunity for such Fund to increase its participation in a successful operation, may result in the Fund’s investment in the relevant portfolio company becoming diluted and, in circumstances where the follow-on investment is offered at a discount to market value, may result in a loss of value for the Fund. Non-U.S. Investments. H&F expects to invest a portion of the Funds’ aggregate commitments outside of the United States. In addition, the Funds from time-to-time invest in companies that are organized, headquartered, or principally operated in the United States and have material subsidiaries or operations in, material sales to or other material exposure to foreign countries. Investments in and/or other material exposure to foreign countries involve certain factors not typically associated with investing in U.S. securities, including risks relating to: (i) currency exchange matters, including fluctuations in the rate of exchange between the dollar and the various foreign currencies in which the Funds’ foreign investments are denominated, and costs associated with conversion of investment principal and income from one currency into another; (ii) differences between the U.S. and foreign securities markets, including potential price volatility in and relative liquidity of some foreign securities markets, the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and less government supervision and regulation; (iii) differences in the legal and regulatory environment or enhanced legal and regulatory compliance; (iv) certain economic, social and political risks, including potential exchange control regulations and restrictions on foreign investment and repatriation of capital, political hostility to investments by foreign or private equity investors, risks relating to trade wars involving the U.S. and/or other countries (including any rules, regulations, taxes and/or import duties that arise as a result of such disputes), the risks of political, economic or social instability and the possibility of expropriation or confiscatory taxation or other changes in law; (v) differences between U.S. and foreign market contract terms (e.g., foreign contracts do not typically include many of the closing conditions that are commonly found in U.S. contracts) and conventions relating to documentation, settlement, corporate actions, stakeholder rights and other matters; (vi) the possible imposition of foreign taxes on income and gains recognized with respect to such securities, including as a result of the loss of tax treaty benefits that were expected at the time of investment; (vii) less developed corporate laws regarding fiduciary duties and the protection of investors; and (viii) less publicly available information.

Foreign Investment Controls. Foreign investment in securities of companies in certain of the countries in which the Funds may invest is restricted or controlled to varying degrees. These restrictions or controls may at times limit or preclude foreign investment above certain ownership levels or in certain sectors of the country’s economy and increase the costs and expenses of the Funds. While regulation of foreign investment has liberalized in recent years throughout much of the world, there can be no assurance that more restrictive regulations will not be adopted in the future. Some countries require governmental approval for the repatriation of investment income, capital or the proceeds of sales by foreign investors and foreign currency. The Funds could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation of capital interests and dividends paid on securities held by the Funds, and income on such securities or gains from the disposition of such securities may be subject to withholding taxes imposed by certain countries where the Funds invest or in other jurisdictions. Investments with Third Parties; Syndication of Co-Investment Opportunities. The Funds from time-to-time co-invest with third parties, thereby acquiring shared or non-controlling interests in certain portfolio companies. The Funds may not have control over these companies and, in such a case, would have a limited ability to protect their positions therein. Such investments involve risks not present in investments where a third party is not involved, including the possibility that a third party partner or co-investor may have financial difficulties resulting in a negative impact on such investment, may have economic or business interests or goals which are inconsistent with those of the Funds, or may be in a position to take action contrary to the Funds’ investment objectives. In addition, the Funds may in certain circumstances be liable for the actions of its third party partners or co-investors. Furthermore, if a co-investor defaults on its funding obligations, the Funds may be required to make up the shortfall. Investments made with third parties through consortiums of private equity investors, partnerships, joint ventures or other similar arrangements may involve incentive compensation and/or other fees payable to such third-party partners or co-investor. In those circumstances where such third parties involve a management group, such third parties may receive compensation arrangements relating to such investments, including incentive compensation arrangements.

In addition, the Funds have from time-to-time made, pursued investments and/or bore costs as Fund expenses in connection therewith with the expectation of offering a portion of its interests therein as a co-investment opportunity to Limited Partners and/or other third parties. This may include bridge financing to fund anticipated investments by co-investors. In the event that a Fund is not successful in effecting such co-investment, in whole or in part, such Fund will consequently hold a greater concentration and have more exposure in the related investment than initially was intended, which could make such Fund more susceptible to fluctuations in value resulting from adverse economic and/or business conditions with respect thereto. Moreover, an investment that is not syndicated to co-investors as originally anticipated could significantly reduce a Fund’s overall investment returns.

Non-Controlling or Minority Investments. The Funds from time-to-time invest in minority positions of companies and make small scale investments in companies for which the Funds have no right to exert significant influence. The Funds from time-to-time hold a non-controlling interest in such companies and, therefore, may have a limited ability to protect its position in such investments. Although it is expected that appropriate rights generally will be sought to protect the Funds’ interests as a condition of investment, there can be no assurance that such rights will be available or that such rights will provide sufficient protection of the Funds’ rights. In such cases, the Funds will typically be significantly reliant on the existing management, board of directors and other equity holders of such companies, who may not be affiliated with the Funds and whose interests may conflict with the interests of the Funds. Fund Leverage and Borrowing. Funds from time-to-time borrow cash or enter into other financing arrangements (including revolving credit facilities the collateral for which can be committed capital or one or more assets of the Funds) for various reasons, including, depending on the Fund, to pay Fund expenses, to pay management fees, to make or facilitate new or follow- on investments, to make payments under hedging transactions, to cover any shortfall resulting from a Partner’s default or exclusion or to fund capital contributions at the closing of an investment. Such Fund-level indebtedness may result in the use of the Funds’ cash flow (including capital contributions, which the General Partner may decide to call from the Partners in its discretion subject to the limitations set forth in the applicable Governing Documents) for debt service, distributions or other purposes. To the extent that Fund revenues are required to meet principal and interest payments, the Partners may be allocated income (and therefore tax liability) in excess of cash distributed. In certain circumstances, the Funds may be required to dispose of investments at a loss or otherwise on unattractive terms in order to service its debt obligations or meet its debt covenants. The documentation relating to Fund-level borrowings provides that during the continuance of a default under such borrowings, the payments made to Partners by the Fund may be subordinated to such Fund-level borrowing. If a Fund borrows in lieu of calling capital to fund the acquisition of an investment, the borrowing would be used for all Partners in such Fund on a pro-rata basis. As a general matter, use of leverage in lieu of drawing down capital commitments amplifies returns (either negative or positive) to Limited Partners

In addition, the batching of capital calls may amplify the magnitude of potential defaults by Limited Partners as a result of there being fewer but larger capital calls. To the extent a subscription facility becomes due upon a demand by the lender, such a demand may be issued at an inopportune time at which liquidity is generally constrained, such as when the Fund is facing financial difficulties or when Limited Partners are facing similar capital calls in multiple funds, potentially resulting in greater defaults by Limited Partners. Moreover, the existence of a subscription facility may impair a Limited Partner’s ability to transfer its interest in a Fund as a result of restrictions imposed on such transfers by the lender.

