Hedge Funds Ireland. Providing insights on Hedge Funds

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1 Hedge Funds Ireland Providing insights on Hedge Funds Ireland is a jurisdiction that is synonymous with hedge funds. After all, over 40% of global hedge funds are serviced in Ireland, making it the largest hedge fund administration centre in the world and Europe s leading hedge fund domicile. Irish domiciled hedge funds account for USD 100 billion in assets. As is shown in the chart opposite, despite a decline in 2008 as a result of the credit crisis, Irish hedge funds have grown steadily over the last six years and have now surpassed the pre crisis asset levels. Ireland was the first regulated jurisdiction to provide a regulatory framework specifically for the hedge fund industry and remains at the forefront in preparing for, and reacting to, regulatory and market developments. The majority of hedge funds set up in Ireland are structured as Qualifying Investor Funds (QIFs). The Irish Qualifying Investor Fund (QIF) is a well established, regulated investment fund vehicle that addresses the flexibility and speed to market requirements of sophisticated investors. The QIF has the characteristics and flexibility of typical hedge fund products while authorised and regulated by the Central Bank and already meeting many of the pending regulatory standards being agreed at EU level, such as those in the AIFMD.

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3 Irish Administrated Alternative Investment Funds Assets US Dollars Billions NAV ( Bn) Rest of the world 60% Ireland 40% Source: HFM Survey & IFIA, Oct 2011 Growth of Irish Domiciled Hedge Funds Source: Lipper Ireland Fund Encyclopaedia Irish Domiciled Qualifying Investor funds (QIFs) No of funds Why PwC for hedge funds? Commitment PwC s goal is not to meet, but to exceed, our clients expectations. We are fully committed to this goal. Market leader PwC s hedge fund practice is unsurpassed in terms of its depth of knowledge, breadth of experience and dedication to the industry. PwC s global leadership position is measured not only by market share and practice size but also by the quality of our clients, many of them industry leaders themselves, and the quality of the services we provide. We are the number one auditor by number of funds audited in: Bermuda, Canada, Cayman Islands, Guernsey, Ireland, Jersey, Luxembourg, New Zealand, UK and the USA. Global network PwC s integrated global network of asset management professionals provides extensive industry experience. With offices in 158 countries throughout the world we provide the global coverage our clients need. Our blue-chip global client list means that we are at the forefront of industry developments. Industry focus PwC Ireland has a 100% dedicated group with over 400 individuals that offers unique insights, industry-leading practices and trends and informed perspectives on what is happening in the marketplace. A valued point of view Recognising PwC s position in the industry, regulators, industry associations and accounting rule-makers often seek advice from PwC. For instance, a PwC partner was elected chair person of the Irish Funds Industry Association (IFIA) last year. This not only allows PwC to anticipate issues and trends but to help shape them and offer clients a unique perspective that others may lack. An integrated approach Recognising the global nature of the hedge fund industry PwC offers seamless integration of audit, tax and advisory professionals. This industry-leading integrated service delivery model allows information to flow freely and smoothly. Activities are carefully coordinated and efficiency is maximized. Net asset Value ( Billion) No. of funds (incl sub funds) Source: Lipper Ireland Fund Encyclopaedia Hedge Funds - Ireland

4 The proof is in the numbers PwC knows hedge funds 100% dedicated Asset Management group, over 12,000 people worldwide 158 countries worldwide have PwC offices including countries from all the main regions such as Asia, Europe and the Americas. 70% of the Hedge - Fund Intelligence Top 100 Hedge Funds worldwide are serviced by PwC May % of the Hedge Fund Intelligence Top 100 Hedge Funds worldwide are audited by PwC May % of the European Top 50 hedge fund managers are serviced by PwC 42% of the European Top 50 hedge fund managers are audited by PwC 90% of the European Top 10 hedge fund managers are serviced by PwC 60% of the Hedge Fund Journal Top 25 Asian single managers are serviced by PwC 96% of the Absolute Return & Alpha US Billion Dollar Club Top 25 Hedge Funds are serviced by PwC in the US What can PwC offer to Hedge Funds? Hedge funds are a specialist product. PwC has a global team of experts with extensive experience of hedge funds. We offer services which are specifically tailored to the needs of hedge fund managers, their funds and their service providers. Our hedge fund and manager services include: Assisting clients with all aspects of manager and product design and selection Tax reviews and examinations fund and manager structuring, treaty access, geographic tax analysis and investment manager tax reviews Annual audit of hedge funds and asset management firms Agreed-upon procedure engagements Preparation and audit of SSAE16 (previously SAS 70) and AAF reports for asset management; administration and prime brokerage firms Market risk and valuation services Performance improvement, regulatory and advisory services Investor reporting Complex tax and accounting solutions PwC Ireland Hedge Fund Market Share Market share of Irish Domiciled Hedge Funds by AUM 19% 21% 21% 8% 14% 26% 52% Market share of Irish Domiciled Hedge Funds by no.of funds 26% 13% 39% 33% Source: Lipper Encyclopaedia Ireland 28% 2011/2012 An audit tailored to the needs of hedge funds 26% PwC KPMG E&Y Deloitte As one of the world s leading audit and advisory firms, PwC audits many of the largest hedge funds and their managers throughout the world. We have a wealth of experience in servicing the hedge fund industry, as demonstrated by our client list and our market share. PwC provides hedge funds and their managers with: An efficient audit process which minimizes business disruptions, costs and results in more timely reporting Complex accounting solutions on new guidance released from global accounting standard setters Specific agreed-upon procedures reviews of controls and processes surrounding hedge fund control environment Knowledge of valuation techniques for difficult to price investments that are consistent with industry standards and practices For investments which are less liquid or where valuations are more subjective, we will leverage off processes at the Investment Manager and administrator and liaise with third party specialists. Involvement of our market risk group and corporate finance team to consider valuation assessments utilising specialised valuation and modelling expertise. PwC KPMG E&Y Deloitte PwC KPMG E&Y Deloitte A greater depth of knowledge with the seamless integration of audit, tax and advisory professionals Auditing track records Strategic investor or IPO of management company IFRS/USGAAP/Local GAAP - monitoring potential impact on Management Company and funds financial statements

