Five Essential Questions For Emerging Fund Managers In Cayman

Published date15 February 2023
Subject MatterFinance and Banking, Financial Services
Law FirmCollas Crill
AuthorMs Natalie Bell

Are you looking to launch a fund based in the Cayman Islands? In this article, Collas Crill Partner Natalie Bell summarises the five questions she asks from the outset to set you up for success...

1. What's your background?

Getting to know you is the most important part of the conversation.

Some of our emerging manager clients have spun out of large prestigious managers and are starting out on their own; they know the investment funds industry inside out but may never have been involved in the structuring of the fund before and need our help to guide them through this. Some are absolute experts in the industry in which they are investing but may not have had much prior experience of operating an investment fund and need more guidance on that. Others are managers who have already established successful onshore funds with strong performance and are looking to build on this; for example, they might be looking to add an offshore feeder, convert into a master-feeder structure or create a new stand-alone fund so that they can attract international investors and US tax-exempt investors such as university endowment funds and pension funds.

When we first meet you, there are a few key things we ask - where you are from, where you are resident, what your experience is and why you are considering establishing a fund in Cayman. This background information will already be providing clues as to what structure we are going to need to create and what our role is going to be in the process.

Your location is also critical and will affect the regulatory and tax structuring of the fund and its manager. We ensure that our clients are properly advised on the tax and regulatory implications in their jurisdiction of residence and how these could impact the fund - and, if not, introduce them to advisers.

2. What's your strategy?

We advise managers with diverse strategies from long-short equity hedge funds and quant funds, through to venture capital and private equity funds, real estate investment funds and digital asset funds.

Not only is this the most interesting part of working with managers, and generally what they are most interested in, it is absolutely critical to selecting the best structure and regulatory regime for the fund.

Your fund strategy will determine liquidity of the target assets and whether we should be looking to register the fund as a mutual, open-ended fund to give investors the right to redeem their investment at certain intervals; or as a private fund...

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