Fund revolving credit facilities are available to provide borrowed amounts directly to the portfolio companies of such Funds, in which case such borrowed amounts would be guaranteed by such Funds. Where a portfolio company borrows amounts directly through the Fund’s revolving credit facility, the applicable Fund may charge the portfolio company borrower higher interest rates than the interest rate the Fund pays pursuant to such financing facility to effect arm’s length cost of capital, as determined by H&F. Tax-exempt Limited Partners should note that the use of leverage at the Fund level may cause unrelated business taxable income (“UBTI”), but will not be treated as UBTI for purposes of the applicable Governing Documents. Finally, to the extent a Fund uses borrowed amounts in advance or in lieu of capital contributions or a portfolio company borrows amounts directly through the Fund revolving credit facility, such Fund’s Partners generally make correspondingly later capital contributions. As a result, the use of borrowed amounts at the Fund level can impact calculations of returns (e.g., IRR and MoM) as these calculations generally depend on the amount and timing of capital contributions as well as the level of the organizational structure at which such borrowed amounts are borrowed or deployed. In addition to financing at the Fund level, most Fund portfolio companies employ leverage at the portfolio company level as well, including acquisition financing at the time of the Fund’s investment in the portfolio company. While investments in leveraged companies offer the opportunity for greater capital appreciation, such investments also involve a higher degree of risk. Such borrowings increase the potential exposure to a particular investment above the level that the Fund would typically have had in such investment had the acquisition been limited to equity. Any such borrowings will further diminish returns (or increase losses on capital) to the extent overall returns are less than the cost for such an investment. In addition, investments by the Funds involve varying degrees of leverage and as a result recessions, operating variances and other general business and economic risks (as well as particular risks associated with investing in the industries targeted by the Funds) may have a more pronounced effect on the profitability or solvency of such portfolio companies. Moreover, an increase in interest rates may significantly increase portfolio companies’ interest expense, which may cause losses and/or the inability to service debt levels. If a portfolio company cannot generate adequate cash flow to meet debt obligations, the Funds will likely suffer a partial or total loss of capital invested in the portfolio company. These risks exist with respect to leverage provided at the Fund level as well.

The use of such borrowed amounts may be subject to certain conflicts of interest, as described in please register to get more info

Bridge Loans; Bridge Investments. From time-to-time the Funds lend to portfolio companies on a short-term, secured or unsecured, basis or otherwise invest on an interim basis in portfolio companies, including in anticipation of a future issuance of equity or long-term loans and/or debt securities, a purchase of securities by portfolio company management and/or employees or funding by co-investors. Such bridge loans and bridge investments are typically excluded from the calculations of returns (e.g., IRR and MoM) as they would typically be refinanced into more permanent, long-term loans and/or securities; however, for reasons not always within the Funds’ control, such long-term loans and/or securities or other refinancing or syndication may not be issued and such bridge loans and bridge investments may remain outstanding. In such event, the interest rate on such loans or the terms of such bridge investments may not adequately reflect the risk associated with the position taken by the Funds. In addition, such bridge investments may result in greater concentration to a particular company and sector than anticipated. Further, performance returns (e.g., IRR and MoM) will be higher to the extent bridge loans or bridge investments are excluded from such calculations.
Financial Market Fluctuations and Increased Regulation of Financial
Markets. Fluctuations in the global financial markets may reduce the availability of attractive investment opportunities and could affect the Funds’ ability to make investments and the value of the investments held by the Funds. In particular, the value of investments may be adversely affected by fluctuations in interest rates or by declines in the capital markets. Volatility in interest rates and the securities markets also increase the risks inherent in the Funds’ investments. Volatility in the capital markets, and dislocations in the credit markets specifically, may impact the ability of companies to obtain financing for ongoing operations. It is unclear what the repercussions of any market turmoil may be. Moreover, it remains unknown whether governmental measures undertaken in response to such turmoil (whether regulatory or financial in nature) would have a positive or negative effect on market conditions. There can be no assurance that the market will, in the future, have adequate liquidity for efficient capital markets transactions. The ability of portfolio companies to refinance debt securities will depend on their ability to sell new loans or securities in the credit markets and/or to private investors. Additionally, significant dislocation in the global credit markets in the aftermath of the financial crisis made it more difficult than it had been for financial sponsors like H&F to obtain favorable financing for investments. A reduction in liquidity, coupled with the deterioration of the global debt markets, led to reduced investor demand for leveraged credit, which in turn led some investment banks and other lenders to be less willing or unwilling to finance new investments, or to only offer committed financing for these investments on less favorable terms than had been previously been available. This phenomenon could occur and or be more pronounced. In addition, increased and/or emerging regulations applicable to banks and other lending institutions have limited the ability of the Funds to obtain leverage in amounts, and/or on terms, historically available to the Funds. Moreover, to the extent that such marketplace events occur, they will have an adverse impact on the availability of credit to businesses generally, and could lead to an overall weakening of the U.S. and global economies. Such an economic downturn could adversely affect the financial resources of corporate borrowers in which the Funds have invested and result in the inability of such borrowers to make principal and interest payments on outstanding debt when due. In the event of such defaults, the Funds would suffer a partial or total loss of capital invested in such companies, which could, in turn, have an adverse effect on the Funds’ returns. Such marketplace events also may restrict the ability of the Funds to sell or liquidate investments at favorable times or for favorable prices. Additionally, the Funds may be required to pay break-up, termination or other fees or expenses even if H&F is willing to close on an investment if it is ultimately unable to close on such investment due to a lender’s unwillingness to provide previously committed financing. In addition, a downturn in the performance of the public equity markets may limit the ability to exit portfolio company investments through initial public offerings, subsequent follow-on offerings, and/or block trades. The duration and ultimate effect of current market conditions and whether such conditions may worsen cannot be predicted and there can be no assurances that conditions in the financial markets will not worsen or adversely affect one or more of a Fund’s portfolio companies. The ability of portfolio companies to refinance debt depends on their ability to sell new loans and/or securities in the public or private credit markets.

Increased or Changing Regulatory Scrutiny. The financial services industry generally, and the activities of private investment funds and their managers, in particular, have been subject to intense and increasing regulatory oversight. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) has resulted in extensive rulemaking and regulatory changes that will affect private fund managers, the funds that they manage and the financial industry as a whole. Those changes include new recordkeeping and reporting requirements that will add costs to the legal, operations, and compliance obligations of H&F and increase the amount of time that H&F professionals spend on non-investment related activities. The Dodd- Frank Act affects a broad range of market participants with whom the Funds interact or may interact, including banks, non-bank financial institutions, rating agencies, mortgage brokers, credit unions, insurance companies, payday lenders and broker-dealers. Legal, tax and regulatory changes could also occur during the term of a Fund that may adversely affect such Fund, its portfolio companies, or Limited Partners. For example, the Tax Reform Bill has resulted in a partial limitation on the deductibility of business interest expense, which may impact the profitability of portfolio companies subject to the Tax Reform Bill. In addition, from time-to-time the market for private equity transactions has been adversely affected by a decrease in the availability of senior and subordinated financing for transactions, in part in response to regulatory pressures on providers of financing to reduce or eliminate their exposure to such transactions. Regulatory changes that affect other market participants are also likely to change the way in which H&F conducts business with counterparties. It is difficult to anticipate the effect of these and other regulatory changes on H&F and the Funds. General Economic and Market Conditions. The private equity industry generally, and the success of the Funds’ investment activities, is subject to general economic and market conditions, as well as by changes in laws, currency exchange controls, and national and international political and socioeconomic circumstances. While current market conditions may create opportunities for the Funds to make investments at prices that H&F believes are attractive, there remain a number of risks. There can be no assurance that the market will, in the future, be liquid, and it may experience periods of volatility in the future. The Funds may be adversely affected to the extent that they seek to dispose of any of their portfolio investments into an illiquid or volatile market, and the Funds may find themselves unable to dispose of an investment at a price that H&F believes reflects the investment’s fair value. A sustained downturn in the U.S. or global economy (or any particular segment thereof) could adversely affect the Funds’ profitability, impede the ability of the Funds’ portfolio companies to perform under or refinance their existing obligations, and impair the Funds’ ability to effectively exit their investment on favorable terms. Any of the foregoing events could result in substantial or total losses to the Funds in respect of certain investments, which losses will likely be exacerbated or accelerated by the presence of leverage in a portfolio company’s capital structure.

