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THE STRUCTURE


Case Studies Case Study 1


CHALLENGE: A family wished to invest with a number of funds and to also take long term strategic stakes in a number of listed companies. The family was not licensed to establish and operate a fund and, importantly, wished to remain anonymous while still maintaining a level of control.


SOLUTION: A bespoke fund was established after consultation with the family on a range of issues. Investments were made into six different funds and stakes were purchased in a number of listed companies. The family invested via accounts they held at various private banks; the private banks invested as nominees so anonymity was further guaranteed. Control was assured as the family were appointed co-signatories to the Fund’s bank account, meaning they had to approve each remittance resulting in additional oversight over the flow of cash in and out of the fund.


management aims and limitations. Funds can be restricted to just one strategy or can operate as ‘Fund of Funds’ allowing the family to invest in other funds and assets. Many questions that each individual family will


need to consider include: Ö What will be the different strategies? Ö What currency will be the designated currency of the fund?


Ö Will the Fund need to hedge currency exposure? Ö Will there be sizeable cash balances? If so, how will they be managed?


Ö What is the fee structure?


Jurisdiction Funds may be domiciled in a number of jurisdictions including BVI, Cayman, Guernsey, Jersey and Singapore. Amongst Asian-based investors, Cayman is the most popular. The interest in Cayman reflects its relative speed, efficiency and cost-effectiveness of both establishment and operation. Investors will seek out jurisdictions which have stronger regulations and/or well developed infrastructure with reputable service providers.


How is the Fund established? Legal counsel will draft a series of documents, however, the key documents are the Trust Deed, the Offering Memorandum, the Investment Management Agreement, the Subscription Application form as well as other Service Provider agreements. Once the Trust Deed and the Offering Memorandum are filed with the Cayman Islands Monetary Authority the fund is officially established. Following that, various agreements are signed with both the investment manager and the service providers who will service the fund on an ongoing basis.


 FAMILY OFFICE: THE FUTURE 43 Case Study 2


CHALLENGE: A family had accounts at four private banks in Hong Kong and Singapore and had allocated a certain pool of money to each one to manage. Unfortunately reporting from each bank was both slow and uncoordinated so the family did not really understand the separate and or total profitability of their investments. The family wished to consolidate the reporting and have increased transparency, flexibility and control over their assets.


SOLUTION: A fund was established that created managed accounts with each of the four private banks replacing the previous arrangements. Each bank continued to invest on behalf of the family based on the previously agreed mandates. Because managed accounts were utilised they offered both greatly increased transparency and control to the family. Thefund acting on behalf of the family was able to access the trades related to liquid assets on a daily basis from each of the four private banks and to provide daily consolidated reporting to the family to show them gains and losses both collectively and by each of the private bank. This resulted in an increased level of reporting, visibility and accountability by the private banks. As managed accounts were utilised the family had the ability to increase or decrease assets managed by each private bank on a rapid basis and additionally to deploy a risk overlay implemented by the platform. The fund did not compete with the private banks, rather it provided an effective and efficient consolidated value add service to the family.


THE STRUCTURE


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