Asset Managers (Regulated)

Asset managers can greatly extend their client base by packaging their managed strategies into easily investable securities.

Our two most popular solutions for this are Swiss-issued Actively Managed Certificates (Swiss ISIN; Euroclear + Clearstream + SIX-SIS) and Islamic Investment Certificates (Sukuk al Wakala bei Al-Istithmar) for funds managed in a Shariah-compliant way which can be marketed to private investors and institutions observing investment restrictions based on Islamic finance principles.

Asset Managers (Unregulated)

If you are not a licensed asset manager but have a trading strategy and want to raise funds to manage on a profit-sharing basis and/or for a commission, we can help.

Issuance of actively managed certificates (AMC) or portfolio-linked notes (performance-linked notes / bonds) is the solution. Those, issued under the jurisdiction of Switzerland (ISIN: CH), are not considered “collective investment schemes” by the Swiss regulator, FINMA, and thus do not require a licensed asset manager. (Their tax treatment, though, is confirmed by the Swiss authorities to be similar to collective investment schemes and is thus favorable for investors).

‘I have a trading strategy…’

Raising funds from private investors for your investment strategy is easier done through globally cleared securities. Investors can then contribute funds to your trading activity by simply ‘buying an ISIN’ through their regular broker or bank. We can get such securities into global clearing systems for ease of trading.

Shall it be considered a ‘collective investment scheme’ and thus subject to harsh regulation, and do you necessarily have to be a licensed asset manager? The answer is ‘not necessarily so’ to both questions. Securities issuance practice has developed solutions to avoid these complications.

‘I raise funds for a real estate development project’

The usual way – an investment agreement negotiated with each investor.

Drawbacks:

• An agreement to be negotiated with each investor; execution formalities
• A payment method and route to be agreed with each investor
• Accounting for multiple investors

The optimal way: we issue securities to raise funds for the project. 

Benefits:

• Standard terms for all investors (fixed in the Issue Terms)
• No need to have an agreement negotiated to invest, just buying a security by ISIN
• Investors hold the securities via their broker, see it on the account statement
• The Developer has a SINGLE COUNTERPARTY – the SPV company which issues the securities
• Remuneration of intermediaries not a problem, as in scenario above

‘We have access to pre-IPO equity and wish to sell this opportunity to investors’

Whether in the US or elsewhere, unlisted equity of fast-growing companies raising round after round of venture investment is a highly sought after asset for professional investors.

Once you secure an allocation, we can issue securities (typically, Swiss ISIN + Euroclear/Clearstream) backed by the equity participation in the startup company.

Standard terms for investors include an entry fee (load) charged upfront for the opportunity access and a percentage of the price appreciation (carry) payable to the organizer of the opportunity. The organizer need not be a regulated investment firm.

Raising debt or hybrid debt

Issuance of plain vanilla bonds (Eurobonds) is easy, and we are happy to help. We also structure more nuanced deals involving provision of debt financing with some of the income linked to the income of the company/asset. Other example of bespoke bonds/notes is when they are convertible into the company’s stock or another asset.

In any event, we issue such securities in a format which allows their easy admission into global clearing systems (Euroclear, Clearstream, SIX-SIS) and may provide an exchange listing for them for ease of access or just prestige/visibility.

Raising funds in crypto in a compliant way

When raising funds in crypto, a great deal of legal effort is spent on proving that the token being offered to investors is a ‘utility’ rather than a ‘security’ token. Truth is, such tokens are very rarely pure utility instruments.

Our approach for non-utility tokens is – why don’t we call them securities from the start, and get them legally issued as securities? You would be surprised at how easy and inexpensive this could be if the right configuration and jurisdiction is chosen.

Structuring a private placement in a compliant way is easy, as those are exempt from prospectus approval requirements in many jurisdictions.

Raising fiat funds for a crypto business / portfolio / strategy

When exciting opportunities open in the crypto sphere it is not only the crypto investors that want to participate. Family offices, wealthy individuals, even institutions may wish to buy in. However, they prefer investing through ordinary securities, not through blockchain wallets.

We create securities to wrap up the crypto investment, engage suitable custodians for peace of mind and get the securities into Euroclear / Clearstream / SIX-SIS or other depository systems where they are easily investable and tradable. We can even secure an exchange listing for such securities. Our typical issue country for such products is Switzerland but we also do it in other places, depending on the target distribution market.

Making local securities globally investable

If you already have securities issued under the jurisdiction of [X], without access to global clearing (Euroclear / Clearstream), you may want to make them globally investable. We can do it.

To do that we will need to issue ‘wrapping’ securities in the format which allows admission into Euroclear / Clearstream. For example, you have a private investment fund in Cyprus, and its shares cannot be admitted to global clearing. As a solution, we can issue asset-backed notes under Swiss jurisdiction (ISIN: CH) which will be backed by the fund’s shares 1:1. Those securities will be admitted to SIX-SIS, Euroclear and Clearstream. There will be no additional tax consequences for investors holding asset-backed notes in comparison to investors investing into the Cyprus fund directly. The Swiss Paying Agent will handle the custody of Cypriot fund’s shares and the payment flows under the securities.

Another solution is to issue depositary receipts or depositary notes on the underlying security and get those receipts / notes into the global clearing networks.

Opening up investments in closed markets to global investors

In many countries issuance of local securities is a difficult task. And in many countries local depositories are not linked to global depository & clearing systems (such as Euroclear and Clearstream), so even if local securities are issued, there is no easy way for international investors to access them. Exchange restrictions also play a part.

Depending on whether you are raising equity, debt or seek combined financing (e.g., convertible debt), we will set up an SPV in a jurisdiction well connected to global financial markets and will issue globally accessible securities (Euroclear / Clearstream) which will be linked to, and backed by, the investment in your country. The capital raised by the issue will be invested in your business / asset. Normally, there should be no, or few exchange control restrictions on the repatriation of profits to pay ultimate investors under such scheme.

‘We want to raise funds from crypto investors for a non-crypto project’

One obvious solution is to co-operate with a crypto broker and have the investor open two accounts at once – one with the crypto broker to sell crypto and the other with the ordinary broker to buy the securities (that we will help issue).

Some crypto investors may be reluctant to have accounts with institutions, and to accommodate their investing profile securities may be issued as security tokens, being originally on a blockchain and not requiring the investor to deal with crypto/fiat conversion personally.

We know how to issue securities in the form of blockchain-transferable tokens, but otherwise being legally securities (with an ISIN) subject to securities laws.

Private placement of such securities is usually subject to less regulation and oversight than a public issue, but even public issues are possible without a need to involve the regulator in certain jurisdictions.

It is important to say that as a legal services platform we are completely software-neutral and can tether our issuance service to any blockchain and software solution.

‘We want to raise investment from Islamic funds and private investors’

The Islamic investment market is huge. Out of up to 2 billion Muslims in the World a certain part welcomes investment in a Shariah-compliant way, if provided the opportunity. Many wealthy families in the Gulf and other countries would only invest into Shariah-compliant products. Same for Islamic-only financial institutions.

We structure and help launch investment products (securities and financial contracts) that are Shariah-compliant. We provide a Shariah Council to issue a compliance opinion and be available for consultation during the life of the financial product.