Pre-launch and post-launch support for fund managers
The BVI remains an attractive option to US and Asia Pacific fund managers thanks, in large part, to new structures such as the Approved Fund and Incubator Fund, according to Peter Jakubicka, Business Development Manager at Circle Partners.
Circle Partners (Circle) is an independent fund administrator with offices across the EU, the Americas and Asia and is able to guide start-up managers through the whole process of bringing a new fund to market in all major fund jurisdictions.
“At the pre-launch phase,” says Jakubicka, “we give clients good advice on how to set up a legal structure in the BVI, and what we offer is effectively a turn-key solution. We go through every aspect of setting up the structure and we also have a sister company in the BVI that provides registered office and other ancillary incorporation services and also work closely with other counterparties throughout the set-up process.”
At the post-launch phase, Circle provides ongoing administration services and investor services. It also provides numerous reporting services in response to today’s heavily regulated environment; these include FATCA, CRS, Solvency II as well as reporting locally in the BVI.
Jakubicka notes that Circle can also help advise clients wishing to set up their own management companies in the BVI.
“The Approved Manager regime is a very good product. If you use this in combination with an Approved Fund you’ve got a full fund structure with limited costs as well as limited supervision and regulation imposed. This can help start-ups and emerging managers build up a track record without needing to bear a lot of costs from day one. Once their AUM has grown to a good level, managers then have the option to transfer into a professional BVI fund structure, or even re-domicile to other jurisdictions,” outlines Jakubicka.
Jakubicka explains that the vast majority of Circle’s clients opt to use the Approved Fund compared to the Incubator Fund. There are two limitations to the Incubator Fund: first of all, it can have no more than 20 investors and no more than USD20 million in AUM. Then, after two years, one has to switch it to a BVI Professional Fund.
“The only difference with using an Approved Fund is that you have to appoint an administrator, but people would have to end up doing this anyway after transferring their Incubator Fund and to be able to open bank and brokerage accounts. People generally prefer the Approved Fund as a result but it depends on the individual client and their strategy. There aren’t many other service providers beyond the fund administrator that you need to appoint to these structures,” says Jakubicka.
On average, Jakubicka says it takes three to four weeks to finalise the legal documentation (incorporations, drafting the fund prospectus, appointing all parties to the fund).
“Once that is in place, you can start opening brokerage and bank accounts, which takes another three to four weeks. If it is a counterparty that is not known or used to working with investment funds then it can take longer. We can help clients with the Approved Manager set-up simultaneously with the Approved Fund set-up,” concludes Jakubicka.