leaders in launching funds for more than 30 years - ey• risk management ... • robin hood...

Leaders in launching funds for more than 30 yearsEY’s hedge fund services

1Leaders in launching funds for more than 30 years |

Leading service provider for start-ups and spin-outs We have been the dominant accounting firm for start-ups and spin-outs for more than 30 years in the audit, tax and advisory space.

EY Emerging Manager PlatformOur integrated solution is designed to meet the needs of emerging managers.

To better meet the needs of our emerging hedge fund clients, EY has established our Emerging Manager Platform, which is focused on providing cost-efficient services to funds during the start-up phase. The Emerging Manager Platform comprises hedge fund professionals providing one-stop, integrated services, addressing all your start-up needs.

Who we are EY has been a leader in serving the hedge fund sector for more than 30 years. Our emphasis on quality and value is a major factor in the growth of our hedge fund practices. We have assisted many leading hedge funds through every phase of business — from starting up to obtaining listings on exchanges and going public. EY offers a wide range of services designed to provide support to organizations in the start-up phase. In fact, our practices were founded on start-ups. Our services for start-ups include the following:

• Audit

• Domestic and global tax compliance

• Tax advisory and structuring, domestic and foreign

• Selection of domiciles, considering tax, regulatory and infrastructure implications

• Regulatory compliance

• Risk management

• Process improvement

• Technology optimization

• Tax impact to founders

• State and local tax planning

Many of our clients that began as start-ups are among the largest funds today. As these organizations mature, we continue to support their evolving requirements through our extensive portfolio of audit, tax, advisory and transaction services. Our global hedge fund practices are among the largest of any Big Four firm, and are led by highly skilled professionals who are intimately familiar with the demands of developing and maintaining a successful fund business.

Our global knowledge network includes more than 16,000 professionals with deep technical and business experience.

Teams are located in key financial centers throughout the world to serve clients wherever they need assistance. Clients benefit from the collective skills and know-how of this interconnected, worldwide network. Because of our presence in more than 60 cities worldwide, we bring firsthand insight on local market trends and accounting, tax and regulatory issues.

A market leader*

EY member firms• Audit approximately 40% of the top 100 global hedge funds • Provide services to approximately 70% of the top 100 global hedge funds• Provide tax services to approximately 60% the top 100 global hedge funds• Provide advisory services to approximately 25% of the top 100 global hedge

funds• Audit approximately 45% of the top 50 Americas hedge funds • Provide services to more than 80% of the top 50 Americas hedge funds• Provide tax services to approximately 70% of the top 50 Americas hedge funds • Provide advisory services to more than 30% of the top 50 Americas hedge funds• Audit approximately 40% of the top 50 Europe hedge funds • Provide services to approximately 40% of the top 50 Europe hedge funds • Provide tax services to approximately 45% of the top 50 Europe hedge funds• Provide advisory services to approximately 25% of top 50 Europe hedge funds• Audit 20% of the top 10 Asia hedge funds• Provide services to 20% of the top 10 Asia hedge funds• Provide tax services to 50% of the top 10 Asia hedge funds

Source: Hedge Fund Intelligence’s Global Billion Dollar Club, assets under management as of

January 2015.

Industry recognition for EY member firms• Best Audit Services, Alt Credit Intelligence US Fund Services Awards 2017• Best Tax Advisor, Alt Credit Intelligence US Fund Services Awards 2017• Best Advisory Firm, Alt Credit Intelligence US Fund Services Awards 2017• The Leading Global Service Provider for Hedge Funds — The Hedge Fund Journal

Awards 2017• Best Audit Services, Alt Credit Intelligence European Services Awards 2016• Best Overall Advisory Firm 2016 — HFM US Hedge Fund Services Awards• Best Audit Services for Asia Hedge Fund Services — HFM Awards Asia 2016• Best Tax Advisory for Asia Hedge Fund Services — HFM Awards Asia 2016• Best Audit Services, Alt Credit Intelligence US Fund Services Awards 2016• The Leading Global Service Provider for Hedge Funds — The Hedge Fund Journal

Awards 2016• Natalie Deak named one of the 50 leading women in Hedge Funds — The Hedge

Fund Journal• Mike Serota honored in 2015 for his outstanding contribution in tax accounting

and advisory — The Hedge Fund Journal Awards 2015• Best Accounting Firm 2009, 2010, 2011, 2012, 2013, 2014, 2015 — HFM US

Hedge Fund Services Awards• Leading Hedge Fund Tax Practice — The Hedge Fund Journal Awards 2015• Top global audit and accounting service provider 2013 — Hedge Funds Review• EY ranked #1 for outstanding service to the hedge fund industry (as well as in all

six categories — accounting firm, for tax, for audit, for regulatory/compliance, for client service and for hedge fund experience) 2014 — Institutional Investor’s Alpha

• Top auditor 2013, 2014, 2015 — Hedge Fund Alert (based on Securities and Exchange Commission registered funds)

• Best Audit Services for Asia Hedge Fund Services — HFM Awards Asia 2014, 2015

* Sources: Hedge Fund Intelligence, Absolute Return, Alpha Magazine, The Hedge Fund Journal.