Market Disruption, Health Crises, Terrorism and Geopolitical Risk. A Fund is subject to the risk that war, terrorism, global health crises or similar pandemics, and other related geopolitical events may lead to increased short-term market volatility and have adverse long- term effects on world economies and markets generally, as well as adverse effects on issuers of securities and the value of a Fund’s investments. War, terrorism and related geopolitical events, as well as global health crises and similar pandemics have led, and in the future may lead, to increased short-term market volatility and may have adverse long-term effects on world economies and markets generally. Those events as well as other changes in world economic, political and health conditions also could adversely affect individual issuers or related groups of issuers, securities markets, interest rates, credit ratings, inflation, investor sentiment and other factors affecting the value of a Fund’s investments. At such times, a Fund’s exposure to a number of other risks described elsewhere in this section can increase.

Coronavirus Outbreak Risks. The recent global outbreak of the 2019 novel coronavirus (“COVID-19”), together with resulting voluntary and U.S. federal and state and non- governmental actions, including, without limitation, mandatory business closures, public gathering limitations, restrictions on travel, shelter in place orders and quarantines imposed, has meaningfully disrupted the global economy and markets. Although the long-term economic fallout of COVID-19 is difficult to predict, it has and is expected to continue to have ongoing material adverse effects across many, if not all, aspects of the regional, national and global economy. In particular, the COVID-19 outbreak has already, and will continue to, materially and adversely affect H&F, the Funds and their portfolio companies and the industries in which they operate. As global market and economic disruptions continue, H&F and portfolio company personnel will be pulled from the day-to-day operations of H&F, the Funds and portfolio companies into managing the response to the impact of such disruptions, which could include, without limitations, drastic reductions, and in some cases elimination, in demand for portfolio company products, drastic disruptions in supply chains impacting the ability to source products, drastic limitations on workforce availability due to sickness or quarantine limitations, inability to meet financial obligations due to suppliers, landlords, financing sources or other vendors and daily legislative or governmental changes addressing such disruptions. In order to address such daily crises and disruptions, H&F personnel will not be able to devote the same level of attention to all portfolio companies as they did before the COVID-19 outbreak, as they will focus on portfolio companies impacted the most by the COVID-19 outbreak, and the amount of time available for H&F personnel to seek new investment opportunities on behalf of the Funds will be materially diminished. Such daily crises and disruptions may have such an impact on portfolio companies as to inflict significant financial losses on such portfolio companies, which in certain cases could lead to insolvency of such portfolio companies.

The COVID-19 outbreak may adversely affect the Funds’ ability to dispose of their investments as buyers retrench from pursuing investment opportunities due to prolonged economic uncertainty. The applicability, or lack thereof, of force majeure provisions could also come into question in connection with contracts that the Funds and their portfolio companies have entered into, which could ultimately work to their detriment. To the extent an epidemic, including the COVID-19 outbreak, is present in jurisdictions in which H&F or its portfolio companies have offices or other operations, the ability of H&F and such portfolio companies to operate effectively, including the ability of personnel to function, communicate and travel to the extent necessary to carry out the Funds’ investment strategies and objectives or to carry out the business of such portfolio companies, has been, and will continue to be, impaired.

H&F personnel, portfolio company personnel and personnel of critical service providers to H&F, the Funds and the portfolio companies may be directly impacted by the spread of COVID-19, both through direct exposure (the likelihood of which can increase due to the frequency of travel) and exposure to family members, which could impair H&F’s ability to satisfy its obligations to the Funds, their investors, and pursuant to applicable law and could impair the ability of the Fund’s portfolio companies to satisfy their obligations to their customers, suppliers and other vendors and financing sources. The spread of COVID-19 among H&F personnel would have the potential to significantly affect H&F’s ability to properly oversee the affairs of the Funds (particularly to the extent such impacted personnel include key investment professionals or other members of senior management), which could result in the possibility of temporary or permanent suspension of a Fund’s investment activities or operation. Similarly, the spread of COVID-19 among portfolio company personnel would have the potential to significantly affect such portfolio company’s ability to properly oversee their affairs (particularly to the extent such impacted personnel include key investment professionals or other members of senior management), which could result in the possibility of temporary or permanent suspension of such portfolio company’s activities or operation. In response to the COVID-19 outbreak, several industry conference sponsors and venues have suspended or cancelled events due to concerns over the spread of COVID-19. Events have also been impacted by the implementation of U.S. federal and state and non-U.S. governmental actions, as well as voluntary and involuntary travel restrictions. Attendance by H&F and H&F personnel at industry conferences and events is an important component of H&F’s investment- sourcing strategy. Private and governmental efforts to prevent the further spread of COVID-19 through travel restrictions, shelter in place orders and cancellation or suspension of industry events may adversely affect H&F’s ability to source potential investment opportunities for the Funds and to gain meaningful insights in order to properly evaluate the risk/reward potential of investing in a particular industry sector or market. The ability of portfolio companies to attend or host such conferences and events is also important to the business of such portfolio companies and the inability to host or attend such conferences or events will adversely affect such portfolio company’s ability to interact and develop relationships with customers, suppliers and other industry relationships.

Environmental, Social and Governance Matters. While environmental, social and governance (“ESG”) matters are one of many factors H&F considers when making investments, there is no guarantee that ESG investment strategies implemented by the Funds will create a positive ESG impact while enhancing long-term shareholder value and achieving financial returns. To the extent that H&F engages with potential or current portfolio companies on ESG- related practices and potential enhancements, such engagements may not achieve the desired financial and social results, or the market or society may not view any such changes as desirable. Successful implementation of ESG factors in an investment strategy and any engagement efforts on the part of H&F will depend on H&F’s skill in properly identifying and analyzing material ESG factors and their impact-related value, and there can be no assurance that the strategy or techniques employed will be successful. Applying ESG factors in an investment strategy, which may result in the selection or exclusion of certain target companies based on H&F’s view of certain ESG-related and other factors, carries the risk that H&F may underperform funds that do not take ESG-related factors into account, because the market may ultimately have a different view of a particular company’s performance than that anticipated by H&F.

