Information Memorandum (IM)
Information Memorandum (IM) is the document used to present a wholesale investment opportunity to prospective investors. Because wholesale clients are not owed a Product Disclosure Statement or a prospectus, an IM fills the practical role of an offer document without being a regulated one.
Why It Matters
The contrast with a PDS is the point of this entry. An IM is not lodged with ASIC, is not reviewed or approved by ASIC, and has no prescribed content requirements. Two IMs for similar funds can disclose very different amounts of information, and neither is defective for doing so. An investor accustomed to retail documents should not assume an IM has been through any external check, because it has not.
How It Works
- An IM typically describes the fund or opportunity, the manager and its track record, the investment strategy, target return, fee structure, term and liquidity, and the key risks.
- For a mortgage fund it usually also covers lending parameters such as maximum LVR, security types, geographic focus, and how loans are selected and valued.
- It is issued only to investors who have first been classified as wholesale, so eligibility screening happens before the document is provided.
- General law still applies. There is no prescribed content, but statements in an IM remain subject to prohibitions on misleading or deceptive conduct.
Common Use Cases
- Offering units in a wholesale pooled or contributory mortgage fund
- Raising capital for a property development syndicate from wholesale investors
- Presenting a private credit strategy to sophisticated investors
Related Switchboard Resources
- Product Disclosure Statement
- Wholesale Client
- Wholesale Investor
- Managed Investment Scheme
- Loan to Value Ratio
Is an information memorandum the same as a PDS?
No. A PDS is a regulated disclosure document for retail clients with prescribed content requirements. An IM is an unregulated offer document for wholesale investors with no prescribed content.
Does ASIC review an information memorandum?
No. An IM is not lodged with ASIC and is not reviewed or approved by it. The absence of regulatory review is one of the defining features of wholesale offers.
What should I look for in an IM?
At minimum, who the manager is and their track record, how returns are generated, the fee structure including any fees paid to related parties, the term and liquidity, valuation policy, and the lending parameters if it is a mortgage fund. Because content is not prescribed, gaps are as informative as inclusions. This is general information rather than a recommendation, and independent advice is worth obtaining.
General information only. This page explains a term used in Australian financial services law. It is general information, not legal or financial product advice, and does not take account of your objectives, financial situation or needs. Definitions and thresholds change. Confirm the current position on the Federal Register of Legislation or with a qualified professional before relying on it.