The emergence of complex rules and regulations such as AIFMD and FATCA means that any new manager with visions of running their own hedge fund business must think carefully about the best route to market.
For managers who wish to market outside of Europe, then all of the current well established jurisdictions are fine. However, should they wish to market within the EU, then the choice becomes more limited. Luxembourg and Dublin do a fine job of regulating funds but they are predominantly retail and tend to be managed by large institutions.
Malta, by contrast, offers a well regulated choice of jurisdiction that fully supports the AIFMD passport for marketing purposes and is, crucially, a cost-effective option for the aspiring fund managers of this world.
The Maltese speak both Maltese and English despite the fact that it is a sovereign state within the EU, making it the gateway of choice for those emerging investment managers wishing to promote their funds across Europe.
Derek Adler (pictured) is a director and founder member of International Financial Administration Group (`ifina') – a firm that provides turnkey fund services to managers via its Primary European Fund SICAV in Malta and its Primary Development Fund in Cayman.
"We are still championing the smaller managers. As of September 2015, we are offering to set up a fund, within our umbrella structure, for under USD10,000, fully inclusive. On an ongoing basis, our minimum annual costs will stay the same at USD26,500 but we are now offering a fee of USD20,000 for the first year. We are really trying to help start-ups get up and running," states Adler.
Like Ifina's Primary Development Fund in Cayman, the Primary European Fund SICAV provides a turnkey solution for managers wishing to launch in Europe and build a track record without the burden of establishing a standalone fund. Ifina takes care of everything, from setting up corporate bank accounts, dealing with lawyers, appointing service providers, getting service level agreements in place; basically all the heavy lifting.
"We can help an emerging manager get up and running at very competitive pricing. This is a good thing and ensures that there is still a place for innovative and entrepreneurial talent to develop, despite the initial barriers that appeared to be in place," says Adler.
In terms of the structure, the Primary European Fund SICAV is effectively a holding company composed of multiple sub-companies. Each sub-fund that sits beneath the umbrella structure is a separate legal entity. If there were 10 funds on the structure and one imploded, it would not impact the other nine funds at all. Each manager on the platform has full control of the fund's name, branding, and track record.
"Our umbrella structure helps to accommodate the little guy that would ordinarily find it difficult to get off the ground in Europe. We've now got a few sub-funds up and running in Malta. Hopefully the Bloomberg campaign that we run in September to raise people's awareness that it really doesn't need to cost the earth to establish a fund will help to build interest and grow the pipeline even further," concludes Adler