The Hedge Fund Journal Features “Debt Fund” Article Co-Authored by Hanifan, Lloyd-Jones
Akin Gump hedge funds tax principal Jon Hanifan and tax counsel Thomas Lloyd-Jones have co-written the article “Debt Fund Considerations,” which has been published by The Hedge Fund Journal.
The article aims to provide asset managers with an overview of the key issues that they will need to consider when determining fund design for a debt product. The authors note that, because of the diversity of products available under the “debt fund” rubric, “fund design has perhaps a greater role to play in developing a structure that is attractive to investors than in other asset classes where there is a dominant structure well known to, and accepted by, the market.”
Hanifan and Lloyd-Jones identify four “structuring challenges” specific to this asset class—the liquidity of the investment asset, the nature of the investment return, the importance of offshore investment platform structuring, the U.K. tax status of the fund’s investment activity—and discuss them in detail.
The authors conclude, “The structuring considerations for many debt products are often more diverse and less homogenised than for other asset classes. The best structures will need to do more than merely accommodate investor requirements; they will hopefully assist a sponsor in distinguishing its product in what is an increasingly competitive environment.”