Funding managers (IMs) searching for new European markets can launch a fund on a hosted platform or as a stand-alone construction. Luxembourg CEO of Davy International Fund Administration Stephen roberts and director Annette Pile Clarify the important thing factors to think about when making this determination.
A platform hosted by a 3rd social gathering is an umbrella fund construction managed both by a administration firm (ManCo) or by another funding fund supervisor (AIFM). Platforms hosted by third events can assist each UCITS and AIFs and have develop into more and more standard. The platform contains a number of compartments, every with separate liabilities and working its personal funding technique.
An IM contemplating a platform method will doubtless wish to be sure that there isn’t any diminishing of their relationship with their underlying traders or the worth of their model. The institution of the construction with the IM because the designated delegate of the platform maintains the direct hyperlink of the IM with the funding technique of its sub-fund. This ensures that there isn’t any dilution of the IM model when it comes to naming conference, advertising technique or funding historical past. It additionally ensures that the underlying traders determine immediately with the IM and see the platform merely as a supporting operational infrastructure.
This infrastructure is in flip supported by service suppliers, impartial of IMs, who carry out fund administration, custodian and audit features. Hosted platforms can streamline fund set-up by pre-negotiating agreements with service suppliers. This creates a turnkey resolution that IMs can “plug in”, with clear advantages when it comes to velocity to market.
Hosted platforms supply economies of scale and operational and authorized efficiencies and IMs can leverage the information and experience of the platform crew. One other benefit is that the platform is accountable to the regulator, immediately or not directly by way of its ManCo, to make sure compliance and governance of the platform. This enables IMs to concentrate on what they do greatest – funding administration and investor relationship administration – whereas the platform crew, supported by service suppliers, be sure that the platform operates in accordance with rules and business greatest practices.
Hosted platforms have a number of limitations, together with a restricted selection of service suppliers. For instance, administrator, custodian and auditors are chosen on the basic degree. The IM usually solely chooses the sub-distributor, dealer and counterparties for buying and selling. The IM has no consultant on the board of administrators – which sits at umbrella degree – and has restricted entry of the prospectus and different regulatory paperwork.
One of many important causes IMs select a stand-alone platform is that the supervisor’s company tradition favors inside management of funds over outsourcing. A stand-alone platform may additionally be applicable if the IM plans to launch a number of compartments with important property, which might make a stand-alone platform economically viable.
The IM might want to be sure that he has the required monetary assets and experience to function the platform. The prices and advantages of a proprietary platform must be assessed, together with useful resource and time commitments. These would come with hiring administrators with the optimum mixture of abilities and discovering appropriate service suppliers.
Select the proper administration firm
Choosing a ManCo is a crucial determination whether or not you might be searching for a hosted or standalone platform. The ManCo should have the depth and breadth of experience to assist the IM adjust to rules and greatest practices. It’s also essential to evaluate the possession construction of ManCo to make sure that it has the substance, assets and capital on the stability sheet to fulfill the expectations of regulators and traders. Importantly, it’s ManCo’s capital that’s being assessed for adequacy, whether or not the IM fund is on a hosted or stand-alone platform.
Davy International Fund Administration works with funding managers seeking to set up a European footprint by way of hosted or stand-alone platform options in Luxembourg and Eire. Be taught extra www.davygfm.com/platforms
Disclaimer: This text isn’t funding recommendation or a advice and no funding determination must be made on the premise of it. No recipient ought to deal with any of the content material as regulatory or tax recommendation or depend on its obligations. The knowledge contained on this doc doesn’t declare to be exhaustive. It’s for data and dialogue functions solely. Davy International Fund Administration isn’t answerable for actions taken or not taken on the premise of all or a part of the content material of the article.
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