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 ILPA IN FINLAND Active Members Building on the recent membership growth in Europe, this is the ILPA’s ~400 Active Organizations inaugural Helsinki event. Finnish members have been very engaged with the ILPA, travelling for the European Forum, the ILPA Summit and Members’ ~50% Global Institutional PE AUM Conferences and attending virtual webcasts. ~3,700 Active LPs Finland is the ILPA’s 5 th most concentrated country of member HQs in Europe and >20% Member growth in 2016 growing. The first Finnish ILPA member joined in 2008 and our most recent Finnish member joined in 2016. Other, 4% Sovereign Wealth, 4% Local members represent a mix of segments: DFIs, Private Pensions, Public Family Office, 13% Pensions and Insurance Companies. Investment Co., 7% DFI, 6% IN THE ROOM TODAY Endow / Found, 14% • ~20 attendees representing ten different LP organizations from seven Insurance, 10% different organization types. Private Public Pension, Pension, 30% Participants include CE0s, Heads of Private Equity, Managing Directors, • 13% Directors, Counsel, Investment teams and Portfolio teams.

ILPA AT A GLANCE What We Do COMMUNITY EDUCATION VOICE RESOURCES

HIGHLIGHTS FROM THE 2017 PLAN COMMUNITY 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. EDUCATION 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) of Lines of Credit

HIGHLIGHTS FROM THE 2017 PLAN VOICE 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. RESOURCES 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.

ILPA MEMBER DISCOUNTS • Free e Access to PE Analyzer: ILPA Version • Save 4 e 40% % on subscriptions activated in 2017 (1st year only) • Save 25% 25% off the PE Analyzer: Standard Version • Save 25% 25% on subscriptions activated after 2017 Save ve o ove ver 1 15% off the PE Analyzer: Professional Version Save 25% 25% on all renewals • •

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 on 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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