H&F may be unable to successfully execute ESG initiatives in the event that H&F’s assessment of the value of a particular issue and the relevant time horizon related thereto differ from that of society or the market. Furthermore, the application of ESG initiatives may affect H&F’s exposure to certain companies, sectors, regions, countries or types of investments, which could negatively impact H&F’s performance depending on whether such investments are in or out of favor. Applying ESG factors to investment decisions is qualitative and subjective by nature, and there is no guarantee that the criteria utilized by H&F or any judgment exercised by H&F will reflect the beliefs or values of any particular Limited Partner. In evaluating a company, H&F is dependent upon information and data obtained through voluntary or third-party reporting that may be incomplete, inaccurate or unavailable, which could cause H&F to incorrectly assess a company’s ESG practices and/or related risks and opportunities. ESG-related practices differ by region, industry and issue and are evolving accordingly, and a company’s ESG-related practices or H&F’s assessment of such practices may change over time. Assumption of Contingent Liabilities. In connection with an investment, a Fund may assume, or acquire a portfolio company subject to, contingent liabilities. These liabilities may be material and may include liabilities associated with pending litigation, regulatory investigations, environmental actions, or payment of indebtedness among other things. To the extent these liabilities are realized, they may materially adversely affect the value of a portfolio company. In addition, if a Fund has assumed or guaranteed these liabilities, the obligation would be payable from the assets of such Fund, including the remaining commitments of Limited Partners. Contingent Liabilities Upon Disposition. In connection with the disposition of an investment, the Funds, from time-to-time, are required to make representations about the business, financial affairs and other aspects (such as property, tax, insurance and litigation) of the portfolio company typical of those made in connection with the sale of any business and may be responsible for the content of disclosure documents under applicable securities laws. The Funds may also be required to indemnify the purchasers of such investment or underwriters to the extent that any such representations or disclosure documents turn out to be inaccurate or continue to be liable for tax obligations for pre-closing periods. These arrangements may result in contingent liabilities, which shall be borne by the Funds and Partners may be required to return amounts distributed to them to pay for the Funds’ obligations, subject to certain limitations set forth in the Governing Documents.
U.S. Dollar Denomination of Interests; Foreign Currency and Exchange Rate Risks;
Hedging Policies/Risks. Because the Funds are U.S. dollar denominated funds, the return realized on investments by the Funds where the functional currency of such investment is not U.S. dollars, as well as movements in currency exchange rates, costs of conversion and exchange control regulation, may adversely affect the performance of such investment. There may be foreign exchange regulations applicable to investments in foreign currencies in certain jurisdictions which also may adversely affect such performance. The Funds also incur costs when converting one currency to another. In addition, fluctuations in interest rates may adversely affect the returns of investments that employ financing. H&F from time-to-time employs hedging techniques designed to reduce the risks of adverse movements in interest rates and currency exchange. While such transactions may reduce certain risks, such transactions themselves may entail certain other risks or costs. Thus, while the Funds may benefit from the use of these hedging mechanisms, unanticipated changes in interest rates or currency exchange rates may result in a poorer overall performance for the Funds than if they had not entered into such hedging transactions. In addition, H&F may determine not to employ such hedging techniques with respect to certain investments and in such cases, unanticipated changes in interest rates or currency exchanges may also result in poorer overall performance for the Funds than if they had entered into such hedging transactions.

Counterparty Risk. The Funds are exposed to the risk that third parties that owe the Funds or the portfolio companies services, money, securities, or other assets will not perform their obligations. These parties include trading counterparties, clearing agents, exchanges, clearing houses, custodians, prime brokers, administrators, and other financial intermediaries. These parties may default on their obligations to the Funds or the portfolio companies, due to bankruptcy, lack of liquidity, operational failure, or other reasons. This risk may arise, for example, from entering into revolving credit lines or swap or other derivative contracts under which counterparties have long-term obligations to make payments to the Funds or the portfolio companies, or executing securities, futures, currency or commodity trades that fail to settle at the required time due to non-delivery by the counterparty or systems failure by clearing agents, exchanges, clearing houses or other financial intermediaries. Also, any practice of rehypothecation of securities of the Funds or the investments held by counterparties could result in the loss of such securities upon the bankruptcy, insolvency, or failure of such counterparties. Change of Law Risks. In addition to the risks regarding regulatory approvals, government counterparties or agencies have the discretion to change or increase regulation of a portfolio company’s operations, or implement laws or regulations affecting such portfolio company’s operations, separate from any contractual rights it may have. A portfolio company also could be materially and adversely affected as a result of statutory or regulatory changes or judicial or administrative interpretations of existing laws and regulations that impose more comprehensive or stringent requirements on such company. Governments have considerable discretion in implementing regulations, including, for example, the possible imposition or increase of taxes on income earned by or from a portfolio company or gains recognized by a Fund on its investment in such portfolio company, which could impact a portfolio company’s business.

Litigation. In connection with ordinary course investing activities, H&F, the Funds and their respective affiliates as well as the portfolio companies have from time-to-time become involved in litigation either as a plaintiff or a defendant. There can be no assurance that any such litigation, once begun, would be resolved in favor of H&F, such Fund, affiliate or portfolio company. Any such litigation could be prolonged and expensive. In addition, it is by no means unusual for participants in reorganizations to use the threat of, as well as actual, litigation as a negotiating technique. The expense of defending against claims by third parties and paying any amounts pursuant to settlements or judgments generally would be borne by the Funds or the applicable portfolio company and would reduce net assets or could require Limited Partners to return to the Funds distributed capital and earnings. In addition, past or current H&F or portfolio company personnel may disagree with H&F and/or its management from time-to-time over terms related to separation or other issues. If not resolved, such disputes could lead to litigation or arbitration, which could be costly, distracting and/or time consuming for H&F management.

Taxation in Certain Jurisdictions. The Funds, its portfolio companies and/or its Partners from time-to-time become subject to income or other tax in jurisdictions in which such Fund’s portfolio companies operate. Additionally, withholding taxes or branch taxes from time-to-time are imposed on earnings of the Funds or its portfolio companies with respect to such jurisdictions. Local tax incurred in a jurisdiction by the Funds, legal entities through which they invest or the portfolio companies may not entitle Partners to (i) a credit against tax that may be owed in their respective home tax jurisdictions, (ii) a deduction against income taxable in such home jurisdictions by the Partners or (iii) benefits of tax treaties that may otherwise be available to such Partner. Where payments are remitted to applicable taxing jurisdictions due to withholding taxes applicable to the Funds or the Partners, for purposes of calculating Partner returns, the General Partner of such Fund will deem such payments withheld to have been distributed to the applicable Fund’s Partners. Effect of Carried Interest. The existence of the General Partners’ carried interest may create an incentive for the General Partners to make more speculative investments on behalf of the Funds that pay carried interest than they would otherwise make in the absence of such performance- based arrangement. In addition, the manner in which the General Partner’s entitlement to carried interest is determined may result in a conflict between its interests and the interests of Limited Partners with respect to the sequence and timing of disposals of investments. Also, the ultimate beneficial owners of the General Partner are generally subject to United States federal and local income tax (unlike certain of the Limited Partners). The General Partner may be incentivized to operate the Funds, including to hold and/or sell investments, in a manner that takes into account the tax treatment of carried interest. Limited Partners should note in this regard that the Tax Reform Bill provides for a lower capital gains tax rate for carried interest in respect of investments held for at least three years. While the General Partner generally intends to seek to maximize pre-tax returns for the Funds as a whole, the General Partner may nonetheless be incentivized, for example, to hold investments longer to ensure long-term capital gains treatment and/or realize investments prior to any change in law that results in a higher effective income tax rate on carried interest. In addition, if distributions are made of property other than cash, the amount of any such distribution will be accounted for at the fair market value of such property, as determined in accordance with procedures specified in the applicable Governing Documents. An independent appraisal generally will not be required and is not expected to be obtained.

Pursuant to the applicable Governing Documents, the General Partner may be required to return excess amounts of carried interest as a clawback. This clawback obligation creates an incentive for the General Partner to defer disposition of one or more investments or delay the liquidation of the Funds if the disposition and/or liquidation would result in a realized loss to the Funds or would otherwise result in a clawback situation for the General Partner.

In addition, the General Partner is incentivized to hold on to investments that have poor prospects for improvement in order to receive ongoing management fees in the interim and, potentially, a more likely or larger carried interest distribution if such asset’s value appreciates in the future. This incentive is increased by the presence of the clawback obligation of the General Partner.

