Fine wine takes a breather

15th May 2013 – Source: Wealth Adviser

In April the fine wine market saw a pause in its recovery as it waited for, and then reacted to, the latest en primeur releases from Bordeaux.

The main indices fell by 1.3 per cent on the Liv-ex 100 and 0.6 per cent on the Liv-ex Investables.

Lafite (which represents some 23 per cent and 28 per cent of these indices, respectively) was conspicuously the weakest of the first growths, falling by nearly three per cent on average across the key vintages.

Auctions provided a few surprises, for example some very high results for Pétrus in Hong Kong – a 1995 sold for over GBP46,000 and this was more than three-times the UK market price. Otherwise auction results were broadly as expected.

“Some of the market’s weakness in April may be a result of exchange rate movements. The yen fell sharply following the monetary easing early in April and the dollar and the Chinese renminbi also dropped following a particularly strong first quarter. The 2012 en primeurs have been much as predicted – most prices have fallen from last year, but not by enough to generate excitement amongst consumers. Robert Parker’s marks were in the low to mid-90s for most major châteaux and he commented unfavourably on the economics of the market. Merchants are reporting a quiet campaign, with only a few wines selling well,” says Andrew della Casa, founder director, The Wine Investment Fund (TWIF).

Read the rest of the article.


AIFMD – Overview CP2

March 2013 – Source: SJ Berwin

FSA publishes second consultation on AIFMD implementation


The UK Financial Services Authority has published a second consultation paper on implementing the Alternative Investment Fund Managers Directive in the UK.

Market participants have until 10 May 2013 to comment on the issues raised in this paper. Final rules will not be published until June but the FSA’s successor, the Financial Conduct Authority, is meant to confirm some of its final policy positions before then to give firms marginally more time to factor these into their implementation plans. The key policy question on which confirmation is awaited is on whether the FCA will accept AIFM and depositary authorisation or variation applications before 22 July 2013.

Follow the link to read more.


7th May – Source: FCA

Statement on consultation paper 12/19: restrictions on the retail distribution of unregulated collective investment schemes and close substitutes

Here we provide an update on our approach to last August’s consultation on proposed restrictions to the marketing of unregulated collective investment schemes (UCIS) and close substitutes.

Further to discussions with stakeholders, there remain important issues for us to consider and our proposals were not submitted to the FCA Board in April as originally planned. We are working towards publishing our final policy statement as soon as possible this year.  We will take account of the later publication date when setting the implementation date for any new rules.

We remain committed to providing clarity for firms as soon as possible, but this is a complex area and it is important to allow the time to get it right.


Restrictions on the retail distribution of UCIS and close sustitutes

11th February 2013 – Source: FSA

In August 2012 the FSA published a consultation paper proposing rule changes aimed at improving retail consumer outcomes by limiting the promotion of UCIS and close substitutes, and ensuring that they are recognised as specialised products unsuitable for general promotion in the UK retail market. As providing financial advice generally includes making a financial promotion, by limiting the promotion of UCIS the FSA aim to limit the number of retail clients being wrongly advised to invest in UCIS.

Follow this link to read the latest update on the consultation paper.

EIS: to CIS or not to CIS?

13 November 2012 – Source: Maclay Murray & Spens LLP

There has long been some debate in the market as to whether an EIS fund (and indeed, a Seed EIS fund) is a collective investment scheme (“CIS”). To date, this has had implications for investment managers in terms of their scope of permissions and regulatory capital requirements, but following the FSA’s recent issue of its consultation paper concerning the marketing of unregulated collective investment schemes (“UCIS”) and the impending implementation of the Retail Distribution Review (“RDR”) and the Alternative Investment Fund Managers Directive (“AIFMD”), the structure of an EIS fund is of even greater importance.

Is an EIS Fund a CIS?

EIS funds are not funds in the usual sense in that a fund vehicle is established which sits between the manager on the one hand and the underlying investors on the other. Rather, EIS funds operate as a series of investment management agreements between the investment manager and each of the investors in the fund. Investments into underlying portfolio companies (and any income or proceeds of realisation arising from them) are generally owned by each individual investor separately (although in practice, investments may be aggregated across all investors in the fund to form a single investment into the relevant investee companies).

One of the requirements that must be met for investment arrangements to fall within the scope of the definition of a CIS is that there must either be an element of pooling or of collective management involved in relation to those investment arrangements. That is, either the contributions of the investors and the profits or income out of which payments are to be made must be pooled or the property the subject of the relevant investment arrangements must be managed as a whole by or on behalf of the investors.

In the context of EIS funds, the usual structure adopted for these funds does not involve the requisite element of pooling in order to meet the requirements of a CIS. While investments into portfolio companies are often aggregated across investors in the fund and income and proceeds of realisation of interests in investee companies may be held collectively in a single bank account, those interests in the fund’s investments are owned by each investor separately. On this basis, the contributions of investors and the profits or income out of which payments are made are not pooled. Similarly, because each investor enters into a separate investment management agreement with the investment manager under which a separate portfolio of shares is managed, the property of the fund (being shares in the underlying investee companies) is not managed as a whole by or on behalf of the fund’s investors.

While most EIS funds are not CIS, it is possible to structure them as such. This would usually be achieved by ensuring that the requisite element of pooling was met in relation to the fund, by ensuring that the profits or income of investors are owned collectively across the fund or by providing common management.

Whether an EIS fund is structured as a CIS has important implications for fund managers/operators including in relation to the pool of investors to whom the fund may be marketed, the payment of adviser commissions and the potential cost and regulatory requirements arising under AIFMD.

Read full article here.

Securing a fair exit

October 2012 – Source: Insight Out Magazine (Peter Terry, Partner – Manchester)

With the current market for mergers and acquisitions (M&A) tough, a vendor initiated management buy-out (VIMBO) may be an alternative for those looking to exit a business. Our 3 minute masterclass explains.

The current economic background means there are fewer transactions and those that are happening are taking much longer. And with the market a very different place now to how it was pre “credit crunch”, vendors are seeing that the levels of multiple achieved on exit have dropped considerably. While some owners are keeping a watchful eye on whether conditions improve, others close to retirement or in need of cash now are weighing up the alternatives such as vendor initiated management buy-outs (VIMBOs).

What is a VIMBO and when would it be a suitable option to take?

While it can be structured in a number of different ways to suit each particular business and needs, a vendor initiated management buy-out (VIMBO) can bridge the gap between vendors’ expectations and funding availability, and can be used to facilitate a full or partial exit of a business. In headline terms, a business owner can use a VIMBO structure to realise cash now, de-risk his investment in the business and crystalise the value of the business through either cash or loan notes to be paid by the business to the owner going forward. This way, the owner can retain an equity stake in the businesses and a share in any upside achieved on any future exit, as well as facilitate the succession of the business to a management team.

Read full article. Note, you will need to subscribe to Insight Out Magazine to read article.

FSA proposes clampdown on retail sales of alternative investments

August 2012 – Source: Maclay Murray & Spens LLP

The FSA has trailed for some time its consultation paper on restricting sales of unregulated collective investment schemes (UCIS). Now that their paper (CP12/19) has seen the light of day, it is clear that their aim is rather more ambitious than this: they want to cover a wide range of alternative investment products.

What products will be affected?
The FSA have come up with a new term: “non-mainstream pooled investments” (NMPIs). This covers the following:

  • UCIS
  • Qualified Investor Schemes (a type of authorised fund)
  • Traded Life Policy investments
  • Securities issued by Special Purpose Vehicles (SPVs)

Read full article.