Do US Accredited Investor rules apply to UK when investing in Private Equity, Hedge

wonderwall0

Do US Accredited Investor Rules apply to the UK when investing in US Private Equity funds and Hedge Funds like Blackstone Group? Also are the rules here more lenient in the UK in that the certified high individual rule and the certified Sophisticated Investor Rule seem to have lower requirements than the US accredited investor rule when for example apply to becoming an angel investor? Do the certified high net worth rule and certified sophisticated investor rule apply to investing to private equity funds and hedge funds like they apply to becoming a angel investor?

The Co CEO of the Carlyle group said at the Dealbook conference in 2012 that JP Morgan (I think he was referring to JP Morgan asset management) lets individual investors/retail investors access Carlyle Group funds by grouping their money together then investing in Carlyle Group funds can you do this with all private equity funds and hedge funds? Since private equity funds want retail investors to invest with them do you see retail investors investing in private equity funds in the future?

bowlhead99

wonderwall0 wrote: »

Do US Accredited Investor Rules apply to the UK when investing in US Private Equity funds and Hedge Funds like Blackstone Group? Also are the rules here more lenient in the UK in that the certified high individual rule and the certified Sophisticated Investor Rule seem to have lower requirements than the US accredited investor rule when for example apply to becoming an angel investor? Do the certified high net worth rule and certified sophisticated investor rule apply to investing to private equity funds and hedge funds like they apply to becoming a angel investor?

Generally the requirements are a function of the rules that the fund manager must follow to appease his local regulator, and the specific requirements of the country into which he's placing the investment interests (e.g. if raising funds from UK/Europe for a private fund, you have to follow the local regulations for those countries in terms of who you can offer the opportunities to).

Yes if you are investing as a private investor in a private UK PE or hedge fund you will need to meet the sophisticated investor or high net worth investor rules because the manager has to sign off on investor suitability and private PE or hedge funds or real estate partnerships are not products aimed at 'normal' retail investors.

The Co CEO of the Carlyle group said at the Dealbook conference in 2012 that JP Morgan (I think he was referring to JP Morgan asset management) lets individual investors/retail investors access Carlyle Group funds by grouping their money together then investing in Carlyle Group funds can you do this with all private equity funds and hedge funds? Since private equity funds want retail investors to invest with them do you see retail investors investing in private equity funds in the future?

The most common way for retail investors to access private equity or similar alternative opportunities is through closed ended, stock market listed, funds-of-funds. Effectively the investors buy into a listed investment company (which might be managed by JPM or other specialist fund managers) and that company is able to commit money into a number of underlying private equity funds to build up a portfolio - that could include funds offered by Carlyle.

As a retail investor I have a number of investments in this sector including Pantheon International Participations (PIN), Aberdeen Private Equity (APEF) and Harbourvest Global Private Equity (HVPE). They each have a portfolio of commitments to a number of underlying private equity and venture capital funds. JP Morgan Private Equity Limited (JPEL) would be an example of another one.

Some listed private equity vehicles (including venture capital trusts) invest directly in private equity opportunities. Sometimes these are on a co-investment basis with larger institutional funds sharing the opportunity. So there are a variety of different vehicles out there for retail investors - check out http://www.lpeq.com

You say "Since private equity funds want retail investors to invest with them" but this is not necessarily the case. They don't want to exclude themselves from capital which is floating around out there, but a fund manager would much prefer to deal with high quality institutional investors committing millions at a time, than a bunch of individual investors. Unless they are his friends and family and professional networks and he's letting them in on a 'sophisticated investor' basis to do them a favour. So a listed fund-of-funds can be quite useful in pooling together retail investors whose money then comes through into the main fund. This has been going on for decades and is not new.

Sometimes, depending on local regulation, a fund manager could set up a dedicated 'retail investor' feeder fund to invest in his one private fund product but it is more common that such a fund would hold a wider portfolio of interests across multiple investee funds because, generalising, retail investors do not have the time or ability to do their due dilgence on individual private equity funds.

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Having written all that, I'm curious why you are asking the question. Are you just some kid trying to get answers to school / college essay questions? I see your only other post was 15 mins earlier about private car leasing and whether it would exist in the future. Like retail investors investing into private equity, it does exist already.

Still, perhaps the above insight would be of interest to somebody else.

badger09

@bowlhead99

I'm not interested in the subject matter of this particular thread, but wanted to thank you anyway, for your time & patience in answering stuff like this. Don't want you to feel unappreciated:o

bowlhead99

badger09 wrote: »

@bowlhead99

I'm not interested in the subject matter of this particular thread, but wanted to thank you anyway, for your time & patience in answering stuff like this. Don't want you to feel unappreciated:o

Awww thank youu :A

wonderwall0

Thanks for writing that explanation, I was looking to invest money in the search for higher yield in Blackstone Group's Private Equity and or Real Estate funds.

wonderwall0

Also on the personal contract hire front I know some car manufacturers offer car leasing to personal customers though what I was trying to ask on that thread was whether personal contract hire and leasing for personal customers would reach the motorcycle market as offered by manufacturers? For example someone at BMW Motorrad Financial Services (I don't know whether they share their financial services department with BMW cars) told me that they only do leasing for business customers. So I was wondering if any motorcycle manufacturers offered personal contract hire/leasing to personal customers as well as business customers. I am grateful to the members on this fourm all my questions on that motorcycle leasing front and on this private equity and hedge fund investing for retail investors have been answered on that thread and this thread.

wonderwall0

Thank you very much for your help I will look for some "closed end, stock market listed, fund of funds" and look at the website you mentioned.

bowlhead99

wonderwall0 wrote: »

Thanks for writing that explanation, I was looking to invest money in the search for higher yield in Blackstone Group's Private Equity and or Real Estate funds.

Blackstone's private equity funds are not known for a particularly high yield; like most private equity funds, the goal is to make a good overall total return for investors as a combination of high IRR and cash-on-cash multiple. So total return should be decent but ongoing dividends distributed may be very low or zero for large parts of the fund's life. The latest fund was closed in December at $18bn but there will likely be some fund-of-funds who have a piece of it, and some of these may have a retail route to access.

Of course, as a listed investment management group, Blackstone itself is available to invest into on NYSE. So if you are seeking returns and believe in their people and business model, it's one thing to consider. Since the worst days of 2009, the stock is up 5x, while still throwing out dividends four times a year. Although if you'd invested at $35 a share in their 2007 IPO your returns would have been rather less stellar, as they picked a good time to go public.

wonderwall0

Thank you for your post, what is your opinion on Blackstone's Real Estate Funds?

bowlhead99

wonderwall0 wrote: »

Thank you for your post, what is your opinion on Blackstone's Real Estate Funds?

You mean something like BREP VIII LP which only closed last year and has yet to deploy much of its investor commitments into properties, or something like BREIF which mostly holds CMBS?

When you say what do I think of them: in comparison to what? And how are you proposing to invest into them?