Asset Valuations. There is no actively traded market for most of the securities owned by the Funds. When estimating fair value, an independent, nationally-recognized, valuation firm retained by H&F applies methodologies based on best practices in the valuation industry that are appropriate in light of the nature, facts and circumstances of each of the investments. Valuations are subject to review and approval and all portfolio investments are valued in accordance with the procedures set forth in H&F’s Valuation Policy. However, the process of valuing securities for which reliable market quotations are not available – even if performed by a qualified third party – is based on assumptions and inherent uncertainties. The resulting values may differ from values that would have been determined had an active market existed for such securities, and may differ from the prices at which such securities may ultimately be sold. Further, third-party pricing information for publicly traded or registered securities may at times not be available regarding certain of a Fund’s assets. Valuations of investments will be determined primarily by a Fund’s General Partner as described above, subject to review by such Fund’s Advisory Board to the extent required by the applicable Governing Documents, and generally will be final and conclusive. There can be no assurances that the projected results will be obtained, and actual results may vary significantly from the valuations. General economic, political, regulatory and market conditions and the actual operations of the portfolio companies, which are not predictable, can have a material impact on the accuracy of such valuations. Material Non-Public Information. By reason of its responsibilities in connection with its other activities, H&F (or its personnel) from time-to-time acquires confidential or material non-public information or is restricted from initiating transactions in certain securities. In addition, the information provided to Limited Partners by the Funds may include material non-public information about a portfolio company. The Funds will not be free to act upon any such material non-public information that they acquire, and Limited Partners may be restricted in their ability to buy or sell securities or bank debt of companies about which they have received material non- public information. Due to these restrictions, the Funds and Limited Partners may not be able to initiate a transaction that they otherwise might have initiated and may not be able to sell an investment that they otherwise might have sold.

Deployment of Capital. In light of the Funds’ investment strategy and the need to be able to deploy capital quickly to capitalize on potential investment opportunities, the Funds from time- to-time maintain cash at the Fund level pending deployment into portfolio investments, which could at times be significant. Such cash may be held in an account of a Fund or may be invested in money market accounts or other similar temporary investments. In the event the Funds are unable to find suitable portfolio investments, such cash may be maintained at the Fund level for longer periods, which would be dilutive to overall investment returns. It is not anticipated that the temporary investment of such cash into money market accounts or other similar temporary investments pending deployment into portfolio investments will generate significant interest, if any, and Limited Partners should understand that such low interest payments (if any) on the temporarily invested cash may adversely affect overall Fund returns.

In addition, a Fund may deploy capital into portfolio investments using proceeds derived through Fund-level borrowings (e.g., a secured revolving credit facility) on a short-term or long-term basis, which may be on a joint, several, joint and several, or cross-collateralized basis or otherwise with such Fund’s parallel investment entities (“Parallel Funds”) and/or other Funds or Co-Investment Vehicles. The costs and expenses of any such borrowings will generally be allocated among such Fund, such Parallel Funds, such other Funds and such Co-Investment Vehicles pro rata (or, in the case of any such Co-Investment Vehicle, at least pro rata) and to all Partners pro rata, which will increase the expenses borne by Partners and would be expected to diminish net investment returns (e.g., net IRR and net MoM). General financing costs or expenses arising out of such borrowing facilities not related to a specific transaction are generally allocated among the Funds and Parallel Funds and not allocated to Co-Investment Vehicles. Investments in the Technology Sector. The Funds have invested in portfolio companies that operate in the technology sector. Investments in the technology sector may involve risks greater than those in other sectors and may experience significant fluctuations in returns. The technology sector is challenged by various factors, including rapidly changing market conditions and participants, new competing products and services and improvements in existing products and services. Some of the Funds’ portfolio companies compete in this volatile environment. There is no assurance that products or services sold by such portfolio companies will not be rendered obsolete or adversely affected by competing products and services or other challenges. Instability, fluctuation or an overall decline within the technology sector may not be balanced by investments in other sectors not so affected. In the event that the technology sector declines, returns to Limited Partners may decrease. Investments in Less Established Companies. While not its primary strategy, H&F expects to invest in growth-oriented companies that have inherently greater risk than more established companies. To the extent there is any public market for the securities held by the Funds, such securities generally are subject to more abrupt and erratic market price movements than those of larger, more established companies. Growth-oriented companies tend to have lower capitalizations and fewer resources and, therefore, often are more vulnerable to financial failure. Oftentimes, such companies also have shorter operating histories on which to judge future performance and in many cases, if operating, will have negative cash flow. Certain growth- oriented companies may not have significant or any operating revenues, and any such investment should be considered highly speculative and may result in the loss of the Funds’ entire investment therein. In addition, less mature companies could be deemed to be more susceptible to irregular accounting or other fraudulent practices. In the event of fraud by any company in which the Funds invest, the Funds may suffer a partial or total loss of capital invested in that company. Growth companies may also be more susceptible to macroeconomic effects and industry downturns, including those resulting from acts of terrorism and war. The foregoing factors increase the difficulty of valuing such investments. There can be no assurance that any such losses will be offset by gains (if any) realized on the Funds’ other investments.

Illiquid and Long-Term Investments. Investment in the Funds requires a long-term commitment with no certainty of return. There most likely will be little or no near-term cash flow available to the Limited Partners. Many of the investments will be highly illiquid and there can be no assurance that the Funds will be able to realize returns on such investments in a timely manner. Consequently, dispositions of such investments may require a lengthy time period or may result in distributions in-kind to the Limited Partners. While an investment may be sold at any time, it is not generally expected that this will occur for a number of years after the investment in a portfolio company is made. The Funds will generally acquire securities that cannot be sold except pursuant to a registration statement filed under the Securities Act, or in a private placement or other transaction exempt from registration under the Securities Act. In some cases, the Funds may be prohibited by contract from selling certain securities for a period of time. Even where the Funds hold freely tradable publicly traded securities, the Funds’ positions may represent a significant portion of the outstanding public float of a particular company, creating a degree of illiquidity when the Funds wish to dispose of or reduce their position in such company by selling shares into the market. Investments in Regulated Industries or Companies. The Funds from time-to-time make investments in portfolio companies operating in industries that are subject to greater amounts of regulation than other industries generally. These more highly regulated industries include healthcare and financial services. Investments in portfolio companies that are subject to greater amounts of governmental regulation pose additional risks relative to investments in other companies generally. Changes in applicable laws or regulations, or in the interpretations of these laws and regulations, could result in increased compliance costs or the need for additional capital expenditures and/or regulatory capital requirements. If a portfolio company fails to comply with these requirements, it could also be subject to civil or criminal liability and the imposition of fines. A portfolio company also could be materially and adversely affected as a result of statutory or regulatory changes or judicial or administrative interpretations of existing laws and regulations that impose more comprehensive or stringent requirements on such company. Governments have considerable discretion in implementing regulations that could impact a portfolio company’s business and governments may be influenced by political considerations and may make decisions that adversely affect a portfolio company’s business. Certain portfolio companies from time-to-time have a unionized work force or employees who are covered by a collective bargaining agreement, which could subject any such portfolio company’s activities and labor relations matters to complex laws and regulations relating thereto. A portfolio company’s operations and profitability could suffer if it experiences labor relations problems. Upon the expiration of any of such portfolio company’s collective bargaining agreements, it may be unable to negotiate new collective bargaining agreements on terms favorable to it, and its business operations at one or more of its facilities may be interrupted as a result of labor disputes or difficulties and delays in the process of renegotiating its collective bargaining agreements. A work stoppage at one or more of any such portfolio company’s facilities could have a material adverse effect on its business, results of operations and financial condition. Additionally, any such problems may bring scrutiny and attention to the Funds themselves, which could adversely affect the Funds’ ability to implement their investment objectives.