3Leaders in launching funds for more than 30 years |2 | Leaders in launching funds for more than 30 years

A global networkOur wide-ranging, diverse, global client base encompasses all strategies, from simple long and short funds to highly complex trading funds. Our client service teams have extensive experience structuring and servicing complex funds, and extensive tax experience forming and servicing multi-faceted tax structures aross the globe.

Why we are differentAmong the Big Four firms: • We have been serving the hedge fund industry for years.• We have a large alternatives practice, with a large global footprint.• We have a globally integrated practice.

Stamford

Tokyo

Seoul

MoscowOslo

Rome

San Francisco

Los Angeles

Toronto

Cape Town

Bangalore

Beijing

Rio de Janeiro

Buenos Aires

Chicago

Dallas Washington, DC

Houston

Atlanta

Boston

Montréal

Philadelphia

London

São Paulo

Zürich

Sydney

Madrid

Bahrain

Malta

Milan

Frankfurt

Shanghai

Hong KongBahamas

Geneva

New Delhi

Munsbach

Miami

Cayman Islands

Bermuda

Curaçao

Dublin

AmsterdamLuxembourg

Tel Aviv

Minneapolis ParisJerseyGuernsey

Singapore

Mumbai(Bombay)

New York

Stamford

Tokyo

Seoul

MoscowOslo

Rome

San Francisco

Los Angeles

Toronto

Capetown

Bangalore

Beijing

Rio de Janeiro

Buenos Aires

Chicago

Dallas Washington, DC

Houston

Atlanta

Boston

Montréal

Philadelphia

London

São Paulo

Zürich

Sydney

Madrid

Bahrain

Malta

Milan

Frankfurt

Shanghai

Hong Kong

Bahamas

Geneva

New Delhi

Munsbach

Miami

Cayman Islands

Bermuda

Curaçao

Dublin

AmsterdamLuxembourg

Tel Aviv

Minneapolis ParisJerseyGuernsey

Singapore

Mumbai(Bombay)

New York


Thought leadershipEY works proactively to provide our clients with the latest information on trends and issues affecting the hedge fund sector. In addition, we sponsor many platforms throughout the year to keep our clients informed, including roundtable discussions with senior hedge fund executives, hedge fund surveys, papers and alerts on hot issues affecting the sector, published articles, interactive webcasts and participation in many industry conferences.

Our commitment to the hedge fund sector In addition to providing thought leadership and timely commentary on the latest hedge fund developments, we support the sector through our involvement in various sector forums and groups. For example:

• Hedge Funds Care — active supporter and board member

• Robin Hood Foundation — active supporter

• Managed Funds Association — strategic partner

• Alternative Investment Management Association — active member and sponsor

• American Institute of Certified Public Accountants — member of industry committees

Global Hedge Fund Symposium SeriesOur annual series of hedge fund symposia in 19 cities worldwide brings together more than 5,000 senior industry thought leaders and EY professionals. Discussions cover emerging trends, industry outlooks, regulatory developments, current hot topics and wide-ranging views on challenges and opportunities facing the industry.

Global Hedge Fund and Investor SurveyEY’s annual Global Hedge Fund and Investor Survey records the views and opinions of senior executives from more than 150 of the world’s largest hedge funds and investors on hot issues.

How to establish a global hedge fund business — a typical example

Prepare business objective

If appropriate, apply for regulatory authorization of fund If appropriate, apply for stock exchange listing of fund

Select service providers for the fund • Accounting firm

• Prime broker

• Administrator

• Law firm

Assess guidelines for tax and structuring Confirm domicile and structure of fund

Address infrastructure — office space/system technology Address human resources issues

Set up management company Understand estate and tax needs of founders

Comply with marketing rules in

different jurisdictions

Obtain all authorizations for

management company and fund

Launch fund

Apply for regulatory authorization (if applicable) for service and management company

Estimated time frame is three to six months.

Our Global Hedge Fund Symposium Series has a large footprint among the Big Four, attracting more than 5,000 thought leaders in 19 cities worldwide.

More than 150 of the world’s largest hedge funds and investors participate in our annual Global Hedge Fund and Investor Survey.


