Conduits of Capital

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STAKEHOLDER VIEWS ON THE RELATIONSHIP BETWEEN LPS AND FUND DOMICILES:
“If a fund manager is trying to attract local investors, it will want to have a fund that is domiciled in its own country. For
international investors, this is not the case—they prefer not to be in the local currency and to instead have the fund manager
manage the currency risk for them. Most international investors don’t have the capability to manage a foreign exchange book
on three levels: 1) having to make the distributions / capital calls in foreign currency; 2) having to take the foreign exchange
risk; and, 3) reporting, because you have to convert every single report that comes to you in a foreign currency into US dollars,
and that requires additional administrative costs. In my view, dual structures could be a potential solution for managing these
two sets of investors. However, dual structures are normally difficult to manage.”
– Fund of Funds
“My sense is that one of the primary drivers for LPs is current market practice. From our perspective, that means going with a
structure that LPs and their advisors are familiar with, where they are able to make use of existing advisory relationships,
”
keep
costs down, keep perceived risks down, and make the whole business of investing in funds a simpler process.”
– Pan-Emerging Market GP
Conduits of Capital – Onshore Financial Centres and Their Relevance to African Private Equity
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