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How to Launch a Private Equity /
Venture Capital Fund
Structure, Key Fund Terms,
LP Tips and Recommended
Advisers
IntroductionDear Reader,
The objective of this guide is to provide start-up private equity and venture capital managers with comprehensive, commercial advice on how to form and raise their first fund. Starting a new fund can be a daunting process, made all the more difficult by the lack of information available to help a prospective manager achieve its ambitions, but
this guide seeks to provide you with some clarity.
Investors are key to any fund launch. To help the process of winning over investors, MJ Hudson through its LP Unit (a team of lawyers advising
investors on fund investments) spoke to a number of its clients to gather tips on how new private
equity and venture capital managers should form a fund. Those tips are dotted throughout this guide.
We cannot emphasise enough the importance of third party advisors in the nascent stages of fund formation. This is not meant to be a
self-serving comment (although lawyers have an important role in fund formation), rather we are pointing towards other third party advisors
such as accountants, placement agents and compliance firms, whose guidance is essential
to the success of any fund.
As part of this guide we have listed a number of trusted third party advisors who we have
worked with over the years (see Part 5 –
Recommended Advisers). These third party advisors have been integral to the formation
of many of our clients’ funds.
The decision by the UK to leave the EU in June 2016 ('Brexit') will have an impact on the fund
management industry (eg, how the fund will be regulated, where the fund should be domiciled
and how the fund can be marketed to investors). The ultimate impact of Brexit will depend on
what terms the UK leaves the EU which means this is an evolving area and up-to-date legal and
regulatory advice should be obtained.
Prospective managers need to be acutely aware of the costs of fund formation and the level of
financial commitment required from the manager.
Although a large amount of costs will be covered by the fund on its establishment, a manager will have to cover its own costs and any interim costs out of its own pocket. In addition, managers are
often required to invest alongside investors, so the manager’s commitment to the Fund can be
substantial. To assist with understanding the costs of fund formation we have set out indicative pricing for third party advisors at Part 1 - Planning. These cost ranges are merely estimates, are subject to
fluctuations and other costs may arise.
As specialist alternative assets lawyers, we work with fund managers from inception to winding
up of funds. We have built up a considerable level of knowledge on the various forms a fund can
take, the legislation fund managers are required to comply with and the pitfalls a manager should
avoid. Whilst this guide is intended to be as comprehensive as possible, no two funds are the
same, and no fund is ever really ‘plain vanilla’.
So when you want to start the process of setting up the Fund, please feel free to contact us so we
can help you achieve your goals.
We hope this guide serves you well with your new business plans and wish you the very best of luck.July 2016
With kind regards,Eamon and Rob
Eamon Devlin Managing Partner +44 (0) 20 3203 3207 / Eamon.Devlin@mjhudson.com
Rob Eke Associate +44 (0) 20 3463 3203 / Robert.Eke@mjhudson.com
How to Launch a Private Equity / Venture Capital Fund
2
Index1. Planning
Fund Q&A 6
External advisers 7 - 8
Advisers’ fees 9 - 10
How to choose a structure for the Management Group 11
What are the other business considerations? 12
What are the key considerations on a spin-out? 13
Timetable to closing 14
2. Structuring
What are the key considerations when structuring a Fund? 16
Choice of Domicile 17 - 18
Why Onshore? 19
Why Offshore? 20
What are market terms for a £100 million Fund? 21
What are the key Fund documents? 22
3. Marketing and Regulation
How is a private equity fund marketed? 24
Marketing and Regulation 25
What are the regulatory issues when marketing 26
Marketing by a Sub-threshold AIFM 27
Marketing by a Non-EU AIFM 28
What is meant by "Marketing" 29
What is reverse solicitation? 30
How is a private equity manager regulated? 31
AIFMD 32
How to Launch a Private Equity / Venture Capital Fund
3
4. Typical Fund Terms
What are the typical terms of the Fund? 34 - 36
5. Recommended Advisers
Recommended Advisers 38 - 52
All of the costs and structuring suggestions contained in this guide in the context of a hypothetical Fund with the following headline terms:
Notes on the guide
CarryA share of any profits that the general
partners of private equity funds receive as compensation.
Cornerstone investorAn investor who commits a large
proportion of the Fund’s total commitments and whose commitment will be used to
draw in additional investors.
FundThe investment fund established by the
Management Group.
General Partner The entity that acts as general partner to the Fund, if the Fund is structured as
a limited partnership.
Hurdle A hurdle rate is the minimum rate of
return on a project or investment required by a manager or investor. In order to
compensate for risk, the riskier the project, the higher the hurdle rate.
IRR A measure for evaluating performance of
investments. The IRR rule states that if the internal rate of return (IRR) on a project or investment is greater than the minimum
required rate of return – the cost of capital – then the decision would generally be to
go ahead with it.
Investment Adviser An entity appointed by the Manager to
provide recommendations on investment and divestment decisions. For some
Management Groups, the functions of Manager and investment adviser may
be done by the same entity.
Management Group The Manager (unless the Manager is a third
party service provider), the General Partner of the Fund (and any future General Partners of future funds), the carried interest vehicle, and
an investment adviser, if appointed.
This is interchangeable with ‘GP’ and ‘Sponsor’ in their general senses.
ManagerThe entity specifically appointed to
manage the Fund.
Regulatory Umbrella An FCA authorised entity through which
an unauthorised firm can use its regulatory provisions to (under supervision of the
Regulatory Umbrella) market the Fund and provide investment advice to the Manager.
The private equity and venture capital industries employ an extensive, and sometimes bewildering, body of jargon. We have attempted to limit our
use of jargon to the following key terms:
New private equity or venture capital fund manager.
• A maximum of £100m of
commitments to the Fund. •
Closed-ended (ie, investors are locked in for the life of the Fund).
The investors are a mixture of HNWs family offices, funds of funds and institutions.
• English, Scottish or a Channel Islands Limited Partnership.
• Most of the investment team is
based in Europe.
" A well-known cornerstone investor is usually helpful, not only for the fund but also for strategic advice – however, they might ask for a sweet deal."
Peter Schwanitz, Managing Director Portfolio Advisors
How to Launch a Private Equity / Venture Capital Fund.
4
Fund Q&A 6
External advisers 7 - 8
Advisers’ fees 9 - 10
How to choose a structure for the Management Group 11
What are the other business considerations? 12
What are the key considerations on a spin-out? 13
Timetable to closing 14
1Planning
Fund Q&AWhat is the Fund’s Investment Thesis?
This is a fundamental decision for the Management Group and it is vital that the
investment thesis is able to satisfy the following, in the minds of investors:
1. There are sufficient investment opportunities available for the Fund to
invest all of its committed capital
2. There will be a market to sell the Fund’s investment interests within the
duration of the Fund
3. The Management Group has sufficient skill, experience and relationships to
successfully execute the investment thesis
Ideally, the investment thesis will feel like an extension of the team.
What should I call the Management Group and the Fund?
Whilst a specialist marketing agency can develop a full brand and visual identity for
the Management Group and related entities, there is not always time or budget for this. In any case, care must be taken to ensure that
the name chosen for the Management Group and the other entities does not infringe on
the registered intellectual property of others. The use of a trade mark or naming agent can streamline this process. Care must be taken
not to use a name that may be restrictive, in the future. Ideally, the name of the fund will include
the name of the Management Group and also clearly and succinctly express the investment thesis, so that potential investors are quickly
able to grasp the opportunity presented.
Who will be in the team?
The members of the team must have the requisite skills, experience and relationships
in order to successfully execute the investment thesis and run the Management Group
efficiently. Investors will be more amenable to new teams that have worked together
previously and will want to see attributable track records that demonstrate an ability to make and exit investments in the same or
related areas to the Fund’s investment thesis.
How much money will the Fund raise?
When deciding how much money to raise, the Fund’s operational expenses need to be kept in mind as the management fee
is calculated on the size of the Fund.
The expected investment size and anticipated pace of investment are also
important considerations. NB some regulations (eg, AIFMD) have exemptions
for Funds below a certain size.
What are the type of investors and location?
One of the considerations that is important for the efficient tax structuring of the Fund is the type and location of likely investors. It is
important to carefully consider which investors are likely to be able and willing to invest in a first time manager and to assess their likely
location, if such is not already known. In order to successfully raise a debut Fund, it
can be helpful to create “social proof” around the quality of your investment thesis and
Management Group.
" Proper demonstrable experience of sourcing, executing, managing and exiting several investments as principal is crucial. All components are important, but selling skills are less common."
Neil Sneddon, Director, Private Equity Funds BMO Global Asset Management (EMEA)
Part 1 - Planning
6
External advisers
Compliance Consultants
The Management Group should appoint compliance consultants to advise on acquiring
the necessary regulatory permissions and on the development of a formal compliance
program. Compliance consultants are a cost-effective solution for these matters and will often have close contacts with the necessary
regulators, which can help accelerate the authorisation process.
Fund Accountants
The Fund will also appoint accountants. Together with the lawyers, they will advise on the best domicile for the Management Group
and the Fund taking into account tax efficiency and other factors. The accountants will also provide audit and other services during the
life of the Fund.
Regulatory Umbrella
Many of a Management Group’s activities in connection with a Fund are regulated in the UK. FCA authorisation can take time and be
commercially obstructive, particularly where prospective investments are lined up or capital is ready to be committed. A solution to this is to appoint a regulatory umbrella. This is an FCA authorised entity which extends its regulatory provisions to an unauthorised Management Group and supervises the Fund’s investment
and marketing activities.
