The Reinvestment feature allows sponsors to assign a Reinvestment Rate to a specific Class or specific Positions. A Reinvestment occurs when a Distribution is made. Reinvestment allows for a Distribution to be retained in a current investment (essentially compounding) or to be used to fund a new investment rather than paying out cash.
IMPORTANT: This feature must be enabled by the InvestNext team. Please contact support@investnext.com to request this feature be enabled for your Portal.
After this feature is enabled for your Portal, you can turn "on" and customize the settings! This article will walk you through how to complete this.
Table of Contents:
TIP: Useful information to gather before proceeding:
The Project and Class that is being exited (if different from the current one)
The Project and Class that investment is going to (if different from the current one)
Any Discount percentages to be applied (Optional) - A Discount may be used as an incentive to keep the investor’s current capital in the Sponsor’s investments.
Part 1: Project - Setting the Path for the Reinvestment
STEP 1: Go to the Project and click on the Classes tab. Then select the Class you need:
STEP 2: On the Class page, click on the 'Unit Price' tab to confirm one is set:
IMPORTANT: If there is no Unit Price set, the Reinvestment feature will not work correctly. Use this article to easily add the Unit Price: Update Class Unit Price (Project)
STEP 3: On the Class page, click on the 'Reinvestment Settings' tab to enter the details:
Enable Reinvestment: Click the checkbox to turn this feature on for this Class.
Reinvestment Route: Click on the drop-down menu to select the Project and Class the Reinvested funds should go to.
Reinvestment Discount (Optional): If there is a Reinvestment Discount, enter it here to tell the system what percentage to take off or discount the Reinvestment.
STEP 4: Click 'Save Changes' when complete!
Part 2: Positions - Add the Reinvestment Rate to Each Investor’s Position
STEP 1: Go to the Investors Position page in the Project. On the left side panel, click the 'Edit' button for the Reinvestment Rate:
STEP 2: Enter any percentage between 0% - 100% that should be Reinvested for that investor (for example, enter "100%" if all of their investment should be Reinvested). Click Update Reinvestment Rate when complete:
STEP 3: Repeat Steps 1 and 2 for each Position, as needed.
Reminder:
A Reinvestment Rate must be entered for EACH Position.
After you run the Distribution and while the Distribution is in the DRAFT state, you can add or change the reinvestment amount.
Part 3: Distribution Plan - When and how the Reinvestment should be made
TIP:
The Distribution Plan settings choose the direction (or where) the Reinvestment is being made:
The Position's Reinvestment Rate setting defines how much is being Reinvested for each Investor. (This will be a percentage of their allocated Distribution.)
STEP 1: Go to the Project’s Distributions tab and click on Distribution Plans:
STEP 2: Select the Distribution Plan:
NOTE: If the Distribution Plan you need is not created yet, you can create one by clicking the '+ NEW DISTRIBUTION PLAN' button.
For example, if you are exiting the Project, use the Return of Capital Distribution or Distribution of Profits (and any other hurdles that need to be paid before the reinvestment is made).
STEP 3: On the Distribution Plan page, toggle "on" the Enable Reinvestment setting:
STEP 4: Go to the Distributions tab and generate the Distribution by clicking '+ NEW DISTRIBUTION':
TIP: You can use this article for a detailed guide on this step: How to Run a Distribution
STEP 5: Review the Distribution in the 'Draft' state to see the Reinvestment Rates and amounts for each Position:
The Positions that are Reinvesting will have the Reinvested amount in the 'Reinvested' column.
The Cash column will show any cash owed to the Positions that are NOT being reinvested.
TIP: You can only review the Reinvestment when the Distribution is in the DRAFT state. After you click Confirm Allocations, no payment record for the Investor will display because there is no money distributed for this investor.
STEP 6: When the Distribution is in the Draft state, you can add or change the Reinvestment Rate by clicking into the Reinvestment Rate column for that investor.
The system will automatically calculate the Reinvested Amount and any Cash to be paid to the investor in the distribution.
STEP 7: After the Confirm Allocations is clicked, the Reinvestment will now show in the same Project or in the new Project.
STEP 8: To see the Reinvestment:
If you are reinvesting the investor's Distribution into the same investment:
Go to the Distributions Payments tab to see any payouts made to the investor.
Go to the Distributions Allocations tab to see the amount of reinvestment made to that position.
If you are reinvesting their distributions into a new Project, go to that new Project, under the Position, you can click into the Position to see the investment.
RELATED CONTENT: