Hedge Fund Managers looking for an efficient, flexible and cost effective structure, which are very easy to setup and secure regulatory approval may now consider using Performance Linked Notes as an effective alternative to an investment fund.
In order to secure regulatory approval to market the Performance Linked Notes throughout the EU27, the Notes are listed on the MTF Market of the Vienna Stock Exchange, with an Austrian AT-ISIN provided through which promoters and their Business Introducers may raise funds from investors.
The proceeds of the Performance Linked Notes are invested in any type of asset (ideal for hedge funds trading in derivatives) and investors share the benefit or loss of investment. Thus, when the performance of the underlying asset increases, the Net Asset Value increases and when there are losses, the NAV declines.
Listing is done without prospectus but through submission of Information Memorandum. All the terms and conditions are included in the Information Memorandum including the full or partial redemption rights.
Here are the simple steps to follow:
- SPV setup in an EU or offshore jurisdiction, with hedge fund manager or administrator acting as nominee shareholder/director and holding all the signature rights to the bank and trading accounts.
- SPV issues Performance Linked Notes, minimum amount €200k or equivalent, in any major currency, bearing no interest and with long term maturity.
- Proceeds of Note issue invested in a bank or brokerage trading account managed by the hedge fund manager or a regulated Investment Manager appointed by the Hedge fund manager. When the trading account performance is positive, the NAV increases, when there are losses, the NAV declines with the investor sharing the benefit or the loss through the NAV change.
- Eurivex will list the Performance Linked Notes on the MTF Market of the Vienna Stock Exchange through submission of Information Memorandum (no prospectus required – no prior history required), dematerialize and deliver registry electronically to OeKB, secure Austrian AT-ISIN, and act as Listing & Payment Agent.
- Promoter is now free to keep on raising funds from investors in EU27 and beyond and add-on to existing Notes on the same ISIN.
- Hedge Fund Manager entitled to secure rebate income from the spread and markup, charge a performance fee and charge an administrative fee.
- Investors follow the performance/update valuation by visiting the web site of the Vienna Stock Exchange to follow the daily or weekly NAV performance.
- Partial or full redemption, all terms and conditions included in Information Memorandum prepared and submitted by Eurivex.
- Only important changes in corporate structure need to be notified to Vienna Stock Exchange through Listing Agent to maintain the ISIN and listing.
- No tax implications as SPV will always break-even. Investors in Notes will receive proceeds of redemptions tax free.
Ideal for hedge fund managers who wish to setup their own structure, operating in a regulatory environment and more importantly provide their Business Introducers the regulatory permission to market a listed financial product.
Eurivex offers flat fee complete packages starting from €20.000 first year and €12.000 annual maintenance fee.
- SPV setup
- Listing of the Performance Linked Notes on the Vienna Stock Exchange including preparation and submission of the Information Memorandum
- Acting as Listing and Payment Agent