Some fund structures will include an entity that acts as Manager of the Fund. Otherwise, the
same functions are performed by the General Partner. A regulatory umbrella can act as this Manager. Using a regulatory umbrella in this
way can save considerable time and expense for the Management Group on the first fund raise, as it cuts out the cost of ensuring all relevant entities are fully compliant with the applicable
fund management regulations.
Placement Agent
Marketing advisers and placement agents advise on the marketability of the Fund to
potential investors. They can assist with the preparation and production of key marketing
documents, including a Fund presentation and the PPM (“Private Placement Memorandum”).
Placement agents with the correct permissions can introduce potential investors
to the Management Group and also act as relationship managers for the Management
Group throughout and beyond the subscription process. Marketing advisers will tend to charge
flat fees for advice and document production and placement agents may receive fees in a
number of ways, including a signing-on fee, a success fee tied to the amounts committed by
investors and, occasionally, a part of the carried interest of the Fund.
The launch of a new Management Group and its first Fund requires a range of advisers to work together.
Part 5 to this guide contains a list of some of our trusted partners who can provide the services listed below. It provides a breakdown of the services they offer, their strengths and their contact details. Indicative pricing for those service providers is on pages 8 and 9.
Below is an overview of the advisers typically required when launching and operating a Fund:
" Ask a trusted adviser to run your fund proposition past experienced LPs who have an active interest in supporting first time funds before lifting your head above the parapet."
William Gilmore, Senior Investment Manager Aberdeen Private Equity
Part 1 - Planning
7
External advisersSwiss Representative
If the Management Group is marketing to qualified investors in Switzerland (who are not regulated investors such as banks), it will be
necessary to appoint a Swiss Representative to ensure that the Fund is promoted in accordance
with Swiss law. It will also be necessary to appoint a paying agent (essentially a bank
account for Swiss investors to pay into). Any marketing to retail investors in Switzerland
would require full authorisation by the Swiss Financial Markets Authority, and is undesirable for a private equity or venture capital manager.
Lawyers
The lawyers appointed by the Management Group will create the documents for the
establishment of the entities making up the Management Group and the Fund and will
lead negotiations with investors and manage the closing of the Fund.
The lawyers will also advise on the most appropriate structure and jurisdiction (including
onshore and offshore options) that will best fit the related investment strategy, and regulatory considerations for managing
and marketing the Fund.
Fund Administrator
The Manager will need to appoint a fund administrator to perform various operational
tasks. Depending on the jurisdiction of the Fund, it may also be necessary to appoint additional
fund administrators for the carried interest vehicle or for an offshore Manager. Appointing
different administrators for the Fund and for the other entities may help avoid conflicts of interest,
but will typically incur additional costs.
The AIFM Directive may require the appointment of a fund administrator if the directive requires
the Manager to separate asset safe-keeping and management functions, and segregate investor
assets from those of the Manager. If the fund administrator is not sufficiently independent for the purposes of the AIFM Directive, the
role of depositary may have to be taken on by an independent third party custodian. Fund
Administrator fees are usually paid out of the Fund’s assets as an operating expense.
Insurance
During the course of its business, the Management Group will require insurance
for various activities. In particular, directors’ and officers’ liability insurance, professional indemnity, and commercial crime insurance are normally required for its operations as a Management Group. When conducting
investment transactions, transactional risk insurance is a prudential step in case of
unforeseen liabilities. For a typical private equity fund (perhaps less so for venture
investments where the controlling stake is smaller), it will also be important for portfolio companies to have adequate insurance. For
each of these, a Management Group will need to have a strong working relationship with an
insurance broker.
"Emerging managers should:- Have verified track record - Raise fund size in line with strategy - 1st fund maximum of eight companies - Next fund step-up maximum of 25% - Full access investors to next
funds + LPAC seat."Jos van Gisbergen, Senior portfolio manager Achmea Investment Management B.V.
“ Remain humble and be honest about past mistakes – everyone makes them and investors look to understand how they have been addressed going forward.”
David Jeffrey, Partner, Head of Europe StepStone Group Europe LLP
Part 1 - Planning
8
Welcome
O N S H O R E
Welcome
O F F S H O R E
Administrator
£12.5k - £18k ONE-OFF
Advisers’ fees - One-OffThis graphic illustrates the fees that
might typically be incurred by a £100m Fund when retaining different advisers.
It should be remembered that other services may be necessary, and that this
would usually increase costs.
Ongoing fees are expressed as a cost per annum.
Typical onshore countries:England • Scotland • Luxembourg
Typical offshore countries:Jersey • Guernsey • Cayman Islands
Administrator
£25k - £40kONE-OFF
Lawyers
£160k - £270kONE-OFF
Placement Agent
£1m - £3mONE-OFF
Accountants
£25k - £95kONE-OFF
Compliance
£5k - £15kONE-OFF
9
Part 1 - Planning
Welcome
O N S H O R E
Welcome
O F F S H O R E
Welcome
O N S H O R E
Welcome
O F F S H O R E
Advisers’ fees - Ongoing
Administrator
£100k - £300kONGOING p.a.
Administrator
£50k - £250kONGOING p.a.
Swiss Representative
£5k - £12kONGOING p.a.
Regulatory Umbrella
£60k - £130kONGOING p.a.
Accountants
£20k - £50kONGOING p.a.
Compliance
£18k - £22kONGOING p.a.
1010
Part 1 - Planning
How to choose a structure for the Management Group
The choice of location and structure depends on the following factors:
1Tax
The location from where the Management activities will be performed – if the activities
are likely to be largely performed from a specific territory, this is likely to create a
taxable presence for the Management Group in that territory.
• The tax profile of the executives – for example
if they are UK resident or not, if they are domiciled in the UK or not. Where individuals are not UK domiciled or resident and activities are wholly or partly carried abroad it may be possible to optimise the tax efficiency of the
arrangements by the use of offshore entities. •
Whether there is likely to be a need to re-invest significant amounts of profits into the Manager/
Investment Adviser entity for working capital purposes. In that case there may be benefits to having a corporate entity as the Manager or Investment Adviser in order to minimise taxation on profits that are reinvested. If it is unlikely for there to be a need to re-invest
significant amounts of profits it may be possible to benefit from Employer’s National Insurance
Contribution savings by setting up the Manager/Investment Adviser entity as
an English Limited Liability Partnership. •
Other personal circumstances of the Management Group members – e.g. plans
for succession, protection of assets etc. This is usually relevant in terms of how the management team hold their interests in
the management structure or the Carry – for example whether they hold the interest directly or via trusts or other structures.
2Investor Demands
A cornerstone investor or significant limited partner may want to take a share in the
ownership of the Manager in order to exercise a degree of control over a newly formed Manager
or ensure that it is properly incentivised.
This may affect the intended structure of the Manager together with the domicile, as the bargaining strength of such investors may
be enough to insist on tax jurisdictions or ownership structures favourable to
their requirements.
3Regulation
Operating and managing a private fund is a regulated activity in most jurisdictions,
including the UK. •
In the UK authorisation is by the FCA and is typically a prerequisite to undertaking certain activities. Those activities include marketing the
Fund, operating the Fund, and managing and arranging the investments made by the Fund. The regulatory burden is prohibitively greater for a fund which includes retail investors, so a
private equity fund is not made available to this group of investors.
• The Manager may be a part of the
Management Group, or it may be a third party service provider. A third party service provider is a common solution for first-time
funds to overcome the time delay in establishing a regulated entity. Further, investors prefer to
see a well-established administration managing the Fund.
• Certain specialised funds may be managed offshore with lighter touch regulation. The
flipside of this is investors’ reluctance to accept an unregulated Manager or one which is subject
to less regulatory oversight.
" Comply with ILPA guidelines / best practices or explain why not."
A large Netherlands-based pensions fund
Part 1 - Planning
11
What are the other business considerations?
Branding and identity
Like starting any business, the establishment of a Management Group
requires many practical steps aside from the legal considerations.
One of the first is the branding and identity of the Management Group: the name, the logo, the image that it will
present to prospective investors and partners.
Office Space
There are many considerations to take into account when selecting the location, including:
the space required both at present and in line with projected business growth
• the likely working patterns of
executives and employees •
it is a location where the target employees currently work
• investors are concentrated there
(such as Mayfair in London) •
that the area is attractive as a working location overall.
IT
Once the Management Group has a brand and a physical presence, the principals can establish an IT system and a website. When
deciding on the content to put onto a website, the Management Group will need to take
into account the restrictions on marketing investment opportunities, with appropriate
disclaimers in place.
Common practice is to place the most sensitive information (from a regulatory
perspective) behind a wall that can only be passed by the user confirming that they
are a certain category of investor.
People and Wellbeing
Many executives and other employees often join new start-up firms from large established
organisations with high quality benefits and HR services. It can be difficult to establish
equally attractive packages compared with such organisations. Certain services such as payroll and benefits such as healthcare and pension
plans can be outsourced to save costs by taking advantage of scale.
Corporate Governance
Corporate Governance is a key issue for investors irrespective of the regulation currently
in force or pending. It is important for the Management Group to create a structure that
will provide sufficient oversight for its legal obligations and also assure investors that it is
competent to control significant amounts of invested capital.
A sound structure will include committees to oversee the management of the Management
Group, the investment strategy and investments, the valuation policy, operational risk, compliance matters, and compensation
and performance reviews.
A sensible plan and growth forecast is an essential piece of homework for any new fund manager. Not only does this exercise encourage good corporate governance but also helps map out potential cost increases
as the Fund grows.
Part 1 - Planning
12
What are the key considerations on a spin-out?
What is a spin-out?A spin-out is where a team of individuals leaves its current employer (whether a
management group or a larger institution, such as a bank) to establish a new business. This
business may have links to the former employer or may be independent.
