A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

MAIN ACTORS AND STRUCTURES

Placement agent

2.1.3

Generally fund raising is directly carried out by the GP. However, the GP, which is often a boutique operation in the private equity world, may prefer to focus on management issues rather than on raising capital. In that case, the GP may hire a placement agent, who will be remunerated with a percentage of the funds raised (generally between 1 and 2%). The placement agent is a company specialised in finding institutional investors, high net- worth individuals or other private investors willing and able to invest in a private equity fund or company issuing securities. Today, placement agents do not simply introduce private equity funds to potential LPs. They are highly valued advisers who both understand and know their LPs and the market’s ap- petite for different strategies. They will advise and assist fund managers at every stage of the fund raising process with: • Detailed pre-marketing strategies for going to market (e.g. the United States versus Eu- rope, pension funds versus family offices etc.); • Marketing materials; • Due diligence preparation;

2.1

• Positioning and terms negotiations; • Scaling back fund sizes (if too large).

Depositary

2.1.4

In the case of regulated funds and depending on the fund jurisdiction, the GP shall appoint a depositary for the fund.

The depositary is responsible for the general supervision of the assets of the fund and the custody of the assets entrusted to it. It provides the following services to private equity funds: • Holds and safekeeps assets, oversees them when non-securitised assets; • Arranges settlement of any purchases and sales of securities – Collects information on and income from such assets (dividends in the case of equities and interest in the case of bonds); • Manages cash transactions, performs foreign exchange transactions where required; • Provides regular reporting on all custodian activities to their clients; • Offers other services upon request such as cash management, escrow or pledge account facilities, debt or bridge facilities. For the custody of the assets entrusted to it, the depositary may appoint correspondents, selected amongst professional service providers duly authorised to carry out their functions in the relevant jurisdictions (called sub-custodians).

Depositary banks have also a growing expertise in the administration of private equity funds, in order to offer a full service package.

A thorough understanding of PE | page 37