United States Federal Income Tax Reform. The Tax Reform Bill has resulted in fundamental changes to the Code. Among the numerous changes included in the Tax Reform Bill are (i) a permanent reduction to the corporate income tax rate, (ii) a partial limitation on the deductibility of business interest expense, (iii) an income deduction for individuals receiving certain business income from “pass-through” entities, (iv) a partial shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a territorial system (along with a transitional rule which taxes certain historic accumulated earnings and rules which prevent tax planning strategies which shift profits to low-tax jurisdictions), and (v) a suspension of certain miscellaneous itemized deductions, including deductions for investment fees and expenses, until 2026. Despite proposed, and in some cases finalized, regulations on certain aspects, there are still significant uncertainties regarding the interpretation and application of the Tax Reform Bill. Additional guidance on the Tax Reform Bill is expected; however, the timing, form, scope and content of such guidance are not known. Changes to the Code made by the Tax Reform Bill and any further changes in tax laws or interpretations of such tax laws may be adverse to the Funds and the Limited Partners. Systems and Operational Risks; Risks of Third-Party Service Providers. The Funds will depend on H&F to develop and implement appropriate systems for the Funds’ activities. Certain of the Funds’ and H&F’s activities will be dependent upon systems operated by third parties, and H&F may not be in a position to adequately verify the risks or reliability of such third-party systems. Disruption to third-party critical service providers, such as a Fund’s auditors, external counsel, banks and custodian, may result in other disruptions in such Fund’s operations. Disruptions in such Fund’s operations may cause such Fund to suffer, among other things, financial loss, the disruption of their businesses, liability to third parties, regulatory intervention or reputational damage. Any of the foregoing failures or disruptions could have a material adverse effect on the Funds and the Limited Partners’ investments therein. In addition, the Funds may suffer adverse consequences from actions, errors, or failure to act by such third parties, and will have obligations, including indemnity obligations, and limited recourse against them. The costs, fees, and expenses associated with the provision of such services by third-party service providers will generally be borne by the Funds instead of H&F, thereby increasing the expenses borne by the Limited Partners. Possibility of Fraud and Other Misconduct of Employees and Service Providers. Misconduct by H&F personnel, service providers to H&F or the Funds and/or their respective affiliates could cause significant losses to such Funds. Misconduct may include entering into transactions without authorization, the failure to comply with operational and risk procedures, including due diligence procedures, misrepresentations as to investments being considered by such Funds, the improper use or disclosure of confidential or material non-public information, which could result in litigation, regulatory enforcement or serious financial harm, including limiting the business prospects or future marketing activities of such Funds and noncompliance with applicable laws or regulations and the concealing of any of the foregoing. Such activities may result in reputational damage, litigation, business disruption and/or financial losses to such Funds. H&F has controls and procedures through which it seeks to minimize the risk of such misconduct occurring. However, no assurances can be given that H&F will be able to identify or prevent such misconduct.

Cybersecurity Risk. H&F, the Funds’ service providers and other market participants increasingly depend on complex information technology and communications systems to conduct business functions. These systems are subject to a number of different threats or risks that could adversely affect the Funds and their Partners, despite the efforts of H&F and the Funds’ service providers to adopt technologies, processes and practices intended to mitigate these risks and protect the security of their computer systems, software, networks and other technology assets, as well as the confidentiality, integrity and availability of information belonging to the Fund and its Partners. For example, unauthorized third parties may attempt to improperly access, modify, disrupt the operations of, or prevent access to these systems of H&F, the Funds’ service providers, counterparties or data within these systems. Third parties may also attempt to fraudulently induce H&F’s personnel, customers, third-party service providers or other users of H&F’s systems to disclose sensitive information in order to gain access to H&F’s data or that of the Funds’ Partners. A successful penetration or circumvention of the security of H&F’s systems could result in the loss, theft or corruption of a Partner’s data or of personal data for which H&F or the Funds are responsible (under applicable privacy and data protection laws), a loss of Fund data, a loss of capital, the inability to access electronic systems, overall disruption in operations systems, loss, theft or corruption of proprietary information or corporate data, physical damage to a computer or network system or costs associated with system repairs. These threats may also indirectly affect the Funds through cyber incidents with third-party service providers or counterparties. Data taken in such breaches may be used by criminals in identity theft, obtaining loans or payments under false identities, and other crimes that could affect the Funds’ Partners directly as well as affect the value of assets in which the Funds invest. These risks can disrupt the ability to engage in transactional business, cause direct financial loss and reputational damage, lead to violations of applicable laws related to data and privacy protection and consumer protection or incur regulatory penalties, all or part of which may not be covered by insurance. Cybersecurity risks also result in ongoing prevention and compliance costs. In addition, H&F or the Funds may incur substantial costs related to forensic analysis of the origin and scope of a cybersecurity breach, increased and upgraded cybersecurity, identity theft, unauthorized use of proprietary information, adverse Limited Partner reaction or litigation. Similar types of operational and technology risks are also present for the portfolio companies in which the Funds invests, which could have material adverse consequences for such companies, and may cause the Funds’ investments to lose value. Data Protection. Privacy and data protection are receiving increased amounts of attention and scrutiny from regulators globally. Among other privacy regimes, the legislation at a European Union (“EU”) level with respect to data protection is the General Data Protection Regulation (“GDPR”), which came into effect on May 25, 2018 and replaced Directive 95/46/EC (the “Data Protection Directive”). Other privacy laws that have recently come into force in other jurisdictions, including the California Consumer Privacy Act in the US (the “CCPA”) and the Data Protection Law, 2017 in the Cayman Islands (the “DPL”). The purpose of these laws is broadly to increase the protection of individuals’ rights and freedoms in relation to their privacy and with respect to the processing of their personal data.

New data protection laws, like the GDPR, CCPA and DPL, often require more stringent operational requirements and onerous accountability obligations for controllers and processors of personal data, including, for example, in the case of GDPR, requiring formal records of processing, expanded disclosures inter alia about how, why and by whom personal data is to be used, limitations on retention of personal data, implementation of appropriate technical and organizational security measures to protect personal data, mandatory data breach notification requirements, and higher standards for data controllers to demonstrate that they have obtained valid consent or have another relevant legal basis in place to justify their data processing activities. These laws also include data subject rights, such as the rights to access personal data about them and the right to have such data deleted. These rights are not absolute; however, they will require that H&F have in place the necessary mechanisms to allow individuals to exercise them.

While H&F and the Funds intend to comply with their privacy and data protection obligations under the GDPR, CCPA, DPL and other applicable privacy and data protection laws, they may not be able to accurately anticipate the ways in which regulators and the courts will apply or interpret the law. In addition, because privacy and data protection laws are constantly changing and there are new laws in different jurisdictions constantly being implemented, it is difficult for H&F and the Funds to understand all laws applicable to them at any given time. The failure by H&F or the Funds to comply with applicable privacy and data protection laws could result in negative publicity and may subject them to significant costs associated with litigation, settlements, regulatory action, judgments, liabilities, or (actual or contingent) fines and penalties. For example, under the GDPR, fines of up to the higher of €20 million or 4% of the total worldwide annual turnover of the preceding financial year, may be imposed for non-compliance. These new laws also could cause H&F’s, the Funds’ and their investments’ costs to increase and result in further administrative costs as part of their compliance efforts, which is likely to reduce capital that can be deployed for making investments. If the current trend in the development of such laws continues in other relevant jurisdictions, such costs may be exacerbated further as new or different compliance obligations arise. Similarly, if privacy or data protection laws are implemented, interpreted or applied in a manner inconsistent with H&F’s or the Funds’ expectations, that may result in business practices changing in a manner that adversely impacts H&F or the Funds. Moreover, if H&F or the Funds suffer a security breach impacting personal data, there may be obligations to notify government authorities or data subjects, which may divert H&F’s or the Funds’ time and effort and entail substantial expense. The provisions of the GDPR, CCPA, and DPL and other existing or new privacy and data protection laws may also apply to the portfolio companies. On the basis that global data protection laws are constantly evolving, the portfolio companies may be continually subject to new laws, regulations or standards or new interpretations of existing laws, regulations, or standards. These laws could affect the value of the portfolio companies if they incur additional costs and restrict business operations. Similarly to the above, failure by the portfolio companies to comply with applicable requirements may result in governmental enforcement actions, litigation, (actual or contingent) fines and penalties or adverse publicity, which could have an adverse effect on their and the Funds’ reputation and adversely affect the business and the value of the Funds’ investments.