Depending on the events leading up to the spin-out, there may be the opportunity to
seed the new business with a legacy portfolio. Assuming such a portfolio is in good order, it may be attractive for potential investors to have some visibility on some of the new
company’s investments.
When financing a legacy portfolio, care should be taken to avoid taking investments merely
from dedicated secondary investors, as these may be unable to participate in future Funds
marketed by the Management Group.
EmploymentWhen establishing a Management Group as a spin-out from an existing organisation, or when finding employees from elsewhere,
it is important to consider whether any restrictions prevent the person from joining the Management Group. If restrictions exist,
whether in their current or former employment contracts, legal advice should be sought on how
to overcome them.
Some common restrictions include:notice periods and whether the employee in question is required by their contract of
employment to serve their notice period on ‘gardening leave’ or otherwise.
• good leaver/bad leaver provisions which
may affect their receipt of carried interest or deferred bonuses. A good leaver typically is one who leaves due to retirement at the
normal retirement age, redundancy, death or permanent disability. A bad leaver typically is one who is summarily dismissed or who
resigns. Where a solicited employee stands to lose bonuses or carried interest entitlements as a result of resignation, the issue will need to be
handled with sensitivity. •
non-competition clauses on termination of the employment contract which prevent
the employment for working for a competitor of their current employer for a certain
period of time.
similarly, the employment agreements of the principals of the Management Group
should also be reviewed in the context of the above considerations.
InvestorPrincipals of the Management
Group who have worked previously in funds will need to have their previous contract of
employment reviewed for any restriction on the solicitation of investors who have participated
in funds managed by their previous outfit.
" If you are using a track record in your marketing materials from a previous employer ensure that you have sought written permission to do so."
William Gilmore, Senior Investment Manager Aberdeen Private Equity
Part 1 - Planning
13
Timetable for closingThe timetable below is set out based on the assumptions that the Management Group
has secured a cornerstone investor for first close, and that it will use a Regulatory Umbrella and act as appointed representative to a FCA authorised firm.
If the Management Group is seeking regulation from the FCA for first closing (ie, will not be using a Regulatory Umbrella), then a timeframe of four to nine months for the ‘Seeking Regulation’ step should be anticipated. If there is no cornerstone investor providing sufficient commitments
then a period of two to twelve months of ‘pre-marketing’ would probably be necessary. Once the Fund reaches first closing, and if it has not already obtained enough commitments to meet the cap on fund size, the Management Group will be able to commence investing whilst simultaneously continuing to seek out commitments from investors. This subsequent fund raising period - the Commitment Period – is subject to a limit in the
limited partnership agreement, typically 12 months.
Appointment of advisers
Structuring the management group and business considerations
Marketing the fund
Choice of domicile
Review regulation
Negotiating fund terms
Structuring the Fund
Drafting legal documents
First closing
1 – 3 weeks
1 – 2 weeks
4 – 8 weeks
1 – 2 weeks
3 – 6 weeks
6 – 8 weeks
1 – 3 weeks
3 – 7 weeks
14 weeks
Part 1 - Planning
14
What are the key considerations when structuring a Fund? 16
Choice of Domicile 17 - 18
Why Onshore? 19
Why Offshore? 20
What are market terms for a £100 million Fund? 21
What are the key Fund documents? 22
2Structuring
What are the key considerations when structuring a Fund?
The Management Group will choose a structure under the influence of a variety of factors and interests. The Management Group, influential investors, and any third party service providers will participate in these decisions and have an interest in their outcome. The success of the
Fund can depend on making the right choices at this stage.
FlexibilityIt must be possible to have a flexible structure which can be easily tailored to the investments and the needs of
the investors.
The most appropriate structures for this are the limited partnership and the limited company, as the governing documents can be drafted to accommodate a wide range of interests (within certain legal restrictions).
In relative terms, the limited partnership provides more flexibility
than a limited company.
Limited LiabilityMost fund structures limit the liability of the investors
to the amount they have paid to the Fund.
A protective measure required by investors,
who do not want to assume unlimited
liability for an investment managed
by another.
The structure of choice is the limited partnership. A ‘general
partner’ assumes unlimited liability to third party creditors
for the losses of the partnership and the ‘limited partner’ has its liability to third party creditors
restricted to the amount of capital committed.
The limited partner cannot take part in the
management of the partnership without putting its status as
limited partner at risk of being converted into that
of a general partner.
A limited company also provides investors with limited liability, but it is
typically not a tax efficient structure.
Tax EfficiencyThe key fund structuring consideration is that the Investor should not be worse off
tax wise by investing via the fund structure compared to investing directly. For this reason where returns from the underlying assets are likely to be in their majority capital gains, which are generally taxed at lower rates than income, it is often beneficial to the investor to have a “tax transparent” structure (where the investor pays tax rather than the fund entity) to give
them access to the capital gains directly. Partnerships are often used as fund vehicles because they are generally treated as “tax transparent”.
Where investors have different tax requirements (for example where some
prefer a tax transparent and others a tax opaque structure) it may be possible
to accommodate those via parallel or feeder fund structures but this adds to the
administration burden and cost base.
RegulationIn the UK (for example) only an authorised person may manage
and arrange investments on behalf of others. Having the
general partner as the authorised person is unattractive as it
exposes the regulated entity to unlimited liability.
Typically, a ‘blocker’ vehicle (such as a limited company) acts as
the general partner of the Fund. It then appoints an authorised Manager to operate the Fund.
To reduce the regulatory burden, the Fund will often only be
marketed to certain eligible investors, or require commitments of a specified minimum amount; otherwise regulators such as the
FCA will impose a higher regulatory burden on marketing to protect less
sophisticated investors.
The Fund is typically not regulated; it is only the
Manager and any appointed investment adviser who require
authorisation.
Part 2 - Structuring
16
LP Carried Interest
Carried Interest
InvestmentAdviser
(Limited Liability Partnership)
Interim Manager andRegulatory
Provider(FCA Regulated)
GP(Limited Company)
Carry GP(Limited Company)
Carry Partner(Limited
Partnership)
Fund(Limited
Partnership)
ARA IAA
100%
Management Fee
GP LP’s
MA
MA
GP100%
LP
ManagementTeam
PortfolioInvestments
Investors
Choice of Domicile
Chart 1 - Onshore (English) Manager and English Fund
The diagram in Chart 1 shows an onshore Management Group, Manager, and Fund
structure, each of which is based in the UK. The Fund is a limited partnership registered
in England and the general partner is a limited liability company also incorporated in
England (or Scotland).
By contrast, the carry partnership and its general partner are entities established in
Scotland. This is simply a law-driven requirement,
as English limited partnerships cannot be partners of other English limited partnerships
without adverse disclosure requirements.
The Investment Adviser requires FCA authorisation to provide investment services to the Manager (and ultimately the Fund). An alternative, which is shown in this diagram, is
where the Investment Adviser uses the benefit of a Regulatory Umbrella to give investment advice to the Manager. In this situation, the Manager is
also the provider of the Regulatory Umbrella service. The Manager, which is FCA authorised, appoints the Investment Adviser as its appointed representative to give the Investment Adviser the necessary
regulatory cover.
This is often a short-term measure, until it is commercially viable for the Investment
Adviser to obtain the necessary FCA authorisations to act as the Manager.
Key:LP Limited PartnerGP General Partner MA Management AgreementARA Appointed Representative AgreementIAA Investment Advisory Agreement
Scotland England
Part 2 - Structuring
17
Carried Interest
Carried Interest
LP
ARA
100%
GP LP’s
GP
LP
100%
IAA
Carry Partner(Limited
Partnership)
Management Fee
ManagementTeam
PortfolioInvestments
Investors
Carry GP(Limited Company)
InvestmentAdviser
(Limited Liability Partnership)
Interim Manager andRegulatory
Provider(FCA Regulated)
GP(Limited Company)
Fund(Limited
Partnership)
Choice of Domicile
Chart 2 - Onshore (English) Investment Adviser and Offshore (Jersey/Guernsey) Fund
Key:LP Limited PartnerGP General Partner ARA Appointed Representative AgreementIAA Investment Advisory Agreement
Contractual Relationship Ownership
Jersey / Guernsey UK
An offshore (Channel Islands) Fund with an onshore (UK) Investment Adviser is
shown in Chart 2.
The fundamental structural difference is that the role of the Manager is undertaken by the
general partner of the Fund, which is regulated by either the Jersey or the Guernsey Financial Services Commission. The Investment Adviser
advises the general partner to the same extent as it would advise the Manager in the structure in Chart 1. The Investment Adviser
is an appointed representative of a Regulatory Umbrella until the Investment Adviser obtains
its own FCA authorisations.
An alternative to this structure is where a UK Manager is appointed, replicating the
general partner–Manager–Investment Adviser structure in Chart 1.
This may be more suitable if the Management Group cannot maintain an
infrastructure offshore that is sufficient to satisfy investors that the Fund is properly managed, or comply with the regulations.
Part 2 - Structuring
18
P O S I T I V E SN E G A T I V E S
ON
SHORE
Why Onshore?The following outlines some of the positives and negatives of using an onshore structure.
Fund entities can be established within 5 business days
• Members of Management Group can benefit from the HMRC/BVCA memoranda under which their carried interest should be taxed as capital gains
• As the directors of the fund’s GP can be members of the Management Group, deals can be executed
promptly in comparison with structures in which the directors are third parties
• Cheaper to administer than an offshore fund
• EU-based Managers can elect to become a
full scope AIFM and use the ‘passport’ to raise funds in Europe
• If marketing under AIFMD the Management Group
could be provided regulatory cover by a Regulatory Umbrella, until an FCA application is made to allow a Management
Group entity to step into the role of Manager
Required to publish limited partnership accounts
• Unless VAT-grouped, 20% VAT charged on
management fee, and HMRC can also make VAT enquiries to manager for the previous 4 years
• The names of investors can be accessed at
Companies House, as there is a duty to file records of the admission / retirement of limited partners
• Offshore investors may be required to file with
HMRC for tax reference number
" Actions speak louder than words. Other than a stellar track-record, making a very significant commit-ment of your own capital to the fund is probably the most convincing argument you can make."
