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Cost-efficiencies for start‑ups and family offices

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For many start-up fund managers, the prospect of setting up a hedge fund in today's regulatory climate can feel like swimming upstream. That is why the turnkey solution offered by fund administrators, which allows managers to work with one service provider to get all aspects of their fund up and running, is still so appealing. 

"We are able to offer a one-stop-shop solution and take care of everything when it comes to setting up a fund," says David Payne (pictured), Director of Circle Partners BVI, an independent BVI-licensed global fund administrator, and Business Development Manager of AMS Financial Group, an affiliate of Circle Partners. "One can think of it as the spider web principal, with all the different strands involved at the pre- and post-launch phase managed under one roof."

"This option is highly attractive to start-ups because not only is it more cost-efficient, it also reduces the operational complexity of starting a hedge fund by avoiding multiple service provider relationships," adds Peter Jakubicka, business development at Circle Partners. 

Payne says that the first team that a client engages with at Circle is the business development team. Using a detailed questionnaire, the team collects all the relevant fund information, which could relate to any one of the BVI's various fund structures: an incubator fund, approved fund, private or professional fund, or a BVI public fund.

"Usually clients opt for a BVI private or professional fund but we are starting to field increased interest in the incubator and approved fund products because there are fewer regulatory requirements and subscription requirements," observes Payne.

Once the questionnaire has been completed, Circle's legal team prepares the prospectus, the memorandum and articles of association, and assists with the opening of bank accounts (both operational accounts and brokerage/custody accounts) in close cooperation with BVI-based lawyers. 

The fund is then incorporated in the BVI with Circle Trust Services (BVI) Ltd., after which all the relevant fund documentation is submitted to the regulator on the client's behalf. 

At the same time, Circle Partners will act as the authorised representative, acting as the liaison between the fund and the FSC.

"Once the fund is approved, we can act as the fund administrator and transfer agent across a number of jurisdictions. We have offices in the Caribbean, the US, Europe and Asia so clients know they will always have a local point of contact to deal with. Also, Circle takes care of the annual filings with the FSC and offers an auditing service where we prepare financial statements for submission to the manager's appointed audit firm. 

"We also provide AIFMD, Common Reporting Standard and FATCA services, where we act as the FATCA Responsible Officer for BVI funds and take care of the various filings with the BVI International Tax Authority (ITA)," notes Payne.

That ability to work with one party, removing the administrative burden on the manager, also means that they can focus on the core tasks of creating a successful fund management business: namely, asset raising and marketing the fund. 

"In general we see interest from start-ups and family offices across central and eastern Europe, as well as Hong Kong. We have also started marketing our turnkey solution in the US. Start-up managers have limited assets and need cost-efficient solutions. We believe we can offer just that, and at the same time provide a personal, high-touch service," concludes Payne

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