Opalesque Exclusive: Benedicte Gravrand, Opalesque Geneva for New Managers:
Emerging Asset Management (EAM) was set up with the mission to provide emerging managers a cost effective, full turn-key solution to help them launch successful funds and keeping their total expense ratio down, with the mantra: “Helping Emerging Managers Build Strong Foundations.”
EAM was incorporated in Bermuda in May 2008 by Peter Hughes, the Founder and Group Managing Director of Apex Fund Services, and John Bohan, the Managing Director of Apex Fund Services (Ireland) and Group Operation Officer. The New York-based firm has four platforms; one domiciled in the U.S. in Delaware, one in Bermuda, one in Cayman, and a soon to be completed Shariah-compliant platform in Bermuda.
Jerry Gil, Managing Director of EAM, told Opalesque that as there are many more barriers to entry for those funds launching with little money – whether it be large banks and third party organisations which don’t want to work with them, or the prohibitive fees charged by the large service providers – managers with few assets can’t create a fund, and therefore a track record necessary to attract institutional investors.
“Emerging Asset Management was created to fill this gap in the market and developed a service to support startups,” he explains. “Once they are up and running there is significant growth opportunity with many of them.”
“The fund formation documents and legal fees still costs anywhere between $50,000 and $200,000” Gil notes. “Then fund managers have to engage with auditors, prime brokers and administration firms. The EAM platforms eliminate the need for the client to search for these relationships, as we created a plug-and-play out-of-the-box solution for clients and aligned ourself with reputable institutions to provide the services that a fund needs.”
EAM appointed Apex Fund Serves to provide the Administration services, and negotiated preferred rates with internationally recognized providers for Prime Brokerage, Auditing and Legal Services.
“Special fees and special arrangements have been negotiated, so that they can support EAM and pass the benefits onto our clients,” Gil says. “All EAM’s partners understand the long term benefits; when clients come off the platform and launch their own funds, the providers will be in a great position to capture the business in their respective fields.”
The firm has also established relationships with specialist legal firms for each platform, Gil continues. The lawyers ensure the fund formation is completed at the top level under the EAM banner. EAM then creates a completely segregated sub-fund for the end client, which requires a supplement to the fund and is reviewed by EAM’s external legal relationships. This organisation guarantees that most of the fund formation documentation has already been completed, which allows fund managers to enter the market in around four to six weeks. “Significantly faster than if they tried to launch on their own,” Gil adds.
The EAM platform is for funds that are typically small, just starting the process and can’t get big name service providers to support them independently, he sums up. The platform allows them to build a track record with reduced expenses. EAM costs anywhere between $45,000 to $60,000 on an annual basis, including the fund’s set-up, on-boarding for the platform, hosting (EAM charges hosting fees), legal fees, directorships, corporate secretary, and set up fees for Apex.
The platforms now host 75 clients located globally in Asia, Australia, the U.S., LatAm and Europe, managing all types of alternatives funds and EAM targets 50 new funds annually. Each fund will stay as long as its suits them. Those who grow fast and create a good track-record will launch as a stand-alone and become independent before the rest, as well as those whose investors require an independent set up.
According to Gil, investors are more used to seeing funds on hosting platforms these days. They often have doubts about the survival of small independent funds, and are aware they would absorb their costs. EAM’s platforms provide investors with funds that have a lower cost base, and protection by way of segregation of assets and independent verification. Everybody wins.