Richard Clarke-Jervoise Stonehage Fleming
19
Part 2 - Structuring
P O S I T I V E SN E G A T I V E S
ON
SHORE
P O S I T I V E SN E G A T I V E S
OF
FSHORE
Preferred by certain investors (especially family offices) who are
investing through offshore vehicles •
Details of limited partners are not normally available on public records
• VAT advantages for fees paid to
Management Group, but extent of advantage will vary depending on exact structure
• No requirement to register for HMRC
tax reference number •
No requirement to file fund annual accounts
Offshore administrator and directors required •
Outside of the EU and will therefore only be able to raise funds in the EU through private
placement under different national regimes* •
Transfer pricing risk – the pricing of services provided to the Fund by a UK affiliate (e.g. a member of the Management Group) may be subject to adjustment
by HMRC if not on an arm’s length basis •
The appointed directors will need to convene a meeting in advance of key decisions being taken, which may impact
the speed at which deals / decisions can be taken
" Differentiation and specialist offerings are key for us. It’s not just what you can do better or different than your previous firm but also relative to the market."
Maria Prieto, Adveq
Why Offshore?The following outlines some of the positives and negatives of using an offshore structure.
The information in the table is indicative only and represents our experience of cost and timing when structuring first time funds. *Further to recently published ESMA guidance (July 2015), the AIFMD ‘passport’ will be extended to certain jurisdictions in due course
20
Part 2 - Structuring
What are market terms for a £100 million Fund?
MJ Hudson gathers the latest market intelligence on fund terms and trends. Below is a sample of the information relating to first-time funds that closed in 2015 and 2016. Some of the terms used below are explained further in this guide.
Benchmarking of Fund Terms – Category: Small / Mid-Market European Venture Funds (All closed in 2015 and 2016)
Structure of Fund and Jurisdiction
Closed-ended limited partnership. In order of popularity: England, Scotland,
Channel Islands, and Luxembourg.
General PartnerTypically based in same jurisdiction
as the Fund.
Investment AdviserTypically based in London –
regulated by the FCA or an Appointed Representative arrangement.
Carry Vehicle PartnerClosed-ended limited partnership,
based in the Fund’s jurisdiction.
Target Fund Size£100m.
General Partner/Team Commitment
Between 1.5% and 6%. The mean amount is 3%, and it is always at least 1%.
Term7 to 11 years, which may be extended for up to 2 additional 1-year periods. Investor consent for second extension is a common
investor protection.
Investment PeriodThe Fund’s investment period is typically
between 4 to 5 years.
Management FeeDuring the Investment Period, the
Management Fee is normally within a range of 1.75% to 3% per annum.
After the Investment Period, this is reduced to a range of 1.5% to 2% of
actively invested capital.
Transaction FeesAdvisory fees, transaction fees,
commitment fees, break-up fees and other similar fees generated will be 100%
offset against management fee.
Carry15% to 35% - note possibility of ‘ratcheted’
carry, but this is not standard.
Hurdle6% to 9%, annual compounded. Some
U.S. and some European venture funds have no hurdle, but this is rare and not
for emerging managers.
Key Person ProvisionAll have Key Person provisions which
give Investors the right to suspend the Investment Period.
No Fault RemovalAfter the first or second anniversary of final closing, Investors holding at least
between 50% and 85% of Total Commitments may vote to remove the General Partner.
" Have a vision for what you want to become. Be able to articulate why you have a compelling relative competitive position and why the strategy you target should be in LP portfolios."
Jim Strang, Managing Director Hamilton Lane
Part 2 - Structuring
21
What are the key Fund documents?
Limited Partnership Agreements (LPA)
This is the main document for the Fund. It establishes the agreed legal structure
and sets out the rights of the investors, their arrangements with the Manager and the operation of the Fund. Also need for LPA
the carry vehicle.
It will typically provide for the:investment objectives of the Fund and any
investment restrictions •
allocation of profits and losses, carried interest and management fees, and other
economic terms •
distribution waterfall of the Fund and any other distributions
• payment of Fund expenses
• administration and resolution of
conflicts of interest •
obligations of capital contribution and any variance of those obligations
• provisions for investors who default on their capital obligations and in particular punitive
penalties such as the forced sale of their current holdings, interest payments or the loss of certain rights as an investor
• financial reporting
• transfer and exit provisions.
Subscription booklets
These are completed by the investors to commit to the Fund and will set out their
individual capital contributions together with representations and warranties by both the Manager and the investor. The investor will
also be required to fill out a questionnaire to confirm their eligibility to invest in the Fund under applicable laws and to provide other
information required by the Manager.
Legal Opinions
The legal opinions are provided by the Fund’s legal advisers for the benefit of the investors. They affirm that, for example, the Fund is duly incorporated and that the investors have only
limited liability.
Side letters
A side letter is a separate agreement between the Manager and an individual investor. Such an agreement will set out a variation of the
standard terms of the Fund.
The reasons for side letters vary: they are frequently used to accommodate a particular
investor’s regulatory or tax requirements.
Another reason may be that a particular investor’s contribution allows it to command
better terms on which to invest.
The LPA will usually contain a ‘Most Favoured Nation’ clause which prevents more
advantageous terms being offered to a single investor (unless for tax or regulatory reasons)
without those terms being offered to all investors, or at least, all investors with equal or
greater commitments to the Fund.
" My assumption is that a new manager has a track record of investments. If a manager that hopes to raise capital from LPs does not have a track record, then they should make some invest-ments on a deal-by-deal basis until they have a relevant track record."
Tom Eriksson, aeris CAPITAL
Part 2 - Structuring
22
How is a private equity fund marketed? 24
Marketing and Regulation 25
What are the regulatory issues when marketing 26
Marketing by a Sub-threshold AIFM 27
Marketing by a Non-EU AIFM 28
What is meant by "Marketing" 29
What is reverse solicitation? 30
How is a private equity manager regulated? 31
AIFMD 32
3Marketing and Regulation
How is a private equity fund marketed?
Potential investors are usually known to either the Management Group or the placement agent. Other marketing materials will be distributed when seeking commitments to the Fund, such as the private placement memorandum (see below). The fund will not typically
be marketed to the general public or through general solicitation channels (such as trade publications), due to regulatory constraints.
Funds are typically marketed on a small scale basis to potential investors who are often:
Pension funds Financial institutions Foundations
Family offices High-net worth investors
Sovereign wealth funds Funds of funds Insurance companies
Part 3 - Marketing and Regulation
24
Marketing and RegulationWhat are the "road show" materials?
The road show materials will identify the Management Group and its principals. The
documents will summarise the proposed terms of the Fund and are used to secure the support
of Cornerstone Investors. These will usually include an investor presentation, highlighting the
attractive features of the Fund, its investment thesis and the Management group, as well as a series of supporting documents, including a due
diligence questionnaire.
What is the private placement memorandum (PPM)?
The private placement memorandum is the key marketing document for the Fund.
It will provide to investors: •
an executive summary of the Fund and its principal terms
• a detailed explanation of the key commercial
terms of the Fund, including -
the investment strategy of the Fund -
the investment process, particularly where the Manager will use its own unique connections and
expertise to secure investments -
the market environment and opportunities for investment in the target sector (if any) of the Fund
- an overview of the Management Group and
its principals, in particular their track record and relevant expertise. For a spin-out, the
Management Company itself will not have a track record, and the principals should consider
whether the terms of their employment with their previous employer restricts their ability to market
their own personal track record -
the performance of previous/similar investments and the calculation of the IRR
• a summary of the risk factors
" My tip for new managers is that they should be flexible with fees and structures regarding a new fund. We hear too often that 2%/20% is market standard."
Tom Eriksson, aeris CAPITAL
" Ensure you have a compelling and differentiated strategy on which your team has consistently delivered strong returns and can continue to do so."
Mark Nicolson, Partner SL Capital Partners LLP
Part 3 - Marketing and Regulation
25
What are the regulatory issues when marketing?
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Marketing a Fund is regulated in most jurisdictions (by the FCA in the UK and the SEC in the U.S., for
example) and any cross-border fundraising will need to comply with various local regimes. In the UK,
promoting a Fund is possible without authorisation where the promotion is only to a limited class of investors such as investment professionals, high net-worth companies and sophisticated or high
net-worth individuals.
Also, by limiting the promotion to a certain number of investors, or by imposing a certain minimum investment threshold, the requirements for an
offering document compliant with the European Union Prospectus Directive can be avoided.
Even if an exemption is intended to be used for promotion, it is necessary to seek authorisation for the Manager (unless an authorised third party service provider is used as the manager) and the individual
employees. Marketing a fund in Europe has been complicated by the AIFMD, and its
inconsistent implementation across the European Union.
If the Manager is a full scope AIFM it will be able (in theory) to market the Fund to professional
investors across Europe without further notification or authorisation outside of the home member state of the AIFM (but some countries
require a depositary). For Managers that are either sub-threshold AIFMs or non-EU AIFMs, the
position is markedly different depending on the member state that the marketing will occur in.
