Better Capital is an existing Guernsey closed-ended fund listed
on the London Stock Exchange (LSE). The conversion to a PCC sees
the interests of the existing listed fund forming the 2009 cell and
the launch of its second cell, the 2012 cell.
The 2012 cell has raised £169.9m of new money to invest in
Better Capital's second fund, Better Capital Fund II (Fund
II). The new money was raised under a placing and an open offer to
existing shareholders. Like the 2009 cell, the 2012 cell will
invest principally in UK and Irish turnaround opportunities.
This is the first example of a closed-ended PCC with more than
one cell having a full LSE listing. This is the first example of a
closed-ended PCC with more than one cell having a full LSE listing.
The innovative use of a PCC structure provides operational
efficiencies and is also designed to separate the new portfolio of
assets to be acquired by Fund II from the existing portfolio, thus
providing enhanced shareholder benefits. This is achieved by two
cells, the 2009 cell comprising the interests in the existing
portfolio and the 2012 cell which will invest the funds raised for
The use of a PCC in this way is also pioneering for private
equity structuring as it provides the company with the scope to
continue to raise further funds in distinct cells, as well as
providing the legal segregation of assets and their allocation to
each shareholder vintage through a clear separation of listed share
From an operational stance, the unique aspects of the PCC
structure reduce running expenses and enable strong corporate
governance, as a single board of directors has oversight over the
distinct fund vintages.
The Directors of the newly converted PCC believe that
significant opportunities will arise for turnaround investment
funds due to current economic conditions, as companies continue to
suffer from a lack of capital, support from banks and operational
Carey Olsen advised Better Capital on matters of Guernsey law
and HIFM acts as the fund administrator for the structure. The
firms worked closely with DLA Piper UK LLP (the English legal
advisers) and Numis Securities.
The team from Carey Olsen included corporate partner Tom Carey,
senior associate Tony Lane and associate Alex Mauger.
Advocate Carey said: "The use of the PCC structure to
create separate listed portfolios enables new money to be raised
without diluting the existing portfolio and without complicating
shareholder distribution rights at the end of the life of the
original portfolio. Successive portfolios can be created, each
being at a different stage in their lifespan and each benefitting
from the experience of a single Board.
It is always exciting for our team to advise clients on new
types of fund structures that achieve the best product for their
organisation and investors. We wish Better Capital every success
with the new fund."
The HIFM team is led by Mark Huntley, Managing Director, and
supported by a specialist team of qualified accountants, company
secretaries and administrators whose combined expertise helped
deliver the operational framework for the structure.
The directors of HIFM have worked with Better Capital since the
establishment of Fund I and with its chairman, Jon Moulton, for
many years prior to this relationship.
Mr Huntley commented: "Better Capital and all their
advisors have delivered an excellent result with the restructure,
raising a considerable amount in the context of global market
conditions and in comparison to funds raised through public
offerings on the LSE main market in 2011. The team rose to the
challenges faced by the new structure and HIFM was delighted to be
involved in a structure where value could be added from our many
years of experience administering PCC and ICC structures. We now
look forward to working with Better Capital on the exciting
opportunities which are in the pipeline for Fund II. It is
encouraging for Guernsey that, as a jurisdiction, we continue to be
at the forefront of industry innovation."
Probably the most significant change from previous practice in Guernsey law under the Companies (Guernsey) Law 2008, which came into effect on the 1 July 2008, was the consignment to history of the concept of capital maintenance, which was discarded in favour of a solvency model as the basis of a company’s ability to pay distributions and dividends.
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