How to establish a global hedge fund business — a typical example

Management company

Portfolio accounting TaxReporting Operations

CorporateFund

Audit coordination

Regulation reporting

Management reporting

General ledger K-1 reporting

Fund accounting Transactions

Custody

Valuation

TransactionsRegulatory

Compliance

General counsel

Software development and support

Network administration systems and

communications

Hardware/disaster recovery

Investor website

Chief technology

Chief operating

Managing member

Registered investment

advisor

Fund A Fund B

Portfolio managers

Traders

Trade support

Daily

statement

Risk

Valuations

Portfolio management

Trading risk

Settlement risk

Portfolio risk

Business risk

Chief risk

Human resources/payroll Administration

management

control

Chief administration

Liquidity

Financing

Chief credit

Investor servicing Sales/marketing

Investor relations

Relationship management

Cash management/

treasury


Incentive allocation

Managementfee

Management feeIncentive fee

Shareholders

Master fund*

Investment manager

Domestic limited

partnership (feeder)

General partner

(domestic entity)

Offshore corporation

(feeder)

Invest/tradein securities

Non-US/US tax-exempt investors

US taxable investors

Limited partners Shareholders


Management fee

Limited partners

Master fund*

General partner

(domestic entity)


(feeder) Domestic

limited partnership

(feeder)

Investment manager





Management fee

Management feeIncentive fee

ShareholdersLimited partners


Domestic limited


Investment manager

Generalpartner

(domestic entity)





*Master fund: offshore corporation, offshore limited partnership (LP) or domestic LP

*Master fund: offshore corporation, offshore LP or domestic LP

Typical fund structures IMaster-feeder structure Master-feeder structure

Revised fee and incentive allocation model

Side-by-side structureDomestic partnership structure Offshore corporation structure

Advantages• Provide single portfolio to

manage — greater economy of scale for purposes of day-to-day management and administration

• Offer different deal terms or tax structures to different investor groups

• Eliminate performance differences of side-by-side structure (assuming no withholding issues)

• Eliminate need to enter into duplicate agreement with counterparties (reduce cost)

• Obtain and maintain better deal terms due to increased assets under management

Disadvantages• Conflict of interest between

onshore and offshore investors (tax efficiency)

• Additional costs for three entities vs. two entities

Advantages• Minimize tax risk associated with management fee


Typical fund structures IIMini-master structure


Limitedpartners

Investment manager

Shareholders

General partner

#2


Master fund*

Mini-master (intermediate

fund)

Generalpartner

(domestic entity)

Domestic limited



(feeder)

Managementfee





Managementfee

Managementfee


Investment manager

Domestic limited


General partner

#2

Shareholders

Limitedpartners

Master fund*

Mini-master (intermediate

fund)

General partner

(domestic entity)


(feeder)




*Master fund: offshore corporation, offshore LP or domestic LP*Master fund: offshore corporation, offshore LP or domestic LP

Advantages• Allows the general partner to carry out the offshore side of the

structure

Mini-master structureRevised fee and incentive allocation model

Global contactsGlobalMichael D. [email protected]+1 212 773 8940

Michael [email protected]+1 212 773 0378

Americas

Bahamas

Tiffany [email protected]+1 242 502 6044

Bermuda

Jessel [email protected]+1 441 294 5571

Brazil

Flavio Serpejante [email protected]+55 11 2573 3290

British Virgin Islands

Mike [email protected]+1 345 814 9003

Rohan [email protected]+1 345 814 9002

Canada

Gary [email protected]+1 416 943 3427

Fraser [email protected]+1 416 943 3353

Cayman Islands

Dan [email protected]+1 345 814 9000

Jeffrey [email protected]+1 345 814 9004

Curaçao

Bryan [email protected]+599 9 430 5075

Fatima de [email protected]+599 9 430 5020

US (Boston)

Robert [email protected]+1 617 375 2382

Alex [email protected]+1 617 585 1930

Shaun [email protected]+1 617 375 3733

US (Charlotte)

Corey [email protected]+1 704 338 0533

US (Chicago)

Matthew [email protected]+1 312 879 3535

Anthony [email protected]+1 312 879 3957

US (Dallas)

Adrienne [email protected]+1 214 754 3226

US (Houston)

Brenda [email protected]+1 713 750 5913

US (Los Angeles)

Mark [email protected]+1 213 240 7490

Scott [email protected]+1 213 977 5893

Michael O’[email protected]+1 213 977 5858

US (Minneapolis)

Brian [email protected]+1 612 371 8564

Michele [email protected]+1 612 371 8539

US (New York)

Joseph [email protected]+1 212 773 3807

Natalie Deak [email protected]+1 212 773 2829

Samer [email protected]+1 212 773 6486

David [email protected]+1 212 773 2656

George [email protected]+1 212 773 2430


US (Philadelphia)

Robert [email protected]+1 215 448 5614

US (San Francisco)

Michel [email protected]+1 415 894 8605

Paul [email protected]+1 415 894 8056

US (Stamford)