Part 3 - Marketing and Regulation
26
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Marketing by a Sub-threshold AIFMIf the Manager is a sub-threshold AIFM
(basically a venture or private equity manager with less than €500 million of assets under
management, assuming no leverage) it may be able to market, depending on the
implementation of AIFMD by different member states. There is no harmonisation of laws
in this respect. The below map is an outline guide, but if planning to market in any of the states shown below, legal advice should be
sought from local lawyers first. The map shows whether marketing is possible: (i) with or
without prior notification (i.e. a declaration of intent to market); (ii) with prior authorisation
(i.e. marketing cannot commence without the authorisation of the state in question; or (iii)
not possible at all. Norway and Switzerland are included on the map, despite not being member
states of the EU, as they have enacted laws that implement, or are similar to, provisions
of the AIFMD.
Key: Possible, with or without prior notification Possible, subject to prior authorisation Not possible
Part 3 - Marketing and Regulation
27
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Marketing by a Non-EU AIFMUnder the AIFMD, marketing by non-EU AIFMs in Europe is regulated. The AIFMD sets out a minimum set of compliance standards to be
met by such managers, but member states have some latitude to impose additional requirements (and some have). One of the main requirements
is for the manager to register with the financial authority in a relevant member state. The
following map sets out the requirements to be met by a non-EU AIFM. The map shows whether
marketing is possible: (i) with or without prior notification (i.e. a declaration of intent to market);
(ii) with prior authorisation (i.e. marketing cannot commence without the authorisation of the state
in question; or (iii) not possible at all.
Key: Possible, with or without prior notification Possible, subject to prior authorisation Not possible
Part 3 - Marketing and Regulation
28
WHAT ISMEANT BY
“MARKETING”?
The AIFMD regulates the management and marketing of funds. The AIFMD defines
marketing as a direct or indirect offering (i.e. publicly) or placement (i.e. to a limited group) of fund interests at the initiative of the AIFM
or on behalf of the AIFM to investors in the EU. There is variation across the EU as to what
activities constitute marketing and what can be considered “pre-marketing” (i.e. activities that will not trigger the obligation to register
in accordance with the AIFMD). For example, marketing may mean circulating final versions
of documents; circulating draft documents; or hosting roadshow events setting out the
proposed terms of a fund.
" Be as scientific as possible about your value creation methodology and build a strong pipeline that confirms the quality and scale of your opportunity set."
James Roebuck CLEARSIGHT
Part 3 - Marketing and Regulation
29
WHAT ISMEANT BY
“MARKETING”?
What is reverse solicitation?Marketing under the AIFMD is defined as an offer or placement of interests
in a Fund at the initiative of the Manager.
The AIFMD provides that marketing is not intended to capture investments into funds
that are made at the initiative of the investor (referred to as reverse solicitation). As with
marketing as a whole under the AIFMD, a large amount of latitude has been given to member
states to interpret and implement this into law.
Reverse solicitation should not be seen as a means of side-stepping the regulations. Interpretation of the reverse solicitation
provisions have been generally restrictive across the EU. For instance, in the UK the
FCA has stated that to demonstrate reverse solicitation an investor would need to confirm in writing that it approached the Manager before the offer or placement taking place. The FCA
has stated further that Managers should not be able to rely on these confirmations
to circumvent the AIFMD – that is, they should be genuine.
Raising capital for a first time fund is difficult and doing so without proactively
approaching investors adds to this challenge. Any attempt to rely on reverse solicitation for a Management Group in this position should be treated with extreme caution – it is not a
credible marketing strategy.
the analyses underlining the investment strategy of the Fund and the assumptions that have produced
the projected returns
the intended investments of the Fund – whether broken down by geography, industry or asset class, and the diversity of the investments
the track records and backgrounds of the principals of the Management Group – including each principal’s contribution and
the extent to which that contribution positively (or negatively) influenced the investment performance (compared with other factors)
the key commercial and legal terms of the Fund.
How do private equity investors conduct due diligence on the Management Group?The due diligence process is time consuming but of vital importance. It is the opportunity for potential investors to investigate the Management Group and the proposed Fund. The Management Group will have to make available a wide range of information for inspection in either a data
room or by the distribution of a pack containing the information. The potential investors will be looking for information concerning:
Part 3 - Marketing and Regulation
30
How is a private equity manager regulated?
Jurisdiction
The regulation of the Fund and the Manager depends on the jurisdiction in which they are
incorporated (or otherwise established) and the jurisdictions in which they operate. Managers operating funds within or from the UK will be regulated by the FCA, subject to applicable
exemptions. For a Manager based in the US, the potential extent of applicable regulation is
greater with both federal and state laws, although there may also be applicable exemptions.
Certain offshore jurisdictions may offer a lighter regulatory regime but many investors will prefer
that the stronger compliance standards of the U.S. or the EU are met.
Authorisation
In the UK a Manager cannot perform ‘regulated activities’ or issue ‘financial promotions’
without authorisation or an exemption. To do so is a criminal offence and any agreements
entered into would be unenforceable. Regulated activities include managing an alternative
investment fund and issuing a financial promotion. Any employees or officers of
authorised firms who carry out key functions in that firm must also be authorised as individuals by the FCA. A financial promotion is an invitation
or inducement to invest, issued by a UK firm or to UK investors. Exemptions can be sought where the investors addressed have sufficient
knowledge and understanding of the investment to understand the risks, or meet certain criteria
for personal wealth.
Going offshore?
Typically, regulated activities require the Manager to be authorised when undertaken in or from the UK. However, there is an exemption for overseas persons from the requirement to be authorised, in the case of some regulated activities. Nevertheless, the limited scope of
the exemption means that, in practical terms, a non-UK Manager that wishes to market, operate or otherwise arrange investments
in a fund within the UK would be required to act by way of an authorised person or to seek
authorisation itself.
Application process
FCA
In the UK, firms must apply to the FCA, outlining the scope and type of activities for which
authorisation is sought and including a detailed business plan and financial plan. This should
take into account the minimum regulatory capital that the firm must hold. The firm must also set out the governance and structure of the firm and how it will comply with ongoing
regulatory requirements.
Finally, to demonstrate suitability, the key principals will need to be listed, along with
their relevant experience.
As the application process can take around nine months, authorisation should be sought
early, in order to allow sufficient time for regulated activities such as marketing before
an anticipated first close.
Extending existing regulatory permissions
CERT I F I CATES
If the Manager is formed from an existing regulated business, it may be possible to apply to amend existing authorisations to cover the
new activities which require authorisation.
This will save time and expense compared with an application for a new authorisation.
Consultation with the compliance consultant will ensure that the correct authorisations can
be obtained with the minimal expense of money and time.
Can another firm’s authorisations be used?
The FCA permits an authorised business to extend its regulatory permissions to an
unauthorised firm (appointed representative) via a regulatory umbrella.
This is a useful way of getting a new Management Group up and running. However,
it is not possible to rely on an appointed representative relationship to manage a fund, only to market one or to provide investment
advice to a Manager. Therefore, this approach has to be combined with either an offshore
manager or a third party service provider (often the principal to the appointed representative
firm) acting as Manager.
Part 3 - Marketing and Regulation
31
AIFMDThe AIFMD imposes a number of
requirements on an AIFM. The following are a sample of the most significant
• a minimum regulatory capital requirement
of at least €125,000 of the AIFM and a further amount to cover professional
negligence risks •
conduct of business and governance standards which require that systems are
in place to manage risks, conflicts of interest and liquidity
• remuneration policies and practices in
place which, for senior staff, discourage excessive risk taking
• independent valuation procedures
for the assets of the AIF(s) •
restrictions on the delegation of functions by the AIFM
• greater disclosure of information
to improve transparency.
What is the impact of AIFMD on a private equity manager?
The Alternative Investment Fund Managers Directive (AIFMD) effectively came into force
on 22 July 2014. Managers who are within the scope of the AIFMD are described as Alternative
Investment Fund Managers (AIFMs) – those individuals or legal persons whose regular
business is the management of (one or more) Alternative Investment Funds (AIFs) which will, broadly speaking, include all non-UCITS funds
together with some managed accounts.
The provisions of the AIFMD are extensive and will require careful consideration when
planning a fund and consultation with compliance experts. Compliance with the
AIFMD is an obligation of the Manager as AIFM rather than the Fund. In order to market a
European fund across the European Economic Area, a manager will require a ‘passport’ to do
so – which is granted when compliance with the AIFMD is met and maintained.
The provisions of AIFMD are applicable to the Manager in the following circumstances:
• it is based in the EU (although lighter regulatory
compliance is applicable to managers with assets under management under certain
thresholds), regardless of whether the Fund, as the AIF, is based in the EU or outside of the
EU (a “full scope AIFM”); or •
it is based outside of the EU, but it is marketing the Fund in the EU, regardless of whether the
Fund, as the AIF, is based in the EU or outside of the EU (a “non-EU AIFM”).
All EU based AIFMs will be required to be authorised and subject to supervision in their
home state. An AIF can only have one AIFM and it must have one. Where the AIF is ‘internally
managed’ (e.g. a company that does not appoint a manager) it will need to be authorised as
the AIFM. Under the AIFMD, managing the AIF includes providing portfolio management and
risk management services. The provision of risk management services has not frequently been referred to in private equity fund agreements.
The Management Group will also need to consider the wording of the agreements vesting
managerial responsibility on the Manager with the general partner, and the agreement
between the Manager and an investment adviser, if any. If the Manager in effect delegates
managerial responsibility to an investment adviser, then the Manager will not be the AIFM.
There is also a lower level of compliance for the Manager from the requirements of the
AIFMD (a “sub-threshold AIFM”) if it manages AIFs with aggregate assets under management
of less than: •
€500 million, provided that there is no leverage and investors do not have
redemption rights for the first five years; or •
€100 million including assets acquired by leverage.
A Manager will have to opt-in to full compliance with the AIFMD if it is a sub-threshold AIFM but the Management Group wishes to take
advantage of the management or the marketing passporting provisions.
