Private Equity Trends in Finland Helsinki, Finland | April 25, 2017 - - PowerPoint PPT Presentation

Private Equity Trends in Finland

Helsinki, Finland | April 25, 2017

ILPA AT A GLANCE

Our Members by the Numbers

Active Members ~400 Active Organizations ~50% Global Institutional PE AUM ~3,700 Active LPs >20% Member growth in 2016

Building on the recent membership growth in Europe, this is the ILPA’s inaugural Helsinki event. Finnish members have been very engaged with the ILPA, travelling for the European Forum, the ILPA Summit and Members’ Conferences and attending virtual webcasts. Finland is the ILPA’s 5th most concentrated country of member HQs in Europe and

• growing. The first Finnish ILPA member joined in 2008 and our most recent

Finnish member joined in 2016. Local members represent a mix of segments: DFIs, Private Pensions, Public Pensions and Insurance Companies. IN THE ROOM TODAY

• ~20 attendees representing ten different LP organizations from seven

different organization types.

• Participants include CE0s, Heads of Private Equity, Managing Directors,

Directors, Counsel, Investment teams and Portfolio teams.

ILPA IN FINLAND

Family Office, 13% Endow / Found, 14% Public Pension, 30% Private Pension, 13% Insurance, 10% DFI, 6% Investment Co., 7% Sovereign Wealth, 4% Other, 4%

COMMUNITY VOICE EDUCATION RESOURCES

What We Do

ILPA AT A GLANCE

NEW ILPA EUROPEAN FORUM: February 7 & 8 | London, UK This event brought the central education and networking elements the ILPA is known for to a more time and cost-efficient location for European members. MEMBERS’ CONFERENCE: May 31 – June 2 | Boston, MA A 3-day LP-only event where hundreds of investors gather for networking and education. This year will feature our inaugural CIO Symposium, designed to facilitate the highest level of discussion of the most critical issues. ILPA SUMMIT: November 7 – 9 | New York, NY Using a proprietary algorithm, members are matched for meetings with qualified GPs selected by an LP committee. ILPA INSTITUTE: Select dates | San Francisco, CA; Chicago, IL; London, UK Introduced a new course in 2017: Secondary Fund Modeling. WEBCASTS: Delivered monthly and archived on ilpa.org 50+ archived webcasts including: What’s Next for Regulation of PE in the US?; Fraud in PE – Can Caspersen Happen Again?; Advice on Advisors: The Use of Consultants in PE; and The Use (and Misuse)

• f Lines of Credit

COMMUNITY EDUCATION

HIGHLIGHTS FROM THE 2017 PLAN

ILPA PE PRINCIPLES: To be updated in 2017 Developed to improve the PE industry for the long-term benefit of all its participants by outlining many key principles of any private equity partnership. We are actively gathering feedback for the next iteration. REPORTING TEMPLATE Currently endorsed by ~100 LPs, GPs and third parties, and growing. Stakeholders are working to automate template reporting to encourage additional adoption. WHITE PAPER SERIES Inaugural paper published in Q4 2016 (Limitations of the Value Bridge); four papers planned for 2017 will explore Carry Validation, Fee Leakage, Sensitivity Analysis of Fund Fee Structures, and Policy Benchmark Selection. BEST PRACTICES & TOOLS Most recently, added End of Life and Fund Closing Checklists. ILPA PRIVATE MARKETS BENCHMARK Free and available exclusively to members, these quarterly reports represent the performance of over 3,500 global funds.

VOICE RESOURCES

HIGHLIGHTS FROM THE 2017 PLAN

ILPA MEMBER DISCOUNTS

• Save 4

e 40% % on subscriptions activated in 2017 (1st year only)

• Save 25%

25% on subscriptions activated after 2017

• Save 25%

25% on all renewals

• Free

e Access to PE Analyzer: ILPA Version

• Save 25%

25% off the PE Analyzer: Standard Version

• Save

ve o

• ve

ver 1 15% off the PE Analyzer: Professional Version

TOPICS

• AIFMD era and marketing of non-EU funds to Finnish investors
• PE funds and publicity
• Waterfall, carried interest, clawback and taxation

AIFMD Era and Marketing of non-EU funds

• AIFM Act requires a non-EU manager to interact with Finnish FSA

prior to commencing marketing

• Timing issues and impact on deal flow?
• Reliance on ”reverse solicitation”?
• Using intermediaries or seeking secondary opportunities?
• In addition to reporting requirements, the relevant fund is then

required to comply with asset stripping and transparency rules on portfolio company level

AIFMD bespoke regime in Finland

• Large transposition law (7 March 2014, 162/2014) entered into

force on 15 March 2014

• Apart from AIFMD transposition the law also includes EuVECA and

EuSEF transposition

• 5 MoF Decrees (20 March 2014, 226-230/2014) entered into force
• n 29 March 2014 and deal with AIFMs activities, applications,

remuneration, KID and depositary

• Q&A to be expected from the FIN-FSA
• Lessons learned: Issues which meet controversy should be

stipulated at the level of law

• Scarce experience: EuVECAs, EuSEFs, ELTIFs

AIFMD – what next in Brussels

• EU Capital Markets Union Mid-term review to be expected on 7

June (college of Commission)

• AIFMD is not included in the selected 33 projects (e.g. cross-

border marketing of funds)

• However, AIFMD (and UCITS) Commission reviews are expected

to begin later this year

• AIFMD third country regime has not been finished as yet (and

Brexit complicated it further)

• EuVECA/EuSEF trilogies begin in May 2017
• EP-ECON report extremely forward-looking
• MMFR to be adopted during the summer

AIFMD – what next in Finland

• AIFMD is primarily a bespoke venture capital and private equity regime

in Finland

• Hedge funds and real estate funds are mostly regulated as non-UCITS
• AIFMD national regime to be evaluated as well as possibilities to FIN-

SICAV (in the UCITS context)

• UCITS transposition law under scrutiny in a MoF working party

(deadline 31 January 2018)

• Non-UCITS regulation to be transferred from national UCITS regime to

national AIFMD regime

• Tax issues: A working party on taxation of savings and investments to

be set up in the near future

• SFTR and MMFR to be transposed together

PE Funds and Publicity

• LPA and side letter terms permit disclosure where required by law
• ”FOIA” type requests by press
• Media coverage on pension funds’ investment returns, tax havens and

tax planning, private investments in i.a. healthcare sector, and indirect participation by Finnish institutional investors in portfolio companies

• Retail / semi-professional investor access to private equity
• How to improve public perception of private equity?

Waterfall, carried interest, clawback and taxation

• ”European waterfall” still the market standard
• Still some uncertainty on the taxation of carried interest
• LPA terms: More focus on clawback and escrow
• (AIFMD remuneration rules)

CONTACT INFORMATION

Paulus Hidén Partner Direct +358 20 713 3436 Mobile +358 50 564 6848 paulus.hiden@borenius.com

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