- Entity formation
- Entity management
- M&A transaction support
- Private capital & hedge fund core services
- Private capital
- Hedge fund
- Technology solutions
- Other funds services
- SPV corporate services
- Agency services
- Loan administration
- Cross capital market services
- Structures implementation and management
- Private client services
- Reporting services
Explore content
Show all >Featured articles and media

Insights | Corporate Client Services
Voluntary carbon credits bolster green bonds
25 May 2023
Read >
Featured articles and media
Show all media for Private Capital & Hedge Fund Services >Featured articles and media
Show all media for Capital Markets >Featured articles and media
Show all media for Private Clients >Featured events

Events | Virtual
Bankruptcy and Restructuring: Navigating Distress in the Evolving Markets
22 Jun 2023
Learn more >
Events | Virtual
Private Funds Industry Live, Expanding Private Funds in Global Markets
10 Jan 2023
Watch the recording >
Events | Virtual
Private Funds Industry Live, Demystifying Private Capital Funds
6 Dec 2022
Watch the recording >- Home
- Our services
- Corporate Client Services
- Entity formation
- Entity management
- M&A transaction support
- Private Capital & Hedge Fund Services
- Private capital & hedge fund core services
- Private capital
- Hedge fund
- Technology solutions
- Other funds services
- Capital Markets
- SPV corporate services
- Agency services
- Loan administration
- Cross capital market services
- Private Clients
- Structures implementation and management
- Private client services
- Reporting services
- Corporate Client Services
- Our locations
- About us
- News & Insights
- Login
Demystifying private capital funds
15 December 2022

Liam McHugh
Managing Director, European Fund Administration, CSC

Liam McHugh
Managing Director, European Fund Administration, CSC
As private capital attracts a wider investor base, which fund structures are the most popular and appropriate?
Against a backdrop of high-interest rates and low growth, alternative assets can provide investors with steady long-term returns and a stable home for capital.
Activity in the private equity space may be slowing, but private credit and real estate remain buoyant. As we move into the next economic cycle, distressed funds are anticipated to flourish.
Alternatives can be complex assets, and managers moving into these areas or expanding their allocations need to be cognisant of tax, regulatory and legal requirements, investor demands and compliance obligations.
With that in mind, which structures are managers using to meet their growing needs? And what makes the most sense as private capital targets a wider investor base?
This was the starting point for our latest #PrivateFundsIndustryLIVE event: Demystifying Private Capital Funds.
We were joined by Lindsay Trapp, Partner at Dechert LLP, and Liam McHugh, Managing Director of European Fund Administration at CSC. The event was chaired by Colin Leopold, Head of Research and Insight at Global Fund Media.
The retailisation of private capital
One of the key themes of the discussion was the continued retailisation of private capital and the most appropriate structures for targeting this investor base.
Trapp described the situation in the US, where the popularity of business development companies (BDCs) is testament to the retailisation trend, providing a gateway to credit and distressed investing for non-institutional investors, she explained.
Much of the focus in the US, she added, is on dealing with tax concerns around direct lending. BDCs’ status as regulated investment companies (RICs) make them attractive, and their relative transparency offers comfort to retail investors.
From ILP to ELTIF
In Europe, Luxembourg’s special limited partnerships (SCSp) and Ireland’s investment limited partnerships (ILPs) perform similar roles. Both these structures have the advantages of simplicity, transparency and legal protection, making them attractive to a broader investor base.
McHugh said the ILP, which came into being in 2021 could see real momentum in 2023.
He also pointed to the great success of the variable capital company (VCC) in Singapore, which can also be offered to retail investors. Over a thousand VCCs have been registered since the structure’s introduction at the start of 2020.
The same success has eluded the EU’s European long-term investment fund (ELTIF), introduced in 2015.
Its aim – of creating a long-term investment culture among both professional and retail investors – was hindered by complex rules and a lack of tax incentives. That is now under review and new rules are expected next year.
The evolution of ELTIF is worth watching. It’s a work in progress and may lead to a greater uptake in 2023.
Both Trapp and McHugh have seen continued growth in the creation of parallel funds, with US managers launching European structures to attract European investors or house assets on the continent.
Managing liquidity in private capital
Another key trend identified in the discussion was the challenge of liquidity management.
Trapp explained that this is a particular issue for hybrid funds, but also more generally as economic headwinds gather.
“It’s a key factor for both investors and managers,” she said. “Fund prospectuses should make sure they give clarity on redemption policies and gate clauses.”
General partners are using provisions around gating and longer lockup periods to ensure healthy levels of liquidity. Some funds are attempting liquidity matching.
But Trapp added that no one-size-fits-all solution to liquidity management is possible because each hybrid fund is unique.
An intriguing year ahead
Both experts agreed that new investors are moving en masse to alternatives, regardless of the structure in use.
This significant movement of capital offers opportunities – but also challenges. In the US, McHugh said, increased regulation is expected in private market funds.
In Europe, ESG requirements and potentially new AIFMD II rules will place an additional burden on managers.
These challenges are significant, but the overall impression from this illuminating session was of a sector in relatively good health.
As the economy tightens, we can expect to see a more concerted push towards the retailisation of private capital in 2023, and a corresponding uptick in the use of structures that facilitate it.
Why Intertrust Group?
- Intertrust Group has 70 years’ experience in providing world-class trust and corporate services to clients around the world. Intertrust Group has been acquired by CSC, the world’s leading provider of business, legal, tax and digital brand services, worldwide.
- As a strategic partner, we offer a full-spectrum service tailored to meet all back-office needs throughout the lifecycle of a private capital fund.
- Our Halo Framework identifies and describes a next-generation fund operating framework for private capital. Download it here.