An alternative route for a European sub-threshold AIFM is to be registered as a
European Venture Capital AIFM (“EUVECA”) or a European Social Entrepreneurship Fund AIFM (“EUSEF”). The principal advantage of both the
EUVECA and the EUSEF regimes is that they permit registered managers to market their
funds across Europe with the passport (i.e. on the same terms as a full-scope AIFM) without
having to comply with the regulations that apply to a full-scope AIFM.
Management Groups looking to use a third party service provider for the Manager should note that the service provider may only do so
on a full-scope basis, and that, if appointed as a sub-threshold AIFM, the Manager’s assets
under management may over time exceed the thresholds (due to third parties also engaging
the Manager’s services), meaning that full compliance with the AIFMD will be necessary. " Be flexible in considering alternative
structures for your first fund. Investors backing standard 10 year funds look for a substantial track record and a long trajectory of working as a team, which first-time funds usually lack."
Maria Prieto, Adveq
Part 3 - Marketing and Regulation
32
What are the typical terms of the Fund? 34 - 36
4Typical Fund Terms
What are the typical terms of the Fund?
Investment StrategyThis sets out the types of assets to be invested
in; the market sector in which to invest; the geographic region of investment; or a
combination of all three. A credible investment strategy will be backed by up-to-date research
and analysis.
Investment RestrictionsThe investment restrictions will complement the strategy. The Management Group agrees to limits on the composition of the portfolio to make the Fund more commercially attractive
as an investment. Common investment restrictions include: a limit on investment in public companies; a minimum size for
holdings of unlisted companies (particularly for buyout funds); and the maximum percentage
of the Fund that may be concentrated in the investment in a portfolio company. The
investment restrictions will often be capable of being waived by the investors or the investors
committee.
Fund SizeThe PPM will often set out the target size of
the Fund, which is the total amount of investor commitments that the Management Group will aim to raise for the Fund. In addition, the LPA will often state a cap on the size of the Fund.
For a first time fund, these figures will typically be lower than for the average established fund. When calculating these figures, the Management Group will typically take into
account: (i) the strength of their fundraising ability; and (ii) the investment opportunities which are, or are likely to be, available to the
Management Group.
Term of FundThe time considered by the Management Group
to be sufficient to implement its investment strategy and generate the target returns. A
typical term is 10 years, with extensions at the discretion of the Manager or by agreement of the investors. The number of extensions,
and the decision making process that leads to them, depends on the strength of bargaining power between the Management Group and
the investors. In practice, if the Fund still holds assets at the end of its life, the Manager may be able to agree with investors ad-hoc extensions
to the Fund’s term to maximise the best available price, and to conduct an orderly wind-
down of the Fund.
ClosingsInvestors are admitted to the Fund at a closing.
There is usually a long-stop date for the admission of investors (typically, one year after
first close), and the period between the two dates is aptly named the commitment period. Investors admitted at a later closing have their
commitments backdated to the first close, allowing them to participate in investments that have already been made but have not yet been
disposed of.
In this situation, it is common market practice for investors to pay the following amounts:
• to the existing investors, the amount necessary to equalise the current capital contributions by
investors, excluding the amounts drawn down to pay the management fee
• to the existing investors, an amount equivalent
to interest on the equalising payment above
• to the Manager, an amount equivalent to the
management fee that would have been paid to the Manager, had that investor been admitted at
first close, plus interest on that amount.
Investment periodThe investment period is the time (usually
five years) during which the Fund can make investments. It may be extended at the
discretion of the Manager, or with the consent of the investors. Typically, a Manager will be able to make further drawdowns for investments for a limited time after the end of the investment period. The types of investments that could be made are follow-on investments (investments into an existing portfolio company), and follow-up investments (investments into a company for
which the Manager had reached an advanced stage at the end of the investment period).
GP CommitmentThe Management Group will often be required
to invest in the Fund to show to potential investors that it is sufficiently self-interested
in the success of the Fund. The amount of this investment will often range from 1.5% to 6% of the total commitments to the Fund. For a first fund, the Management Group may find it difficult to secure the amounts necessary to fund this commitment. Instead it may be funded by an equivalent deduction from the
management fee or the carried interest. This is often resisted by investors, and paradoxically,
is more successfully negotiated by more established management groups.
Part 4 - Typical Fund Terms
34
What are the typical terms of the Fund?
Management feeThe management fee is paid to either the
Manager or the general partner to cover the overhead costs of operating the Fund and
making investments. It is not intended to be a source of profit for the manager, or at least, any
suspicion that it is a source of profit rankles investors. During the investment period the management fee is calculated as an annual percentage of the committed capital of the
Fund. The percentage is historically 2%, but for larger funds of more than one billion in capital commitments, 1.5% is more common. After the
investment period, it is generally accepted by managers and investors that the basis of the
calculation of the management fee changes to a percentage of the capital actually invested, with suitable adjustments for write-downs
or write-offs of investments.
Carried interestCarried interest is the performance incentive
for the Management Group – it is a share of the profits (typically 20%) made from investments. The distribution of profit is often referred to as the waterfall. In the early years of the private equity industry, payments of carried interest
were calculated on the realisation of each investment – regardless of the performance of other investments – a ‘deal-by-deal’ waterfall.
Over time, this has been modified in market practice to take into consideration previously realised losses and permanent write-downs
of investments – the ‘loss carry-forward’ model. A deal-by-deal arrangement is more advantageous for the Management Group,
as they receive carried interest on profitable realisations sooner. Investors will strongly resist a deal-by-deal arrangement unless
provisions for clawback are provided.
Clawback/escrowThe clawback provisions will enable the Fund to recover overpayments of carried interest from the recipients within the Management Group.
As security for this, the recipients will often be required to hold a percentage of the carried interest in escrow for a period of time. The
clawback provisions are more keenly negotiated where a deal-by-deal waterfall is used.
Abort costsThe Management Group will incur costs evaluating and negotiating a proposed
investment or sale that fails to complete. If the transaction did complete, the target
company would typically pay the costs of the Management Group. When aborted, a well drafted LPA will provide the Management Group with the means to recover (through
the Manager) these costs from the Fund, but investors often seek to cap these amounts. The Management Group may argue in turn (albeit with some risk) that a cap on abort costs may
create an economic incentive to complete transactions that are actually less-than-ideal investment opportunities in order to avoid the Management Group bearing the abort costs
incurred over the cap.
Transaction feesTransaction fees are paid by the portfolio companies to the Management Group for
various services performed by the Management Group to those portfolio companies under a management services agreement, or an
investment agreement. Most investors believe that transaction fees create a misalignment of economic interests between the Management Group and the investors. Therefore, an offset of 100% of transaction fees received by the
Management Group against the management fee is a typical provision in an LPA.
Key personsInvestors look to the individual members of
the Management Group, particularly in senior leadership roles, as part of their overall due
diligence before making a commitment to the Fund. A departure therefore of a key senior
person (especially during the investment period) would raise a great concern with investors
about the future performance of the Fund, and about the capability of the Management Group
to make investment decisions with a diminished team. This can apply equally with concerns that a key person is still a part of the Management
Group, but is no longer devoting sufficient time to the management of the Fund. Key person
provisions establish thresholds for non-performance that if met, trigger a suspension
of the investment period, and sometimes, after a cure period, termination of the
investment period.
Removal of GPThe investors may remove the GP on a fault
basis (such as criminal wrongdoing, insolvency, or serious breach of the LPA), and some LPAs
will also provide for removal of the GP on a no-fault basis. Negotiations often take place
over the consequences of such a removal: if on a no-fault basis, the level of Management Fee compensation paid; and in all cases, the right
to receive Carried Interest and the treatment of the general partner’s commitment.
Part 4 - Typical Fund Terms
35
What are the typical terms of the Fund?
Management of conflictsOver time, the Management Group (it is hoped)
will manage multiple funds with different vintages and investment strategies. Even if
there is an overlap where investors are invested in multiple funds of the Management Group,
there will be conflicting responsibilities to the investors of each fund. These responsibilities include dedicating time to the management of the Fund (as discussed in respect of key
persons), and a responsibility to allocate the most appropriate investments to the Fund.
The risk of conflict is reduced if the LPA only permits raising successor funds with
similar investment strategies to the end of the investment period or the substantial investment of the Fund’s capital. In practice, larger groups
will have overlapping investment periods, and allocation between the funds will be as
set out in the LPA and (often) an overarching allocations policy.
ExpensesThe expenses of the Fund are divided into
several categories. Organisational expenses are generally those incurred during the
fundraising process such as travel, printing, legal and accounting. These expenses will
usually be borne by the Fund but depending on the complexity and size of the Fund, they may
be capped. If they are capped, the Management Group (through the Manager) will cover the shortfall. Other expenses are the ongoing
operational expenses of the Fund, the day to day costs of: purchasing and holding investments;
third party expenses; and other necessary costs. These are borne out of the capital
commitments of the investors and are typically not capped. The Manager and the Management Group will be expected to bear its own expenses
out of the management fees.
