The lifecycle of a first-time fund manager goes through many stages and milestones from start to close. In addition to understanding the underlying investments in a portfolio, today’s managers are also required to have robust investor servicing, accounting, compliance and recording of transactions across all phases of the fund lifecycle.
In a recent SS&C webinar, we were joined by experts from Carne and Dechert to discuss the operational considerations (including UK licensing, fund domiciling and other best practices) for new managers considering setting up a UK fund.
We know that often, managers who spin off are looking to focus on potentially executing deals and raising money from investors. Our panel discussed the aspects that businesses need to consider and the ways in which they can get to market quickly and efficiently.
- What are your licensing options?
First-time managers can consider using an appointed representative to leverage their licensing to get to market expediently. As the manager progresses and becomes more established, they might consider getting their own license. There is a tipping point where operational infrastructure becomes more important and the consideration of industry-standard target operating models becomes pivotal for growth.
- Which jurisdiction should you pick?
The choice of jurisdiction to set up a fund is a decision often driven by the investor. We have seen recent trends towards the on-shoring of funds as LPs are looking for more and more transparency on their investments. Tax-transparent vehicles are proving ever more popular as investors ask for more transparency on structures and where tax is being paid. Working with third-party providers with a global presence will help future-proof your business. They can be your single partner to support your growth across all jurisdictions, without having to use multiple providers in each location you operate. Luxembourg continues to be a jurisdiction of choice in Europe and we are seeing more competition from Ireland with the ILP structure as well as continued activity in offshore jurisdictions like Jersey, Cayman and Mauritius, due to their tax neutrality and strong regulatory frameworks.
- What infrastructure will you need to support the fund?
As we continue to see digital processes play a bigger role across the industry, more managers are now, more than ever, looking to leverage their partner’s technology. The complexity of structures and the sophistication of investors are all driving a greater need for transparency. The proliferation of the hybrid structure has brought an even more complex set of requirements to market. And accessing the retail flow also raises questions on how we report to, regulate and service these types of investors. Partners like SS&C already have Artificial Intelligence (AI), Robotic Process Automation (RPA) and Machine Learning embedded in their operating models that you can leverage to help digitally capture and automate your own business processes. Download our "Technology on a Trajectory: Why Private Markets Need to Invest in Intelligent Automation" whitepaper to discover more.
- How can you help improve the investor experience?
An example of where next-generation technology is already producing value is in the investor onboarding experience. The application of biometrics to digitally onboard investors will be particularly relevant in the retail investor space. Investors are increasingly demanding and looking to aggregate their private market portfolios in order to have a holistic view of risk and performance. The demand for accurate, timely and relevant data is increasing and will only continue to do so.
SS&C enables alternative asset managers and investors to scale and focus on core competencies while streamlining and creating efficiencies across investment and fund operations. Our experts on the ground provide global operations services, fund administration and technology to today’s largest funds as well as deep experience supporting new and emerging fund managers.
We cover all asset classes including private equity, private credit and real assets and with industry-leading experience. SS&C is a trusted partner for supporting the full life cycle, allowing you to pursue new investment opportunities across all verticals without operational challenges or delays. If you missed the webinar, watch the "Starting a Fund Business in the UK: Considerations For a First Time Manager" recording.
Written by Sara Gilbert