- Replacement Investment Management
- Investment Advisory Service
- Asset Resolution Company
FFP offers a compelling option for maximising the value for investors when a fund has come to the end of its life or finds itself in distress. We’re an experienced, dynamic and independent firm, which has enabled us to create a holistic approach to dealing with funds looking for an alternative to the more traditional liquidation options.
Taking a sophisticated soft wind down approach has many benefits not least of which is the ability to retain the original corporate governance and administrative structure intended for the fund. In addition, soft wind downs are often more appropriate and cost-effective where a long run-off period to realise illiquid securities or complete litigation is required.
Depending on the circumstances of the fund, its investors and its key stakeholders, we can offer several approaches. Each approach has its own benefits and some situations may warrant the application of multiple approaches concurrently.
- Replacement Manager – FFP Advisors, as a Cayman Islands based SIBL registered Investment Manager, we are well positioned to replace the existing investment manager or GP and facilitate the orderly wind down of the fund’s remaining assets. We may also act as an interim caretaker manager while a more permanent fund manager is sought by the fund’s directors. The introduction of a replacement investment manager is particularly effective where funds find themselves in a state of limbo. The directors or service providers of the fund can achieve dramatic cost savings through the appointment of a new manager who endeavours to liquidate hard-to-sell positions or holds positions restricted by litigation. Further savings can be achieved by eliminating certain service providers and surplus costs and administering estates on a fixed fee or percentage of realisations basis.
- Investment Advisor – We have a strong and proven track record in assisting stakeholders, in particular fund directors and GPs, with the sale of fund assets in our capacity as qualified and highly experienced investment advisors specialising in the disposal of hard-to-sell illiquid assets. FFP Advisors can assist clients across a multitude of asset classes including debt, equity and more obscure positions. The team of investment managers has deep experience in the implementation and coordination of disciplined unwinding procedures for illiquid or tightly held securities within a fund. In addition, they can assist in the well-ordered exiting of portfolios of illiquid assets to third parties.
- Asset Repository – If appropriate, we can facilitate the transfer of non-liquid assets out of a fund structure to allow for a timely fund closure, utilising our asset repository SPC – ARC. This creative method of re-housing illiquid securities and litigation claims, which may otherwise prevent an efficient closure of a legacy entity, also acts as a cost-effective mechanism to hold such assets until value can be realised. ARC is able to absorb worthless or low value securities allowing the closing fund to terminate its custodian and trading accounts, remove assets from their books, and complete their dissolution. Where investors wish to retain economic exposure to the original assets ARC can form segregated portfolios tailored to needs of those investors on a fixed or known fee basis.
These innovative solutions have been welcomed by investment managers, law firms, directors and auditors, and when coupled with voluntary liquidation, have been able to help clients complete the closure process in a timely and cost effective manner.
Our experience covers some unique situations that demonstrate our commitment to solving problems. Relevant examples of our recent work include:
Voluntary Liquidation & Fund custody account closure
We acted as voluntary liquidator to a Cayman Islands master feeder structure that held five nil valued assets. The master fund’s prime broker was unable to close the custody account due to these positions. The positions were transferred into a newly created segregated portfolio account with our broker to facilitate the closure of the master fund’s custody account and thereafter the dissolution of the funds. On this occasion the fund investors retain their pari-passu interest in the assets through a nominee arrangement until the assets are sold.
A group held a non-transferable short position, with associated margin cash, which would take several years to liquidate. The cost of keeping the group active was unduly burdensome, so in order to expedite the return of the surplus unencumbered assets ARC become the sole shareholder to retain the ongoing ownership and management of the master fund including the short positions and associated margin cash.
Legacy low and nil valued asset rationalisation
An international investment management firm with a large volume of low or nil value assets held across several funds engaged ARC to assist with a cost saving rationalisation project. Despite the assets’ low or nil value, the prime broker could not formally write them off due to their continued existence. ARC assisted by transferring these assets into a dedicated segregated portfolio cell in ARC with legal and beneficial ownership being transferring to us. The empty custody accounts were then closed to facilitate the dissolution of the various funds.
We were appointed as receiver over shares of a private limited company in Singapore. Rather than hold the shares in the name of the receiver, for safe custody, the shares were transferred to a dedicated ARC segregated portfolio until the receivership could be concluded.