After nearly two years of subdued private equity activity, signs of movement can be detected. “Projects that have been in the pipeline for 12 months or more are now close to launching and fundraising,” says Kate Anderson (pictured), Associate at Voisin, the Jersey law firm.
While the industry waits for conventional fund launches to return, there is plenty of work for service providers in other areas. For a start, there has been a resurgence in commercial property transactions. “Funds investing in the UK property markets are buying in quite specific geographical areas: within the M25 belt, Glasgow, Edinburgh, Leeds and Manchester,” says Anderson. “There are still some distressed – at least undervalued – deals taking place outside these areas for those with readily available funds. However, for most others there is still believed to be value in certain niche sectors of commercial property such as student accommodation and residential care.”
While fundraising is slow, it is not moribund. Anderson notes: “Some umbrella funds are adding new sectors to their portfolios. It is a lot easier to raise money this way than from a brand new start-up.”
But brand new funds are a rare breed these days, as investors require much more time to become comfortable with allocating new funds in the post-crisis period.
Fund promoters are well aware of the current reticence and many are in the process of implementing changes in order to become more attractive to investors. “We are giving ongoing advice with regards to particular issues such as suspensions, gating and increased liquidity measures,” says Anderson. “Fund managers wish to improve liquidity for investors: an increase in dealing days, reductions in minimum subscriptions and reduced notice periods for redemptions.”
While there has been a decline in the establishment of regulated funds, smaller private structures continue to be formed away from the public arena. “A lot of new funds are private vehicles that are not registered as funds,” says Anderson. “These are below the regulatory radar as they contain a small number of sophisticated investors. As such they are not expensive to establish and are attractive in the current economic climate.”
With so many changes afoot and the structures of funds and individual investments in flux, it is useful for law firms to be able to work closely with administrators to speedily solve problems and challenges as they arise.
Ashley Le Feuvre, Senior Manager Funds/SPV Group at Volaw Trust & Corporate Services, which works closely with Voison and provides fund administration services to the investor market, says: “Ready access to a law firm is an advantage because we can talk through issues any time we want, often at no expense to the client at the initial stages of discussion. If a client phones Volaw and seeks advice on the more technical aspects on a fund structure or needs regulatory advice, then we can get an answer more or less straight away. Equally, for the law firm, it is important to know not only if structure works, from a legal standpoint, but to be able to access timely advice on issues of practical implementation and expense.”
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