Force Majeure Risk. Force majeure is the term generally used to refer to an event beyond the control of the party claiming that the event has occurred, including acts of God, fire, flood, weather, earthquakes, war, terrorism, epidemics and labor strikes. Some force majeure events may adversely affect a party’s ability to perform its obligations, under a contract or otherwise, until it is able to remedy the force majeure event. In addition, the cost of repairing or replacing damaged assets could be considerable. Repeated or prolonged service interruptions may result in permanent loss of customers, substantial litigation, or penalties for regulatory or contractual non- compliance. In some cases, project agreements can be terminated if the force majeure event is so catastrophic as to render it incapable of remedy within a reasonable, pre-agreed time period. Force majeure events that are incapable of, or costly to, cure may also have a permanent adverse effect on the Funds or their portfolio companies. Terrorist Activities. U.S. activities in the Middle East and terrorist attacks of unprecedented scope may cause instability in the world financial markets and may generate global economic instability. The continued threat of terrorism and the impact of military or other action have led to and will likely lead to increased volatility in prices for commodities and could affect the Funds’ financial results. Changes to the European Union. . On June 23, 2016, the United Kingdom (the “UK”) held a referendum and voted to withdraw as a member of the European Union (the “EU”) and as a party to the Treaty on the Functioning of the European Union and its related treaties (commonly known as “Brexit”). On January 31, 2020 the UK left the EU and entered an 11-month transition period. During the transitional period the UK and the EU will negotiate the UK’s future relationship with the EU. The negotiation process has been lengthy and complicated, and much uncertainty remains. The consequences of Brexit are uncertain. Brexit has already caused significant volatility in global financial markets and uncertainty about the integrity and functioning of the EU, both of which may persist for an extended period of time. Although we cannot predict the full effect of Brexit, Brexit could have a significant adverse impact on UK, European and global macroeconomic conditions and could lead to prolonged political, legal, regulatory, tax and economic uncertainty. Brexit’s continuing or future macroeconomic impact could adversely affect the value of a Fund’s investments and ability to access markets, as well as limit a Fund’s investment opportunities and exit options. Investments Longer than Term. A Fund may make investments that may not be advantageously disposed of, or have liabilities that may not be resolved, prior to the date that such Fund is expected to be dissolved, either by expiration of such Fund’s term or otherwise. Although at the time a Fund makes an investment H&F will expect that the investment will be disposed of prior to dissolution or be suitable for in-kind distribution at dissolution there may be situations in which H&F determines that the best economic benefit will occur by holding the investment for a longer period of time. In such circumstances, the General Partner of such Fund has the ability to seek an extension to the term of such Fund or may, subject to applicable Advisory Board consents, effectuate a transaction to sell the investment to a successor Fund. While the General Partner will only take such actions if it believes it is in the best interest of the Fund, such actions may be inconsistent with a Limited Partner’s desire for liquidity, or for a Limited Partner’s desire to continue to invest in such an investment. See “Cross Transactions” below for additional information. Alternatively, the General Partner may be required to dispose of such investments due to the expiration of the applicable Funds’ term even though the General Partner believes such disposition is not the best economic benefit of the Limited Partners. In the event that investments remain in the Fund at the time of dissolution the Fund may have to sell, distribute or otherwise dispose of such investments or resolve litigation or other contingent liabilities at a disadvantageous time as a result of the expiration of the Fund’s term and the resulting dissolution. At the time of such dissolution the General Partner of such Fund will be required to use its best efforts to reduce to cash and cash equivalents such assets of the Fund as the General Partner shall deem advisable to sell (such as where the General Partner determines that an in-kind distribution of such assets is not feasible or in the best interests of the Limited Partners), subject to obtaining fair value for such assets and any tax or other legal considerations. There can be no assurance, however, with respect to the time frame in which the winding up and the final distribution of proceeds to the Limited Partners will occur. Risk Arising from Potential Control Group Liability Generally. Certain portfolio companies controlled by one or more Funds have in the past, and may, from time-to-time in the future engage in activities that could adversely affect another Fund and/or its portfolio companies, including, for instance, as a result of laws and regulations or certain jurisdictions (such as bankruptcy, environmental, consumer protection and/or labor or union laws) that may not recognize or permit the segregation of assets and liabilities between separate entities. Such jurisdictions may also allow for recourse against assets that are under common control with, or part of the same economic group as, the entity that has incurred the liability. This may result in the assets of a Fund and/or a portfolio company being used to satisfy the obligations or liabilities of another Fund or its portfolio company.
Risk Arising from Potential Control Group Liability for Certain Pension Obligations.
Under ERISA, upon the termination of a tax-qualified single employer defined benefit pension plan, the sponsoring employer and all members of its “controlled group” will be jointly and severally liable for 100% of the plan’s unfunded benefit liabilities whether or not the controlled group members have ever maintained or participated in the plan. In addition, the Pension Benefit Guaranty Corporation (the “PBGC”) may assert a lien with respect to such liability against any member of the controlled group on up to 30% of the collective net worth of all members of the controlled group. Similarly, in the event a participating employer partially or completely withdraws from a multiemployer (union) defined benefit pension plan, any withdrawal liability incurred under ERISA will represent a joint and several liability of the withdrawing employer and each member of its controlled group. A “controlled group” includes all “trades or businesses” under 80% or greater common ownership. This common ownership test is broadly applied to include both “parent-subsidiary groups” and “brother-sister groups” applying complex exclusion and constructive ownership rules. However, regardless of the percentage ownership that a Fund holds in one or more of its portfolio companies, the Fund itself cannot be considered part of an ERISA controlled group unless the Fund is considered to be a “trade or business”.

While there are a number of cases that have held that managing investments is not a “trade or business” for tax purposes, in 2007 the PBGC Appeals Board ruled that a private equity fund was a “trade or business” for ERISA controlled group liability purposes and at least one Federal Court of Appeals has similarly concluded that a private equity fund could be a trade or business for these purposes based upon a number of factors including the fund’s level of involvement in the management of its portfolio companies and the nature of any management fee arrangements.

If a Fund were determined to be a trade or business for purposes of ERISA, it is possible, depending upon the structure of the investment by such Fund and/or its affiliates and other co- investors in a portfolio company and their respective ownership interests in the portfolio company, that any tax-qualified single employer defined benefit pension plan liabilities and/or multiemployer plan withdrawal liabilities incurred by the portfolio company could result in liability being incurred by such Fund, with a resulting need for additional capital contributions, the appropriation of Fund assets to satisfy such pension liabilities a please register to get more info

As Funds invest primarily in private companies, H&F anticipates that investments in publicly traded securities through brokered transactions will generally be infrequent occurrences. Sales of securities held as a result of initial public offerings of portfolio companies will be also effected through brokered transactions from time-to-time. To meet its fiduciary duties to the Funds, H&F has adopted the following policies to address issues that might arise with respect to purchasing, holding, and selling publicly traded securities.

Selection of Brokers and Dealers

In the event it chooses to use a broker-dealer, H&F seeks to obtain best price and execution of transactions as set forth below. For each of the Funds, H&F has sole discretion over the purchase and sale of investments (including the size of such transactions) and the broker or dealer, if any, to be used to effect transactions. In placing each transaction for a Fund involving a broker-dealer, H&F will seek “best execution” of the transaction except to the extent it may be permitted to pay higher brokerage commissions in exchange for brokerage and research services (as discussed below). “Best execution” means obtaining for a Fund account the lowest total cost (in purchasing a security) or highest total proceeds (whether through a sale or distribution of securities), taking into account the circumstances of the transaction and the reputation and reliability of the executing broker or dealer.

