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Comparing Private Equity Fund Domiciles 26 April 2012

Comparing Private Equity Fund Domiciles 26 April 2012. Introduction. AIFMD, more politics and jurisdictional competition Private equity focus Parallels are not easy: different laws and different needs different industries beware simple comparisons: a fund is not a fund

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Comparing Private Equity Fund Domiciles 26 April 2012

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  1. Comparing Private Equity Fund Domiciles 26 April 2012

  2. Introduction • AIFMD, more politics and jurisdictional competition • Private equity focus • Parallels are not easy: • different laws and different needs • different industries • beware simple comparisons: • a fund is not a fund • when is regulation regulation?

  3. Introduction (cont.) • Subjective criteria can be decisive: • location • investor sentiment • market trends • the preference of particular advisers • Fiduciary responsibility • multi-jurisdiction businesses • product improvement • Focussing on facts • understanding context • making a direct comparison

  4. Understanding Context

  5. Understanding Context (cont.) Operational analysis: Promoter model No offering or capital raising Risk transparency Transparent costs and proper pricing

  6. Understanding Context (cont.) Operational analysis: Banking model • Problems: • Competition • Conflicts • Secret profits • Skewed pricing • Systemic risks: • Shadow directorship • Cells • Pooled management • Custody and illiquid assets • (Beware too much control!)

  7. Understanding Context (cont.) The PE funds’ spectrum Risk free / transparent Systemic risks / opaque Promoter Model Banking Model Traditional UK Industry (Tax neutral) Traditional Continental Industry (Tax negative) UCITS Derivatives CI UK AIF

  8. Making a comparison*1 *1 Before implementation & AIFMD. AIFMD will have a massive impact. *2The “UK” represents a union of England, Wales and Scotland! This comparison describes complex issues in very brief terms and should not be considered a comprehensive analysis.

  9. Making a comparison (cont.) This comparison describes complex issues in very brief terms and should not be considered a comprehensive analysis.

  10. Making a comparison (cont.) This comparison describes complex issues in very brief terms and should not be considered a comprehensive analysis.

  11. Real Estate (More diverse investors) (Less risk)

  12. Conclusion • Comparisons are not easy • No clear answers, no winners • Established patterns exist • asset classes • products • Nothing happens by chance • The equation is always changing • No room for jurisdictional hubris, focus on: • efficiency and established benefits • service standards and integrity • a proportionate, internationally acceptable framework

  13. Visit our website for more information: www.aztecgroup.co.uk Contact details James Bermingham Tel: +352 24 616 000 Email: james.bermingham@aztecgroup.co.uk Aztec Financial Services (Luxembourg) S.A. 9A, Rue Gabriel Lippmann L-5365, Munsbach Grand-Duchéde Luxembourg

  14. www.aztecgroup.co.uk

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