35th AVCJ Private Equity & Venture Forum

Partner Divya Thakur will participate in the 35th Annual AVCJ Private Equity and Venture Forum, Asia’s premier private markets gathering, presenting on the panel, “Fund Formation: Building Strong Foundations.”

Key Takeaways 

Fund Domicile

• Multiple factors go into deciding on a fund domicile—with legal and tax frameworks often at the forefront. Beyond that, there are significant geographical considerations, e.g., where investors are located, where the team is situated, or where the fund will invest. Geopolitical factors have also played an increasing role recently, with funds looking for stable and favorable regimes.

Singapore’s VCC structure 

• Variable capital company (VCC) structures were established in 2020 by the Monetary Authority of Singapore (MAS) as a new form of entity used to set up funds, in an attempt to address issues that general partners were facing with traditional Singapore fund structures. VCC structures have administrative and operational advantages—providing flexibility to structure funds in various ways, e.g., an umbrella with sub-funds or a standalone fund. 
• VCC structures have attracted a lot of attention. MAS’s Asset Management Survey reported that as of October 2022, there are about 660 VCC structures, including more than 1,300 sub-funds overseen by 440 registered managers in Singapore. This demonstrates a significant uptake, but it is not a one-size-fits-all approach. There is a higher uptake among newer funds—due in part to the expense subsidies for VCC structures.
• Traditional partnership structures are still in play, and more established managers have so far been cautious in adopting VCC structures as they already have a partnership structure that works from a regulatory perspective.
• Expect further amendments from MAS on the VCC regime and its continued increase in use.