In selecting brokers or dealers, H&F takes into account all factors that it deems relevant, including, by way of illustration, the reputation, experience and financial stability of the broker- dealer; the ability to provide competitive pricing; the size and timing of the transaction; the nature of the market for the security and the difficulty of execution; the ability and willingness to commit capital or financing and provide prompt and accurate execution and settlement; whether the broker-dealer makes a market in a security and/or or finds sources of liquidity; the deemed appropriate monetization strategy taking into account the current and, if applicable, any contemplated later transaction; the ability to maintain H&F’s anonymity; the broker-dealer’s trading expertise, including its ability to minimize total trading costs and to trade without unduly impacting the market; the belief that the broker-dealer charges a fair and reasonable fee for each trade and that the Funds have been treated fairly and honestly in prior trades, the quality of execution, quality of broker-dealer relationship and quality of service rendered by the broker- dealer in other transactions; the broker-dealer’s expertise in a particular industry or prior experience and familiarity with the issuer; and the quality of any proprietary research and investment ideas. In addition, H&F may consider the use of Electronic Communications Networks (“ECNs”) when placing trades on behalf of the Funds. To the extent consistent with achieving best execution, H&F may also consider other business a particular broker or dealer may have done with H&F, such as identifying investment opportunities, performing investment banking services and the ability and willingness to commit capital or financing to other H&F transactions. H&F has no formal arrangements with specific brokers or dealers to receive research or other services beyond transaction execution in exchange for brokerage commissions from client transactions (so called “soft dollar” arrangements). However, brokers or dealers are from time- to-time selected who provide research reports and services to H&F, including: proprietary broker-dealer company research and analysis; oral and written reports, statistics and advice about the economy, industries and individual securities’ or company investment opportunities; and reports on underwriting activity, bank rates, loan defaults, loan new issuance volumes and other capital markets statistics, all of which may be attractive for one or more Funds or to H&F; and opportunities to confer with management. In accordance with Section 28(e) of the Exchange Act, broker-dealers providing such services may be paid commissions on transactions for Funds in excess of those that other broker-dealers not providing such services might charge so long as H&F determines in good faith the amount of commissions is reasonable in relation to the value of the brokerage and research services provided, taking into account all of the accounts over which H&F exercises investment discretion. Recognizing the value of the brokerage and research services provided, H&F may allow a brokerage commission or negotiated term in excess of that which another broker-dealer might have charged for effecting the same transaction. H&F will periodically evaluate the overall reasonableness of the brokerage commissions and negotiated terms paid to or made with broker-dealers with respect to client transactions by, among other things, seeking to compare such commissions and terms with the commission rates and negotiated terms being charged by and entered into with other comparable broker-dealers. H&F will also periodically review the past performance of the broker-dealers with whom H&F has placed orders to execute Fund transactions in light of the factors discussed above.

Aggregation of Trades
H&F from time-to-time aggregates (or bunches) the orders of more than one Fund for the purchase or sale of the same publicly traded security. Portfolio managers and traders often employ this practice because larger transactions may enable them to obtain better overall prices, including lower commission costs or mark-ups or mark-downs. H&F may combine orders on behalf of one Fund with orders for other Funds for which it or its affiliates have trading authority, or in which it or its affiliates have an economic interest. To the extent H&F aggregates such orders, it will aggregate such orders as it deems appropriate and in accordance with each Fund’s Governing Documents and in the best interest of each Fund. If an order for more than one Fund for a publicly traded security cannot be fully executed, allocation shall be made based upon a pro rata basis among the participating Funds. please register to get more info

Oversight and Monitoring
The investment portfolios of the Funds are generally private, illiquid and long-term in nature, and accordingly H&F’s review of them is generally not directed toward a short-term decision to dispose of securities. However, H&F closely monitors the portfolio companies of the Funds. In addition, each portfolio company is formally reviewed by its team of investment professionals on a periodic basis and presented to H&F’s entire investment staff. The portfolio company’s deal team generally includes H&F Executives and other investment professionals of H&F.
Reporting

Limited Partners in the Funds typically receive, among other things, a copy of audited financial statements of the relevant Fund within 120 days after the fiscal year end of such Fund, as well as unaudited financial statements of the Fund, including statements of operations, cash flow and changes in capital account balances within 45 days after the close of each of the first three calendar quarters of each year. H&F from time-to-time, in its sole discretion, provides additional information relating to such Fund to one or more Limited Partners in such Fund as it deems appropriate. please register to get more info

For details regarding economic benefits provided to H&F by non-clients, including a description of related material conflicts of interest and how they are addressed, please see Item 11 above. In addition, H&F and its affiliates, in certain instances, receive gifts from, or discounts on products and services provided by, portfolio companies of Funds, the customers and suppliers of such portfolio companies and/or service providers of Funds. H&F has in place a gift policy to address conflicts related to such gifts. please register to get more info

As H&F relies on the “audit exemption” under the Advisers Act custody rule (i.e., Rule 206(4)- 2(b)(4)), Limited Partners in the Funds will not receive account statements from the Funds’ custodians. please register to get more info

Investment advice is provided directly to the Funds and not individually to the Limited Partners in the Funds. Services are provided to the Funds in accordance with the Governing Documents of the applicable Fund. Investment restrictions for the Funds, if any, are generally established in the Governing Documents or offering documents of the applicable Fund. please register to get more info

H&F has adopted policies and procedures setting forth the principles and procedures by which H&F votes or gives consent with respect to securities owned by the Funds. H&F may, from time-to-time, determine that it is in the best interest of a Fund to depart from specific policies described below. H&F’s general policy is to vote proxy proposals, amendments, consents or resolutions, including a vote of a private company that does not involve a proxy relating to the Funds (each, a “proxy” and, collectively, “proxies”) in a manner that serves the best interest of the Fund, as determined by H&F in its discretion, taking into account relevant factors, including: (i) the impact on the value of the returns of the Fund; (ii) alignment of portfolio company management’s interest with the Fund’s interest, including establishing appropriate incentives for management; (iii) the ongoing relationship between the Fund and the portfolio companies in which it invests including the continued or increased availability of portfolio information; and (iv) industry and business practices. Subject to the foregoing, H&F will generally vote in accordance with the recommendation of a portfolio company’s management, as applicable, unless, in H&F’s opinion, such recommendation is not in the best interests of the applicable Fund. Unless the matter is reserved for H&F’s investment committee, such votes must be approved by an H&F Executive on the deal team for the relevant deal. H&F will abstain from voting or affirmatively decide not to vote if H&F determines that abstaining or not voting is in the best interest of the Fund. In making such a determination, H&F will consider various factors, including, but not limited to: (i) the costs associated with exercising the proxy (e.g., translation or travel costs); (ii) any legal restrictions on trading resulting from the exercise of a proxy; and (iii) any actual or perceived conflicts of interest in the proposed action to be voted upon. Conflicts may arise between the interest of the Fund, on the one hand, and the interest of H&F on the other hand. H&F will use its best judgment to address any such conflict of interest and ensure that it is resolved in accordance with the best interests of the Funds and consistent with the Governing Documents. See also Item 11 above – Code of Ethics, Participation or Interest in Client Transactions and Personal Trading - Conflicts of Interest. Copies of relevant proxy logs and copies of proxy voting policies are available to any client or prospective client upon written request to: Hellman & Friedman LLC, 415 Mission Street, Suite 5700, San Francisco, CA 94105, Attention: Chief Compliance Officer. please register to get more info

Not applicable. Item 19. Requirements for State-Registered Advisers Not applicable. please register to get more info