Article by Adrian Odell, Head of Funds, Jersey, Collas Crill

Innovative Platform Funds can provide a valuable gateway for funds business between Jersey and India, facilitating both inward-bound and outward-bound investments connected to India.

The idea of commoditising funds is attractive but not new. For a long time Umbrella Funds have been established with a single investment manager providing services to a number of separate funds formed under one holding vehicle. Umbrella Funds may use largely standard form documents and the same service providers to achieve cost efficiencies for all funds on the same platform.

Going one step further, facilitating different investment managers on the same platform presents a new set of challenges. Ideally, it requires the regulation of each fund, as opposed to the Umbrella Fund structure as a whole. This demands a special legal structure that can further protect the portfolio of each fund from the potentially diverse or even opposing investment strategies of different investment fund managers on the same platform. Jersey has such a structure and is using it to establish Platform Funds which are either regulated by the Jersey Financial Services Commission or unregulated, open-ended or closed-ended and, furthermore, capable of having different investment managers. The funds may be established in a corporate form or in a limited partnership form, in either case providing appropriate ring-fencing to protect investors.

Efficiencies and flexibility

Cost and time efficiencies are achieved on a fund platform by each fund using the same standard form prospectus, with fund specific terms reflected in a short appendix. These include the investment objective, strategy and restrictions of each fund, the identity of the investment manager, as well as risks associated with the particular investment. Time periods and amounts for the various dealing dates, lock-ups, maximum and minimum initial investment and liquidity terms and so forth are also dealt with in the appendix.

The standard form documents are drafted in such a way as to provide structural flexibility for funds of varying levels of complexity. They may accommodate nearly any Alternative Investment Fund, including Private Equity, Venture Capital, Hedge Funds, Property Funds, Film Funds and Art Collection Funds.

Jersey Platform Funds pave the way to a more comprehensive and thorough set of fund documents for both alternative investment and other funds. They offer an unbeatable alternative for funds where structural integrity is paramount, consistency of documentation and low cost is highly desirable, and a credible jurisdiction is strongly advisable.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.