final marketing funds in the us and singapore
TRANSCRIPT
Marketing Funds:
Raising capital in the US and Singapore
Ed O’Bree
Head of Funds and Broking
Bovill Ltd
September 2016
Jennifer Hoopes
General Counsel and Head of Global
Foreside
Ed O’BreeHead of Funds and Broking
Bovill Ltd
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Singapore: the landscape
Insurance centre
Family Offices
Regional hub
Sovereign Wealth
Institutional capital
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Marketing Restrictions
General prohibition
Five most common exemptions:
- Registered prospectus (retail)
- Small offers exemption
- Private placement exemption
- S.304 (institutional investors)
- S.305 (accredited investors)
Reverse solicitation
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Institutional investor exemption
S.304 SFA
Relatively narrow definition of institutional investor
No need to register the fund with MAS
Regulatory disclosures required on promotional material
But, definition changing imminently
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Institutional investors: consultation definition
Singapore government
Sovereign wealth funds
Non-Singapore central governments
Banks
Finance companies
Insurance companies
Licenced trust companies
Holders of capital markets services licences
Pension funds and collective investment schemes
Certain bond dealers
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The “305 exemption”
Two categories of investors:
- Those investing S$200,000 as principal
- Accredited investors
Fund must be recorded on the MAS list of restricted schemes
Offering memorandum
Two restrictions:
- No advertising permitted
- Not if prospectus is registered
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Accredited investors (s.305)
• with net personal assets of S$2m
• with net financial assets of S$1m
• with annual income of S$300k
• (other than LLP) where each Partners is an A.I.
• (or similar) with net assets of S$10m
• where all shareholders are A.I.s
Individuals
Partnership
Corporations
• of a trust where trust property is S$10m
• of a trust where all beneficiaries are A/Is
• of a trust where all settlors are A.I.s
Trustees
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Registering restricted foreign schemes
There are 5,000+ schemes on the MAS List of Restricted
Schemes:
1: Fund Manager must be licenced / registered for fund
management in its home country.
2: Information Memorandum, with disclosures, submitted to
MAS
3: Electronic application submitted by the fund, its manager or
agent.
4: Annual declaration is submitted by the Responsible Person
or their agent. Initial registration fee: S$250.
Annual fee: S$50
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Private Banks
• Slow moving
• High charges
Singapore IFAs
• Access to HNWIs
• Networks not so developed
• Initial charges of up to 4%
Introducers
• Institutional capital
• Niche operators
• Up to 20% of AMC and
performance fee
Third party distribution
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Promoting your own fund
Like the UK, promoting in itself is not a regulated activity
May need a licence or registration
If setting up a Singapore entity:
- Base capital S$250,000
- 1 x SG director
- Proportionate compliance function
- Fees
On balance, unlikely to be necessary
Good for family office networks
Our integrity.
Our guidance.
Your success.
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Jennifer Hoopes
General Counsel and Head of Global
Foreside
Accessing the U.S. Marketfor Non-U.S. Investment Managers
September 29, 2016
Portland, ME – Philadelphia, PA – Boston, MA – Columbus, OH
Our integrity.
Our guidance.
Your success.
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Overview
• Accessing the U.S. Market
• Products
• UCITS/SICAVs
• U.S. Registered Funds
(mutual funds or ETFs)
• Non-Registered Funds
• Distribution Options
• Advantages and
Disadvantages
• Regulatory Issues
Our integrity.
Our guidance.
Your success.
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Products – UCITS/SICAVs
• Offerings to the NRA/NRC (non-
resident alien/non-resident client)
market.
• Generally offered through large
U.S. broker-dealers (Pershing,
Morgan Stanley, Merrill Lynch).
• Need connectivity through the
NSCC (National Securities
Clearing Corporation), a
subsidiary of the DTCC.
Our integrity.
Our guidance.
Your success.
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Products – Registered Funds
• Mutual Funds
• Series Trust (established
structure and service providers)
• Stand-Alone
• Exchange Traded Funds (ETF)
• Series (reliance on existing
SEC Exemptive Relief)
• Stand-Alone (need to obtain
SEC Exemptive Relief)
Our integrity.
Our guidance.
Your success.
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Products – Registered Funds
• Register as Investment Adviser
• Establish Board of Directors
• Identify Service Providers:
• Transfer Agent
• Custodian
• Administrator
• Principal Underwriter
• Fund Counsel
• Trustee Counsel
• Audit Firm
Our integrity.
Our guidance.
Your success.
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Products – Non-Registered Funds
• Offered pursuant to Regulation D
to “Accredited Investors”
• Subject to the Investment
Company Act of 1940 and relevant
exemptions
• Registration as a Investment
Adviser (exemptions and limited
registrations possible)
• Offering documents best practice,
not required
Our integrity.
Our guidance.
Your success.
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Distribution Options – Regulatory Structure
• Generally, you must be registered
as (or with) a U.S. broker-dealer or
exempt from registration if you are
marketing securities in the U.S.
Our integrity.
Our guidance.
Your success.
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Distribution Options – Overview
• Issuer Exemption
• Chaperoning (SEC Rule 15a-6)
• Hire a third-party marketing firm
• Build internal distribution function
– register sales people with U.S.
broker-dealer
• Establish proprietary U.S. broker-
dealer
Our integrity.
Our guidance.
Your success.
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Distribution Options – Exemptions
• Issuer Exemption
• Difficult to meet all
requirements of exemption
• If transaction-based
compensation, cannot use this
exemption
• 15a-6 Exemption: Chaperoning
• Limited marketing to certain
types of institutional investors
Distribution Options – Third Party Firms
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Advantages
• Established sales staff
and channels
• Manager does not need to
register as a broker-dealer
• Third party firm
responsible for
compliance with U.S.
regulations
Use of a Third-Party Marketing Firm
Disadvantages
• Cost – generally % of
AUM
• Internal sales staff cannot
get compensated
• Relying on third party firm
to tell your story
Distribution Options – Internal Sales Force
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Advantages
• Your sales force does the
selling
• Sales force can get
compensated
• Broker-dealer responsible
for compliance with U.S.
regulations
Build an Internal Sales Force, registered with
U.S. Broker-Dealer
Disadvantages
• Sales people need to
take FINRA exams to be
registered
• Cost – generally flat
and/or per representative
fee
• Manager cannot get any
portion of compensation
Distribution Options – Proprietary Broker-Dealer
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Advantages
• Your sales force does the
selling
• Sales force can get
compensated
• You control your own
destiny
Establish Proprietary Broker-Dealer
Disadvantages
• Cost – registration and
operating costs
• Required to have certain
principals, annual audit,
compliance program
• Lengthy registration and
approval process (9-12
months)
Our integrity.
Our guidance.
Your success.
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Conclusion
Tremendous opportunities to
access the U.S. market with
registered and unregistered funds.
Compliance with the regulatory
regime is critical to your success.
Our integrity.
Our guidance.
Your success.
Foreside Financial Group, LLC
Three Canal Plaza
Portland, ME 04101
Jennifer Hoopes
+1 (207) 553-7138
www.foreside.com
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Contact Information
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Questions?