Seda [email protected]+1 212 773 1168

Europe, Africa and Middle East

Bahrain

Ashwani [email protected]+973 1751 4708

France

Matthieu [email protected]+33 1 55 61 11 90

Hermin [email protected]+33 1 46 93 86 93

Germany

Rosheen [email protected]+49 6196 9962 6163

Oliver [email protected]+49 6196 9962 7505

Guernsey

Mike [email protected]+44 14 8171 7435

Ireland

Fergus [email protected]+353 1 221 2599

Donal O’[email protected]+353 1 221 2455

Isle of Man

Paul [email protected]+44 16 2469 1818

Angus [email protected]+44 16 2469 1803

Italy

Stefano [email protected]+39 02 7221 2452

Mauro [email protected]+39 02 7221 2471

Giovanni [email protected]+39 06 6753 5502

Paolo [email protected]+39 02 8514 3938

Jersey

David [email protected]+44 15 3428 8697

Luxembourg


Malta

Ronald [email protected]+356 21 34 21 34

Karl [email protected]+356 21 34 21 34

Mauritius

Daryl [email protected]+230 403 4777

Ryaad [email protected]+230 403 4717

Netherlands

Remco [email protected]+31 88 407 3935

Arjan van [email protected]+31 88 40 71113

Nordics

Helena [email protected]+46 8 5205 9687

Fredrik [email protected]+46 8 5205 9853

Russia

Petr [email protected]+7 495 755 9700

Marchello [email protected]+7 495 755 9813

South Africa

Anthony [email protected]+27 21 443 0664

Michelle [email protected]+971 4 701 0410

Spain

Roberto Diez [email protected]+34 933 663 842

Switzerland

Sandor [email protected]+41 58 286 8537

Rolf [email protected]+41 58 286 4494

Christian [email protected]+41 58 286 4104

UK

Robin [email protected]+44 20 7951 1083

James [email protected]+44 20 7951 2877

Fiona [email protected]+44 20 7951 9373

Linda [email protected]+44 20 7951 8618

Zeynep [email protected]+44 20 7951 1928

Russell [email protected]+44 20 7951 6906Matt [email protected]+44 20 7951 2223

Dan [email protected]+44 20 7951 0144

Asia-Pacific

Australia

Antoinette [email protected]+61 2 8295 6251

Rohit [email protected]+61 2 9248 5560

Jon [email protected]+61 28295 6972

China (Hong Kong)

Paul [email protected]+852 2849 9564

Elliott [email protected]+852 2846 9083

Alpha [email protected]+852 2849 9173

China (Shanghai)

AJ [email protected]+86 21 2228 2929

Gavin [email protected]+86 21 2228 3023

Joyce [email protected]+86 21 2228 2392

India

Sameer [email protected]+91 22 6192 0480

Viren H. [email protected]+91 22 6192 0350

Japan

Kazuhiro [email protected]+81 3 3506 2411

New Zealand

Graeme [email protected]+64 9 300 8191

Matthew [email protected]+64 9 300 8008

Singapore

Amy [email protected]+65 6309 8347

Brian [email protected]+65 6309 6227

South Korea

Jong Yeol [email protected]+82 2 3770 0904

Jeong Hun [email protected]+82 2 3770 0972

EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisoryservices. The insights and quality services we deliver help build trust andconfidence in the capital markets and in economies the world over. Wedevelop outstanding leaders who team to deliver on our promises to allof our stakeholders. In so doing, we play a critical role in building a betterworking world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, ofthe member firms of Ernst & Young Global Limited, each of which is aseparate legal entity. Ernst & Young Global Limited, a UK company limitedby guarantee, does not provide services to clients. For more informationabout our organization, please visit ey.com.

EY is a leader in serving the global financial services marketplaceNearly 51,000 EY financial services professionals around the world provide integrated assurance, tax, transaction and advisory services to our asset management, banking, capital markets and insurance clients. In the Americas, EY is the only public accounting organization with a separate business unit dedicated to the financial services marketplace. Created in 2000, the Americas Financial Services Organization today includes more than 11,000 professionals at member firms in over 50 locations throughout the US, the Caribbean and Latin America.

EY professionals in our financial services practices worldwide align with key global industry groups, including EY’s Global Wealth & Asset Management Center, Global Banking & Capital Markets Center, Global Insurance Center and Global Private Equity Center, which act as hubs for sharing industry-focused knowledge on current and emerging trends and regulations in order to help our clients address key issues. Our practitioners span many disciplines and provide a well-rounded understanding of business issues and challenges, as well as integrated services to our clients.

With a global presence and industry-focused advice, EY’s financial services professionals provide high-quality assurance, tax, transaction and advisory services, including operations, process improvement, risk and technology, to financial services companies worldwide.

© 2017 EYGM Limited. All Rights Reserved.

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This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

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leaders in launching funds for more than 30 years - ey• risk management ... • robin hood...

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