Private Equity Fund Administration – Not a “Conveyor Belt” Process  :Private Equity Fund Administration – Not a “Conveyor Belt” Process David Bailey MSI Augentius Fund Administration 1st November 2006


Slide 2:Introduction Revision (and test!!) from previous session Private Equity vs. The Rest Private Equity Fund Processes Questions


 Why me?:Why me? Settlement and Global Custody 5 years in Luxembourg as a fund administrator – Long Only Funds/Hedge Funds/Funds of Funds/Emerging Market Funds etc. Funds Product Manager with Management Group – Hedge Funds Ansbacher Fund Services in 2002 – closed down existing Administration business and created specialist Private Equity Fund Admin Business Completed MBO of Ansbacher Fund Services in August 2006 and re-named business Augentius Fund Administration


 Augentius Fund Administration LLP:Augentius Fund Administration LLP Specialist Private Equity Administrator – its all we do 1st Jan 2003- no clients, no name, no reputation 1st Nov 2006 - 20+ clients - 75+ funds - 120+ entities - €15bn committed under administration Offices in London and Guernsey; 40 staff increasing to 50.


PE Fund Structure:PE Fund Structure GermanExecutives Investors Advisers Manager General Partner(Scottish Limited Partnership) French adviser Italian adviser Germanadviser Guernsey Co General Partner General Partner FrenchExecutives UKExecutives UK Co KG LP I - ERISA (English LP) LP 2 - Non ERISA (English LP) General Partner Investors ItalianExecutives


PE Fund Structure - Simple:PE Fund Structure - Simple Limited Partnership Carried Interest Partnership Investors General Partner Manager Management Agreement Portfolio Companies IHC IHC


PE vs The Rest:PE vs The Rest


 Private Equity Fund Processes:Private Equity Fund Processes Initial Closings Rebalances Drawdowns/Investments Quarterly/Annual Accounts Distributions


The Closing Process:The Closing Process AML/KYC on LPs – either the administrator or the GP Side Letters/Special Arrangements Negotiations Revised LPA – most favoured nations GP to consider/approve LPs and scale back? Board Meeting to approve LPs Initial Drawdown for Management Fees and Expenses and “Welcome” letter


The Rebalance (Equalisation) Process:The Rebalance (Equalisation) Process New Investors Existing Investors – receive distribution of funds received from new investors to equalise Carried out on subsequent fund closings to “true up” all investors as if they joined the fund on Day 1 Pay interest for “late arrival” Contribute share to investments made Pay arrears of Management Fees Pay arrears of Expenses To equalise to Day 1 of the Fund


Slide 11:Read only access to bank account 2. AFA issues drawdown notices to a total of £x m across LP’s, Calculated on a commitment basis 1. Instructs Administrator to generate drawn down for £x m 4. Instructs administrator to pay away £xm to cover cost of investment 3. LP’s remit a total of £xm to fund bank account to cover drawdown 5. Banking instruction to remit funds to settle transaction 6. Funds remitted to settle transaction Drawdowns/Investment


Quarterly/Annual Accounts:Quarterly/Annual Accounts Full Fund accounts issued every three months - Balance Sheet - Profit and Loss - Cash Flow Statement In addition, individual Partner Statements - Capital Account - Income Account - Loan Accountto reflect each LPs individual share of partnership assets/liabilities/ income/expenses Other issues – Consolidation with Co-Invest schemes There are no industry standards – everything thing is personalised to each client – their own look and feel


Slide 13:Read only access to bank account 2. Calculations of proceeds due to each LP and carry & advice of pending distribution 1. Advice of pending sale generating distribution to LP’s to AFA 3. Advice of amount due to each LP plus amount of carry 6. Funds remitted to individual LP bank accounts 5. Automated banking instructed issued re payments to be made to LP’s and carry payment 4. Proceeds received from sale of portfolio investment 7. Carry paid to vehicle Distributions


Slide 14:David BaileyManaging Partnert +44 20 7089 4733f +44 20 7089 4744 e david@augentius.comAugentius Fund Administration LLPTwo London BridgeLondon SE1 9RAUnited Kingdomwww.augentius.com