Case study: Allen, Bob and Cara LLC (“ABC”) is a US based asset manager with USD 10 billion under management.

Case study: Allen, Bob and Cara LLC (“ABC”) is a US based asset manager with USD 10 billion under management. ABC is registered with the US Securities and Exchange Commission as an “investment

adviser” (an “RIA”) and manages a portfolio of private funds across different sectors and geographical

regions. Due to the COVID-19 pandemic which resulting in the soaring demand for healthcare and

medicine, ABC is currently developing a new fund strategy to invest in the healthcare sector across the

EU, especially start-ups focusing on vaccine research and development. Some of their existing deal team

have experience in healthcare but that experience is largely US based. Thus, they are thinking of

recruiting a new team in London to help them identify appropriate opportunities in the region. They are

envisaging two alternative potential structures: (1) a Delaware and Cayman parallel structure managed

by the RIA with advice and assistance from the new team in London; and (2) a Luxembourg fund that

would be managed and controlled from EU by the new team.

1. Please consider the advantages and disadvantages of both structures for ABC: when might one make more sense than the other and what regulatory burdens do they each involve?

2. ABC ultimately decides to go for a Luxembourg limited partnership for their new fund – ABC Pan-

European Healthcare SCSp (the “Fund”) – and plan to raise EUR 2 billion for the strategy. What are

the advantages of using a limited partnership as the fund vehicle?

3. The Fund’s likely investor base is going to be split between the US and Europe. What regulatory

factors should ABC consider when marketing the Fund in each of these regions?

4. ABC begins to work on the governing documentation of the Fund, starting with the PPM. What

factors do they need to consider disclosing and addressing in the Private Placement Memorandum

given the likely investor base (the US and Europe)? What disclosure issues do they need to

specifically consider in the PPM with respect to the new team?

5. During the fundraising process, ABC hears that there is some interest in the fund from investors in

East Asia (particularly in mainland China, Hong Kong, South Korea, Singapore and Japan). Consider

any additional marketing considerations you might want to address with a change in focus to Asian

investors (you only need to consider one or two of the above five jurisdictions listed).

6. VSS is a UK based pension fund considering an investment in ABC Pan-European Healthcare. What

are the primary characteristics of private equity funds like those run by ABC that make them

interesting investment opportunities for institutional investors like VSS?

7. What eligibility criteria should ABC consider when looking at VSS as an investor?

8. VSS passes ABC’s initial verification and eligibility checks. In tandem, after an extensive due

diligence exercise on ABC and the new deal team, VSS decides it is likely to invest in the Fund.

Negotiations on the key documentation therefore begin. ABC is keen to get VSS into the Fund

quickly. What incentives could ABC offer to VSS to ensure they commit quickly? Explain in each

case how they might work.

9. ABC, as a US investment manager, has drafted the Fund’s Limited Partnership Agreement with a

US style waterfall. VSS as a British investor, despite the Brexit, is more accustomed to a European

style waterfall and is arguing that as the Fund is located in Europe such a waterfall would be more

appropriate for this Fund. Consider the key characteristics of each waterfall and the reasons each

of ABC and VSS might prefer one to the other.

10. VSS is concerned that ABC is also thinking of raising a healthcare fund to invest in the US. In

particular they are worried (a) that such a fund in the US might make investments in deals that

would otherwise have been done by the Fund and (b) that certain members of the deal team for

the Fund might spend time working on mandates for the US fund. How should VSS go about

negotiating protections from these issues?

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