Monday evening (10 Jan 2011) at the Barclays Wealth office in Brook Street, London, saw the official launch of a new product by Ifina. Entitled the Primary Development Fund, it provides a one-stop shop solution for unregulated managers looking to establish a fund umbrella structure and become the investment manager to their sub-funds.
Following a short introduction from Steve McCafferty of Barclays Wealth, Derek Adler (pictured), co-founder of Ifina, presented the fund to an audience that included Mary Chandler-Allen, London representative of the government of the Cayman Islands. Adler began by stating that it was the unregulated smaller start-up managers that would best benefit from the fund. “To get a structure that’s fully regulated and to then build up a track record in an audited and regulated fund is virtually impossible,” said Adler. “Many of the administrators out there will not look at funds with less than USD50million so we, as a company, wanted to provide a cost-effective structure.”
Aside from Ifina acting as fund administrator, potential clients will get MF Global Direct as their broker, Barclays Wealth (Isle of Man) for banking, Baker Tilly for auditing services and Solomon Harris for legal counsel. Fund directors will be also provided.
“Straight away you get the credibility of being attached to all these big names,” said Adler. “A couple of traders with USD2million don’t know how successful their fund is going to be and don’t necessarily want to be regulated from day one. This product provides a great opportunity to unregulated fund managers.” In Adler’s words, Ifina was established to “sweep up the crumbs that larger administrators aren’t interested in”.
Adler said that whilst the fund could be offered out of BVI and Malta, Ifina chose the Cayman Islands because it was “the only jurisdiction where the manager doesn’t have to be regulated”, adding that the Caymans were keen to have unregulated managers controlled through a fund administrator such as Ifina. “We will know what each fund is doing, reconciling each fund’s trades every single day against the various brokers/bankers,” explained Adler.
Simply put, the PDF is an umbrella structure within which a manager can run sub funds. In that sense it’s no different from a regulated, licensed mutual fund. What makes the PDF different is although it’s regulated, each licensed sub fund is ring fenced. “Each sub fund is an individual legal structure with completely different managers,” said Adler. Meaning if one were to implode, the other sub funds would remain unaffected.
Costings for setting up a sub fund under the PDF will be about 40 per cent less than normal charges, whilst director and auditing fees will be 50 per cent lower. Adler concluded the launch with one final comment: “The PDF is a complete turnkey product for the start-up fund manager without any of the difficulties of the usual costs associated with offshore funds.”
After the presentation, Hedgeweek asked Adler whether the effects of Dodd-Frank could generate potential clients: “Yes, absolutely. I’m in discussions with somebody right now to promote this in the US. I think it’s the right time because there are a lot of little guys out there that want the opportunity to be in a controlled environment – they aren’t shying away from it, it just isn’t out there.” Adler confirmed that interest had also started to come from Asia: “We’ve been getting enquiries from Singapore, Taiwan, and Saudi Arabia in the Middle East.”
Filippo Del Canto of City Fund Management attended the launch, and when asked by Hedgeweek about the product’s potential, Del Canto replied: “As a company we get a lot of mandates from smaller structures and I’m confident this will be a product they’ll find to be of interest.”
