MAKING THE MOST OF UCITS IV

Profile 5

Possible scenarios

Re-domiciliation of your offshore fund to a EU cross-border distribution centre centre (e.g. Luxembourg or Ireland) and transformation into a UCITS

Scenario 1

Creation of a UCITS range in a cross-border distribution centre (e.g. Luxembourg or Ireland) in addition to your offshore fund

Scenario 2

Possible scenarios

When analysing the UCITS environment, you face the following issues: • Lack of distribution capabilities in Europe and in the other potential UCITS markets;

To reach your objective, you may consider the scenarios above:

• To re-domicile your offshore fund to a EU domicile (a priori chosen for its branding and affiliated services in terms of cross-border distribu- tion) and transform it into a UCITS; • To keep your offshore fund active for a certain category of investors for which offshore funds such as Caymans-domiciled funds remain a label (e.g. American or Asian investors) and create a UCITS in parallel, with an investment policy being as close as possible to the offshore reference fund.

• Lack of knowledge in structuring a hedge fund strategy under UCITS;

• Lack of internal resources to tackle the UCITS complexities when it comes to setting up your own product (e.g. selection of service provi- ders and of the right governance model, coordination of lawyers and service providers in the set up phase, etc.). Additionally, if you are a fund of hedge fund manager, you face the challenge, in case of liquidation or conversion, of having only a limited number of newcits at your disposal, thus reducing your potential to add value and differentiate yourselves.

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Implementation considerations & points of attention

Last but not least, you have no Management Company structure in Europe yet.

The domain of excellence where you have been developing your ex- pertise so far is obviously very different from the new environment you have decided to enter. You will notably have to thoroughly un- derstand the UCITS regulatory constraints (eligible assets, investment restrictions, risk management, etc.), tax and operational environment (flexibilities and constraints).

Product re-structuring challenges

In case of re-domiciliation of your existing funds, you will have to in- sure a transition as smooth as possible between your current and target structures.

CACEIS - UCITS IV |  page 37