Part 4 - Typical Fund Terms
36
Recommended Advisers 38 - 52
5Recommended Advisers
Recommended AdvisersPlacement Agents
Credit Suisse Private Fund Group (“CS PFG”)
Core Services: Advisory
• Project management
• Fund placement
• Raising of capital for initial deals
• Formation support
Strengths:Fused model – project management
and distribution ensuring more effective/efficient execution
• Have raised a significant number of
first-time fund successfully – most over-subscribed, across multiple geographies
• Low volume of clients to ensure
each is a success
Contact Details:Warren Hibbert
+44 (0) 20 3696 4701 +44 (0) 79 5258 8464
wh@asantecapital.com
25 Old Burlington Street London, UK W1S 3AN
Core Services: Fully integrated global placement agent
and advisory group •
Substantial project management resources in New York, London and Hong Kong
to support all aspects of fundraising •
Global distribution capabilities via eight dedicated local offices
• Innovative secondaries advisor providing
customised liquidity solutions •
Dedicated roadshow co-ordination team
Strengths: Experienced market leader: Established in 1994, CS PFG has a proven record across all
fund sizes, geographies and strategies •
Fundraising success: CS PFG has worked with clients raising over 330 funds, aggregating
over $430 billion in capital commitments, including over 80 first-time funds
• Full-spectrum service: Specialist teams dedicated to client due diligence, project
management, placement and distribution, legal and compliance, global roadshow
co-ordination, and market research
Contact Details:Michael Murphy
+44 (0) 20 7883 5816 michael.j.murphy@credit-suisse.com
London
Kevin Naughton+1 212 538 0788
kevin.naughton@credit-suisse.com
New York
Thomas Swain+852 2101 7623
thomas.swain@credit-suisse.com
Hong Kong
Asante Capital Group
Part 5 - Recommended Service Providers
38
Recommended Advisers
Part 5 - Recommended Advisers
39
Placement Agents
TMR Strategic
Acanthus
Core Services: Advice on fund strategy
and positioning •
Advice on fundraising raising options/solutions
• Full fund placement services
• Strategic advice on all key issues
affecting new managers
Strengths: Specific focus on European small end funds
• Particular expertise in relation to
first time funds and non-conventional fund structures
• Senior attention (partner only firm)
Contact Details:Tim Reid
+44 (0) 20 3178 7611 +44 (0) 7775 630236
tim.reid@tmrstrategic.com
23 Berkeley Square London W1J 6HE
Core Services: Mid-market focused private
equity fund placement •
Perform raises of both established and emerging managers
• London-based, serving only European
fund managers, but raising capital globally •
No real estate or infrastructure – only corporate PE
• Focus on primary fundraising,
with secondary activity only in support of a primary mandate
Strengths: Exclusive focus on European,
specialist strategy, country-focused private equity funds, so deep and
relevant relationships, ensuring high conversion rate
• Specialists in spin-out teams, first-time funds, restructurings and successions
• Combined project management and distribution model, again leading to
better conversion rates
Contact details:Wilf Wilkinson
+44 (0)20 7317 5856 wilf@acanthus.eu.com
10-12 Blandford Stree London W1U 4AZ
Recommended AdvisersLawyers
MJ Hudson
Core Services:Fund and management
group structuring •
Tax structuring •
Lead negotiations with investors and manage the closing of the fund
• Regulatory advice and guidance
Strengths:Uniquely connected in the alternatives
industry. Willing to make valuable business introductions for emerging manager clients
• Seamless integration with offshore
offices and with service providers both onshore and offshore
• Technical ability and depth of experience that you would expect from the world’s largest law firms, but do not, however, share their overheads, their inflexibility
or aversion to change
Contact Details:Eamon Devlin
Managing Partner
+44 (0) 20 3203 3207 +44 (0) 7970 304 542
eamon.devlin@mjhudson.com
8 Old Jewry London, UK EC2R 8DN
Part 5 - Recommended Advisers
40
Recommended AdvisersInvestor Relations and Communications Advisory
The Guerin Group
Core Services: Development of key messaging and
positioning strategies for fund managers •
Review and redevelopment of fund marketing materials PPM, pitchbook, teasers etc
• Content, design and production of full range of investor communications and
reporting materials •
LP perception studies to provide feedback on recent activities and to
evaluate LP appetite
Strengths: Experience working with emerging
managers on first and second funds and a full complement of other structures
• Deep understanding of what investors
are looking for and how to communicate with them effectively
• Wide industry network
Contact Details:Matthew Craig-Greene
+44 (0)20 3463 3215 matthew.craig-greene@farblueir.com
8 Old Jewry London EC2R 8DN
Core Services: New Fund analysis resulting in optimal
strategic positioning and development of key messaging to optimize fundraising
• Full and Express Consulting: Marketing materials
critique, development and design including Pitchbooks, PPMs, DDQs, Investor Reports
• Investor Perception Surveys that measure
strength, weaknesses and competitive positioning •
IR Program design, development and staffing recommendations
• First meeting strategy, presentation training
Strengths: Fundraising materials that differentiate the
offering and appeal to a global audience •
Understanding of LP expectations regarding fund offerings
• Access to current thinking of (and candid
feedback from) institutional LPs globally via investor perception survey projects.
Contact Details:Gail Guerin
Office +1.610.526.1698 Mobile +1.610.203.6404
gail@thegueringroup.com
www.thegueringroup.com
Far Blue IR
Part 5 - Recommended Advisers
41
Recommended AdvisersInvestor Relations and Communications Advisory
Foundation FS
Core Services: Develop fundraising strategy and positioning
• Create fund marketing materials and dataroom
• Communication strategy and
presentation training •
Third party referencing •
Project management and LP relations
Strengths: Specialist in working with
first-time, and/ or niche funds and investment strategies
• Capacity to offer hands-on support,
fully tailored to client needs •
In-depth understanding of sophisticated LP universe
Contact Details:Sarah Clarke
+44 (0) 1200 447408 sclarke@foundationfs.com
Part 5 - Recommended Advisers
42
Recommended AdvisersAdministrator
Aztec
Core Services: Managing all investor call / distribution notices
• Preparation and issuance of quarterly accounts
• Formulating and implementing detailed
compliance procedures in relation to applicable regulatory requirements
• Resolving standard investor and
promoter queries
Strengths: Experienced in working with emerging
managers on first and second funds and a full complement of other structures
• Deep understanding of what investors
are looking for and how to communicate with them effectively
• Staff retention rate in excess of 90%
Contact Details:James Duffield
+44 (0) 203 8180 250 james.duffield@aztecgroup.co.uk
Warnford Court 29 Throgmorton St London EC2N 3AT
Core Services: Administration (Company Secretarial/
Accounting and Reporting/Investor Relations/Regulatory Reporting)
• Depositary (AIFMD Reporting)
• Investor Services (FATCA & CRS)
• Fund Governance Services (Risk Management/
Portfolio Management/Director Services)
Strengths: Ipes is a leading provider of outsourced
services to Private Equity in Europe •
By understanding the challenges facing investment managers, including increasing regulatory, reporting and investor demands,
they innovate by developing new services to help their clients succeed
• Every client has a dedicated support team,
which is led by a Senior Client Lead •
Ipes uses Capital Tracker technology built with Private Equity in mind. Capital Tracker’s SWIFT
connectivity enables straight through processing
Contact Details:Nigel Strachan
+44 (0) 7700 703862 nigel.strachan@ipes.com
Ipes, 1 Royal Plaza St Peter Port
Guernsey GY12HL
Ipes
Part 5 - Recommended Advisers
43
Recommended AdvisersAdministrator
Mainspring
Sanne Group
Core Services:Setup of many fund structures
• Fund accounting
• Quarterly reporting
• Fund administration
• Custody
Strengths: Mainspring engages closely with fund
management teams of first and second time funds, and gives a highly tailored service
reflecting the requirements and style of the fund manager and the investors
• Highly experienced team that administer
many fund structures including private equity, venture capital, EIS and IHT funds (where
can act as custodian). •
Hands on experience of investing and operating funds ourselves and so are able
to anticipate real world problems and devise practical solutions.
