Incu Global operates a Segregated Account Company (SAC) umbrella structure in Bermuda, offering fund managers a cost-efficient route to launching a fund. Each manager has his own cell structure – effectively a sub-fund – whose assets and liabilities are ring fenced from all other cells operating on the platform.
“Each cell can issue its own shares and even though it doesn’t have Ltd, Limited or LP at the end of the name, that is in essence what each cell is; it’s its own legal entity,” explains Anthony D’Silva, owner and director of Incu Global and a former managing director and partner of a large fund administrator.
“There is much more compliance today and managers can easily feel overwhelmed. That is one reason for why platforms are and have become popular. A second reason is cost and speed of entry. Setting up an offshore fund can cost anywhere from USD25k to USD50k or higher depending on the structure and can sometimes take months to setup.
“When we set up a fund under Incu, the initial setup costs to the client are only USD5k and can be set-up and approved by the BMA in four to six weeks.”
Incu supervises the underlying fund managers, providing robust corporate governance, managing the funds compliance and risk without interfering in the investment strategy.
Although Incu works with a number of preferred service providers including Circle Partners, Wakefield Quin and Deloitte, managers are completely free to appoint their own counterparties to the fund. To get a sub-fund up and running quickly, the use of preferred parties is recommended.
D’Silva notes that his focus is on standardising all the processes and procedures in order to allow managers to focus on managing the fund and raising assets.
“This is why we work closely with firms like Circle Partners. The administrator plays an integral role in running a fund. They are the ones reconciling between the fund manager, the broker and the custodian, they value the portfolio, they act as transfer agency: they are the hub around which everything hinges.”
The Incu platform primarily focuses on liquid hedge fund strategies trading listed futures, options and FX. It also has managers running equity long/short and even long-only strategies. D’Silva say that the target returns are 10 to 15 per cent per annum with single digit volatility.
If and when a manager is ready to spin off the Incu platform to establish their own standalone fund, they retain a fully audited track record. There are no lock-in periods and no penalties are imposed for those managers who choose to spin off on their own.
“If a manager does well, builds a track record and attracts more investor capital, they can set up their standalone entity and then, at a specific date, there is an ‘in specie’ transfer,” explains D’Silva. “The investors will move across to the new fund structure, and that structure will own shares in the existing fund. Then in stage two, once all the investors have moved across, we transfer the fund’s positions across to the new entity. There’s a continuation in the structure – there’s no need to liquidate the portfolio and start all over again. Circle Partners, as administrator helps to make this process smooth and almost seamless for managers.
“It’s a well-planned, smooth transition and something we’ve done numerous times with clients.”
