Dermot Butler Opalesque Industry Update - Custom House Global Fund Services Limited has today announced the official launch of The Nascent Fund SICAV P.L.C., an open-end Maltese domiciled SICAV umbrella fund platform that will provide an efficient and cost-effective first-stage solution for managers wishing to start their own new fund and establish a track record.
The Nascent Fund is a highly economical structure for start-up managers, with a relatively small amount of initial capital, wishing to establish and control their own fund vehicle, established as a segregated Sub-Fund of The Nascent Fund. The Nascent Fund will specifically appeal to emerging managers with USD$ 5 to USD$ 10 million of assets under management seeking a way to avoid many of the substantial initial and annual expenses of a stand-alone fund and wishing to establish a track record prior to marketing the fund to professional investors.
The Nascent Fund has been structured so that each Sub-Fund will be entirely and legally segregated from each other Sub-Fund so as to avoid any cross-collateral risk. The portfolio of each Sub-Fund will operate through a separately incorporated trading company with each Manager having full autonomy as the Investment Manager of its own Sub-Fund. Nascent’s flexible structure will allow the Manager to separate from the umbrella platform at any time to re-establish his Sub-Fund as a stand-alone independent entity transferring ownership of his trading company, and thus its track record, to the new fund. It is envisaged that most managers will do this with a two to three year period.
Commenting on the SICAV launch, Dermot Butler, Chairman of Custom House said:”The launch of Nascent comes in response to the growing investor interest towards smaller and early stage managers which often outperform bigger, more established counterparts. The market lacks a credible and cost-effective solution to support bright emerging managers who are having difficulty, in the present market environment, in raising seed capital from anywhere except their family and friends and therefore find themselves unable to launch funds with sufficient critical mass to operate economically in their first few years. The Nascent Fund provides exactly the platform of support that these managers need whilst they establish themselves and build their track records and assets under management”
The primary business of Custom House is the provision of full administrative services to Alternative Investment and Hedge Funds, Fund of Funds, as well as Managed Accounts and Managed Account Platforms. In addition to its Malta head office, Custom House, which was established in 1989, also operates through offices in Chicago, Dublin, Guernsey, Luxembourg, The Netherlands and Singapore, and has approximately 290 staff worldwide. With approximately US$40 billion in assets under administration, the firm provides administration services to more than 200 managers, trading through approximately 600 investment funds, for over 200 of which Custom House provides daily dealing NAVs. www.customhousegroup.com
• The Investment manager must be regulated in a jurisdiction approved by the Maltese Financial Services Authority and comply with all relevant EU and Maltese regulations for the duration of the Sub-Fund’s participation in The Nascent Fund.
• The Directors of the Nascent Fund have the right to close any sub-Fund that has not reached US$15 million AUM within two years of the date of commencement of that Sub-Fund.
• The Directors of the Nascent Fund will have the right to convert a Sub-Fund into a stand-alone fund when the AUM of a Sub-Fund rises to more that US$40 million.
• An initial set up fee of Euro 8,000/US$10,000 will be charged by Custom House to the Sub-Fund Manager to cover establishment costs for the Trading Company and ‘hosting’ the Sub-Fund on The Nascent Fund platform. This compares to the typical cost of establishing a stand-alone hedge fund or CTA fund in any of the recognised offshore jurisdictions which can range from US$30,000 to US$125,000 depending on fund structure and complexity and the selection of advisors.
• In addition to a discounted administration fee, Custom House will charge an annual operating fee of 20 (twenty) basis points to each Sub-Fund, subject to a cap.
• Custom House envisages that it will take no more than 3 weeks to set up and launch new Sub-Funds on the Nascent Fund platform, subject to prompt receipt of all due diligence information from the manager, as required by the MFSA.