Contact Details:Stephen Geddes
+44 (0)20 3019 0900 sgg@mainspringfs.com
8 Old Jewry London EC2R 8DN
Core Services: Fund Administration
• Depositary (necessary only for
full scope AIFMs) •
Director services •
SPV administration
Strengths: Sanne Group is a listed business – truly
independent and our continuity provides a long-term focus on client service
• Highly specialists experts operate in
divisions focused around client asset classes of PE/RE/Debt
• Global reach – with 9 international offices as
well as further strategic alliances enabling true cross-border services
Contact Details:Rhea Hood
+44 (0) 20 3327 9717 rhea.hood@sannegroup.com
Part 5 - Recommended Advisers
44
Recommended AdvisersAdministrator
SS&C
Core Services:All accounting & administration
for the entire structure •
AML on investor subscription and investor relations
• Company secretarial
• Loan services if debt fund
• Trade services if hybrid fund
Strengths: We own all our technology which is licensed
to third parties including other administrators •
We cater for client requirements through flexibility and experience
• Independent and unlikely to be bought
Contact Details:Alex Tarantino
+44 (0)20 3310 3134 atarantino@sscinc.com
Part 5 - Recommended Advisers
45
Recommended AdvisersCompliance
ACA
Core Services: Project management of the FCA
Application process •
Drafting a bespoke compliance framework •
Comprehensive on-going retained compliance consulting
• Regulatory reporting for FCA filings,
notifications or clearance events •
Independent Compliance Audit Series, iCAS - a flexible series of focused
independent reviews
Strengths: Institutional Operational Structure supporting our consulting teams
• Broad Client base: ACA currently provides
support to more than 1,300 clients - including 53% of the top 100 Private Equity funds and eight of the
top 10 (as listed in the May 2015 PEI 300) •
International Capabilities: The team in London combines extensive experience as
UK regulatory consultants and includes former FSA and SEC examiners
Contact Details:Andrew Welch,
Head of European Business Development +44 (0) 207 042 0500
andrew.welch@acacomplianceeurope.com
Panton House, 25 Haymarket London SW1Y 4EN
Cordium
Core Services: Compliance
• Financial Regulatory Accounting
• Corporate and Personal Taxation Services
• FCA regulatory Hosting
• Software and Training
Strengths: Largest Compliance Consulting firm in the UK
with global reach providing a depth and range of compliance services across FCA compliance, tax compliance and Financial Regulatory Reporting
• Developed superior web-based regulatory
software platforms servicing its global user base and supported by a dedicated in-house
software development team •
Aim to assist a firm throughout their journey – from formation through to ongoing support
Contact Details:Sarah Donnelly, Sales Director sarah.donnelly@cordium.com
Norfolk House, 31 St James’s Square
London SW1Y 4JJ
Part 5 - Recommended Advisers
46
Recommended AdvisersAccountants/Audit
Core Services: Audit
• Tax structuring
• Ongoing tax compliance
• Outsourced accounting
• Valuations
Strengths: Externally verified as No.1 for client
service for the last four years •
Holistic approach taking account of all stakeholder interests
• Extensive experience of negotiating and
agreeing valuations with HMRC
Contact Details:Vanessa Bradley (Audit)
+44 (0)20 7893 2398 Vanessa.Bradley@bdo.co.uk
Nicoletta Papademetris (Tax)+44 (0)20 7893 3230
Nicoletta.Papademetris@bdo.co.uk
Susanna Macklin (Outsourced Accounting)+44 (0)1473 320 750
Susanna.Macklin@bdo.co.uk
Diane Elliott (Valuations)+44 (0)20 7893 2979
Diane.Elliott@bdo.co.uk
Grant Thornton
Core Services:Audit and financial reporting advisory
• Independent valuation services
• Regulatory assurance reporting and
advisory services •
Tax compliance and advisory •
Transaction support services
Strengths: Experienced in working with start-up
operations through to mature businesses •
Specialist private equity valuations team •
Skilled tax team with experts in the various disciplines who specialise in private equity
Contact Details:Sam Pointon
+44 (0)20 7728 2167 sam.w.pointon@uk.gt.com
Terry Heatley +44 (0)20 7865 2685
terry.j.heatley@uk.gt.com
BDO
Part 5 - Recommended Advisers
47
Recommended AdvisersRegulatory Umbrella
Midmar Capital
Core Services: Initial consultation on FCA regulatory
requirements •
Hosting the client as an Appointed Representative
• Acting as interim fund manager
(including sub-threshold AIFM if required) •
Managing the FCA authorisation application process
• Ongoing compliance support
Strengths: Each of the principals of Midmar Capital has over 25 years’ experience in financial services
and has held senior fund management and compliance positions
• During the past five years, they have
focused upon start-ups and can provide testimonials from a strong stable of successful
new investment firms that they have helped to establish
Contact Details:Kevin Gallacher, Partner
+44 (0) 207 947 4436 +44 (0) 7815 556933
kevin.gallacher@midmarcapital.com
7 Stratford Place London W1C 1AY
14 - 18 Hill Street Edinburgh EH2 3JZ
Lawson Conner
Core Services:Regulatory Hosting/Appointed
Representative Services •
FCA Application Assistance •
Ongoing FCA Compliance Support •
AIFM Manager Services
Strengths:Industry leading regulatory hosting
platform approved by institutional investors and pension funds
• Extensive experience with global regulators
with a strong focus on risk management •
Award-winning Manager platform fully approved by institutional investors
Contact Details:Daniel Maycock
+44 (0) 203 696 2560 dmaycock@lawsonconner.com
Part 5 - Recommended Advisers
48
Recommended AdvisersRegulatory Umbrella
Tower Gate Capital
Core Services: Appointed Representative and full outsourced AIFM solution
• Risk Management
• Long-term growth support and
operational services •
Ongoing training and compliance support
• Investment strategy and
structuring advice
Strengths: We are made up of qualified investment
professionals and ex-fund and asset managers and who have a solid understanding of their
clients’ investment strategies •
Not just a short term fix model - they provide a long term outsourcing model
with fund management services •
Offer a full outsourcing solution so that its clients save considerable costs plus can
provide highly respected NED’s, good corporate governance, strategic input, and instil
confidence in investors by offering a layer of operational excellence
Contact Details:Bobby Console-Verma
+44 (0) 203 078 8888 bobby@towergatecapital.com
8 Old Jewry London EC2R 8DN
Part 5 - Recommended Advisers
49
Recommended AdvisersInsurance Broker
Marsh
Core Services: Advisory and transactional services
relating to directors and officers (D&O) liability, professional indemnity, crime,
cyber and related insurance for PE & VC structures
• Transactional risk insurances
• Investee company level insurance
Strengths: Design and implementation of bespoke technical policies that encompass the
entire organisational structure •
Highly-experienced insurance practitioners able to provide advice at each step of the
fund life cycle •
Extensive global claims management and experience
Contact Details:Neill Harman
+44 (0)20 7357 1281 neill.d.harman@marsh.com
Rawden Leigh+44 (0)20 7357 1209
rawden.leigh@marsh.com
Marsh Ltd, Tower Place East London EC3R 5BU
Part 5 - Recommended Advisers
50
Recommended AdvisersSwiss Representative
Montfort
Core Services: Swiss representation for private equity and hedge fund managers
• Hands on advice on Swiss fundraising
landscape and LP universe
Strengths: Simplicity
• Transparency
• Represent 100+ PE firms incl.
6 of top 10 global GPs
Contact Details:Roman Pelka, CEO
+41 22 508 1547 roman.pelka@montfortfunds.com
Hugo Fund Services
Core Services: Swiss representative for foreign funds
marketed to qualified investors only •
Arrange the appointment of the paying agent •
Assist with documentation to reflect required legal language
Strengths: Alternative investments specialists who
understand the market very well •
Systems driven on-boarding process leading to simplified and streamlined process
• Leader in the Swiss representation space
Contact Details:Colin Vidal
+41 22 707 41 95 cov@hugofunds.ch
6 Cours de Rive 1204 Geneva Switzerland
Part 5 - Recommended Advisers
51
Recommended AdvisersSwiss Representative
ASR
Core Services: Swiss Representation of foreign
funds in Switzerland •
Assistance in asset raising in Switzerland
Strengths: Extensive experience in legal, regulatory
and distribution aspects within the alternative investment industry
• Professional, pragmatic and cost effective
Contact Details:Anne Simond
+41 22 354 2533 anne@armswissrep.com
Route Cite-Ouest 2 1196 Gland
Switzerland
Part 5 - Recommended Advisers
52
Shervin Shameli Partner
shervin.shameli@mjhudson.com +44 (0)20 3463 7009
MJ Hudson was established in 2010 as the first ever boutique law firm created to provide specialist legal advice to the alternative assets sector. Representing over 300 asset managers (GPs – private equity and venture) and 60 investors (LPs - funds
of funds, family offices and sovereign wealth funds) through the Firm’s LP Unit, our client base is drawn from the industry it serves.
MJ Hudson is the alternative asset law firm
Jonathan Bale Advocate & Principal
jonathan.bale@mjhudson.je +44 (0)1534 712 911
Martin Cornish Partner
martin.cornish@mjhudson.com +44 (0)20 3463 3221
Ronan McCann Associate
ronan.mccann@mjhudson.com +44 (0)20 3463 3211
Hannah Daly Associate
hannah.daly@mjhudson.com +44 (0)20 3463 3211
Robert Eke Associate
robert.eke@mjhudson.com +44 (0)20 3463 3203
Eamon Devlin Managing Partner
eamon.devlin@mjhudson.com +44 (0)20 3463 3207
Benjamin Aller Partner
benjamin.aller@mjhudson.com +33 (0)1 83 81 50 01
Karma Samdup Partner
karma.samdup@mjhudson.com +44 (0)20 3463 3220
London - Paris - Jersey - Guernsey - Zurich
Matthew Wrigley Group Partner
matthew.wrigley@mjhudson.com +44 (0)1481 741 201
Mark Silveira Senior Associate
mark.silveira@mjhudson.com +44 (0)20 3463 3213
Emmanuel Amos Senior Associate
emmanuel.amos@mjhudson.com +44 (0)20 3693 7042
Core practice areas:M&A
• Venture
• Fund Formation
• Secondaries
• Primaries
Partners:15 partners and a team of 61
• At least one third of our team has
worked inside asset managers (eg, Credit Suisse, Man Group, 3i,
Coller Capital) ensuring MJ Hudson fully understands alternative assets
Growth:MJ Hudson has experienced
huge growth:Past 18 months, number of MJH
partners has almost doubled from 7 to 15 and number of clients is now 389
• Past 18 months, team numbers have
increased by 205% to 61 •
Past two years – opened these new offices: Paris, Guernsey and Zurich (in addition to London and Jersey)
MJ Hudson is the alternative asset law firm
Ted Craig Partner
ted.craig@mjhudson.com +44 (0)20 3463 3216
Saloni Joshi Partner
saloni.joshi@mjhudson.com +44 (0)20 3463 3200
Andrew Mills Partner
andrew.mills@mjhudson.com +44 (0)20 3463 3214
London – Paris – Zürich – Jersey – Guernsey
T +44 (0)203 463 3200
www.MJHudson.com
This guide, How to Launch a Private Equity / Venture Capital Fund, is intended to provide general information about forming a fund, which may be of interest. It is not intended to be comprehensive nor to provide any specific legal advice and should
not be acted or relied upon as doing so. Professional advice appropriate to the specific situation should always be obtained.
MJ Hudson would like to thank the advisers who inputted into this guide, who are listed at Part 5.
Special thanks to the MJH team, particularly Robert Eke.
MJ Hudson Limited, solicitors, is a limited company registered in England and Wales (no. 08607159), and is authorised and regulated by the Solicitors Regulation Authority of England and Wales (no. 605223).
© MJ Hudson July 2016
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