A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

FISCAL AND OPERATIONAL ISSUES

Tax advisers will propose an investment scheme per investment type or a general model for the whole structure.

Examples of common setups

3.1.3

Figure 34: Illustration of an arrangement with two different investment funds in parallel European Investors MENA Investors T wo different investment funds Private equity houses may run two different investment funds in parallel in order to accom- modate for different classes or families of investors. Figure 34 shows an example of set up with one Luxembourg domiciled fund to meet the requirements of European institutional investors and one Moroccan domiciled fund for the MENA investors, both funds investing in the same assets.

Dividends Capital gains

Units/shares

Moroccan investment vehicle

Luxembourg investment fund (regulated)

Equity: 5%

Shareholder loan: 95%

Dividends Capital gains

Fixed interest/ floating interest

Target 1

Target 2

Target 3

Target 4

Copyright CACEIS, 2009

I nvesting through a feeder It is also common to see private equity houses creating feeder funds for some specific countries before investing in the investment vehicle (in the same country or in offshore vehicles), as illustrated in figure 35.

Figure 35: Illustration of an arrangement with a feeder fund

Investors country 1

Investors country 2

Dividends Capital gains

Common shares

Feeder Fund (regulated)

Dividends Capital gains

Institutional shares

Offshore investment fund

Capital gains Net income at target 1 level

Equity: 1% Profit participation loan: 99%

Target 1

Target 2

Copyright CACEIS, 2009

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