New Government Pension Reforms & Its Impact on the Fund Management Industry.

Pension funds face transformation as new government proposals encourage strategic changes, mergers, and focused asset investments.

Collectively, our team at Edenbridge has the experience to guide and execute any changes required to your investment guidelines in order to help facilitate new strategic directives that come from the new changes as stipulated by the government. Additional changes to these guidelines will require legal, compliance, and potential operational changes to your operating model. Many of the fund launches and changes we have conducted include investment guideline changes or the introduction of a new financial instrument or asset classes. In addition, we have extensive experience in the planning and execution of multiple fund mergers.

For further information on the impact of the Government Fund Reform and how Edenbridge can help please click the link below to download the fact sheet.

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Below are two case studies on this subject matter.

CASE 1 : Launching of a Multi-Asset Credit Fund (with the addition of leverage loans)

Seen as a strategic priority with client , an assessment was required on how to introduce leverage loans into the company using as much of the current operational model and investment management execution systems as possible. There was also the requirement to conduct a feasibility on the options for the most appropriate fund structure that would allow for a quick regulatory approval and subsequent launch following the implementation of a leverage loan process model.

Upon conducting the assessment on the fund structure options available, it was decided that a RAIF would be adequate for the institutional investment segment required. The company had significant success running investment grade and high strategies previously and wanted to build on that success with the addition of Multi Asset Credit using leverage loan exposure.

A high level project plan was constructed that captured a number of work streams, two of which were particularly important; regulatory and leverage loan implementation. These, along with operational, investment and legal made of a majority of the project work break down structure (WBS). Being an Irish domiciled RAIF, the CBI requirements were observed and key milestones baselined. Approval timelines for a fund structure based on a RAIF, the additional requirement of setting up AIFMD regulatory reporting and using the client as an AIF needed to be planned for. Key dependencies and glide pathways were drawn up and addressed to key stakeholders.

For the two key work streams, separate glide paths and a list of requirements were drawn up particularly as for leverage loan pricing and originations, a third party loan administrator, Clearpar were also integrated into the operational model and new processes developed.

Further linkages to third party administrator for pricing of the new instrument, leverage loans would need to be put in place and so discussions with counterparts on this subject were undertaken and additional deliveries established, timeboxed and included in the delivery plan and timelines.

A key legal documentation log and target dates were assembled and the project planning document shared with all parties before a kick off meeting held in order to run through the key deliverables, resource and checkpoint stage gated milestones.

The fund documentation was ready for submission within 6 weeks of kick off, loan process requirements understood and tested in parallel to ensure that once the operating model was completed , leverage loans would incorporate the steps needed to ensure that the loan administrator, Clearpar were sufficiently incorporated. The fund was launched in a little under 6 months, the fund begun trading and reporting as an AIFM shortly after.

CASE 2 : Passive Fund Restructure and Merger Programme.

Seen as one of the major wins at the time, the client needed to consolidate its much fragmented passive fund range into a more easy to distribute grouping combined with fund types and investment strategies. The need to restructure investment objectives for a number of funds in each of the European domiciles together with merging funds and converting structures was in itself a very large 18 month initiative. Several Irish REITs were being merged and converted to Irish ETFs, additional French REITs were to be merged with a smaller selection of newly launched ETFs domiciled in Ireland. The second phase of the programme brought about 10 French SICAVs to merge into newly launched Lux SICAVs. Finally, a number of French SICAVs would be converted to Lux domiciled ETFs.

Conducting mergers of this size requires a number of key deliveries which would need to observe the processes akin to each of the jurisdictions in which each of the funds reside. This means extensive legal and compliance based steps to ensure the funds moving to the newly established funds undergo all needed regulatory protocol. In addition valuations and accounting is conducted correctly.

The programme would be structured into 4 distinct deliveries, each with their own timelines that captured operational, legal, compliance, Third Party Admin and Merger Execution. Each individual set of mergers would be broken down into 4 timelines with critical pathways established and milestones for each significant grouped delivery per stream incorporated into the plan.

Project phasing was established for each of the 4 merger objectives which included, Pre-Merger Phase, which focused on transfer agreement, unit holder circular and communications, agreed merger ratios for each of the funds to be applied at point of merger, additional merger application forms and a copy of existing fund documentation which would all be eventually submitted to the regulator through the clients legal team. The second phase would ensure that fund documentation (Investment Management Agreements and Prospectuses inc. KIIDs) for the new funds prepared ready to submit to the regulator where the fund will be launching (observing local juristiction requirements). A third, launch stream would include all fund set up operational and third party admin linkages to be put in place, ready for the donar fund assets. The merger execution phase would make up the final phase for this programme. Ensuring shareholder EGM's , communication dates and fund accounting pricing were captured.

All of the above was imperative in overseeing all phased mergers which were conducted successfully with minimal client attrition. Shareholder's were informed of the key dates, the options available to them and provided with the regulatory notices needed to redeem if they so wanted. By producing additional outputs of Q&As the clients (unit holders / shareholders) were able to make informed decisions in good time about investments prior to assets being transferred over and recorded at the new prices using the merger ratios agreed by the fund accounting teams and appropriate records updated at Custody for each of the merger groups.