A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

MAIN ACTORS AND STRUCTURES

2.1.5

Administrative agent (fund administrator)

The administrative agent is responsible for the domiciliation of the fund, the maintenance of records and other general administrative functions as well as the processing of the cal- culation of the fund’s Net Asset Value (NAV). He is also responsible for providing the fund’s financial reports. As such, he provides the following services to private equity funds: • NAV calculation; • Portfolio accounting; • Bookkeeping and consolidation with local or international GAAP; • Portfolio performance computation; • Domiciliary services; • Other services depending on their competencies and offering, such as asset valuation, risk ratios monitoring, legal services, investor services, etc. In countries such as France and the United States, this function can currently be carried out by the private equity asset management company itself, which could be called into question in Europe by the AIFM directive if a mandatory independent valuator was enforced (see section 4.4.2.). Furthermore, in North America, the recent events during the financial crisis have led to a re- evaluation of the fund administrator role by major investment companies and/or investors, causing them to reconsider their practice of self-administration.

2.2

2.1.6

Registrar and transfer agent

The registrar and transfer agents are responsible for the processing of the issue and re- demption of the fund units/shares and settlement arrangements thereof. They shall further- more assist the GP and/or the fund to determine whether the prospective investors willing to subscribe for units/shares meet the possible eligibility requirements set out. This function is often carried out by the same entity as the depositary or the administrative agent, depending on the country.

2.1.7

Auditor

Auditors are appointed by the GP. They are responsible amongst other things for issuing an audit opinion on the financial statements of the investment vehicle prepared by the GP (sometimes delegated to a professional fund administrator). This opinion will declare whether the financial statements have been prepared in accordance with applicable ac- counting standards and be based on audit work executed in accordance with applicable auditing standards (International Standards on Auditing for example). As the audit opinion will cover the financial statements, it will implicitly cover: • The income and expenses of the investment vehicle; • The carried interest and other performance fee calculations; • The fair value of the investment; • The compliance with applicable laws, regulations and investment limits; • The accuracy of the tax provision.

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