5 Tax compliance & efficiency PwC offers a dedicated group of tax professionals, focused on international and local tax issues facing hedge fund managers. PwC has a global asset management tax network and is a leading provider of tax services to 56% of the European top 50 hedge funds and 70% of the top 10. PwC provides hedge funds with: Assistance on tax structuring of asset managers and their investment funds to ensure maximum investment return for investors. Assistance & Advice in relation to European investor tax reporting obligations and EU Savings Directive reporting requirements Compliance obligations to include Value Added Tax ( VAT ), investment undertaking tax obligations, transfer pricing rules and payroll related tax services The set up and optimal tax structuring for management companies Portfolio level tax risks Compensation planning for executives, directors and employees Tax Authority audit preparation Meeting strategic business challenges PwC advisory professionals understand the fundamentals of creating value. They know why, where, how and in what sequence critical elements such as strategy, structure, people, process and technology must be addressed and integrated to drive performance. PwC assists hedge funds and hedge fund managers by: Assisting with the review and interpretation of, and providing briefings on, new regulations e.g. AIFMD Identifying the impact of regulations on business operations, across people, processes and technologies e.g. FATCA Estimating the cost, and planning the timeline involved, in adhering to new regulations e.g. Dodd Frank Assisting with market entry strategy and hedge fund domiciliation Optimising processes and achieving cost efficiency Supporting the enhancement of governance structures,compliance procedures and risk management practices. Hedge Funds - Ireland

6 ESMA issues final advice on Level 2 measures some more answers, some more questions. ESMA publishes final advice 1 Preparing the next generation of hedge funds for growth. December, 2010 December, 2010 Distinctive Research and Publications Asset Management Valuation survey Asset Management Valuation survey Our publications help to differentiate PwC from the competition, enabling us to provide you with our points of view on the broad environment in which your hedge funds operate and on specific issues impacting this industry now and in the future. The Finger on the Pulse series The Finger on the Pulse is a series of annual Asset Management events run by PwC Ireland in our offices at Spencer Dock, Dublin. These events focus on topical issues affecting the industry. This is our 5th year running this series of events. Our first event each calendar year is on the changing landscape of the alternative asset management ( Alternatives ) industry. This event is part of a global Alternative Investments Roadshow seminar series: these Roadshow are also held in London and Zurich as well as in cities in the US, the Caribbean, South America and Asia. ESMA publishes final advice AIFMD News Edition 10 Winter 2011 AIFMD newsletter newsletters issued throughout the process, this is edition 9. Also, flyers available on impact to various sectors such as Private Equity, Real Estate and service providers Infrastructure: From Cost to Benefit Hedge Funds 2.0 Global AM newsletter Asset Management Insights is our flagship publication for communicating key asset management issues. A Closer Look Series This series of publications provides updates on the announcements regarding Dodd Frank and the impact of this regulation on various sectors Valuations Survey annual survey polling more than 50 US-based asset managers of varying sizes. Global News brief Update on the long-awaited proposed FATCA regulations Asset Management Future Newcits regulation? Our view, informed by conversations with regulators Cost to Benefit Point of View on the hedge fund industry s infrastructural challenges Trust and Transparency Point of View on the growing demands for transparency in the hedge fund industry Future Newcits Regulation? PwC s view, informed by conversations with regulators Our dedicated hedge fund team Irish Hedge Fund Leader Pat Candon pat.candon@ie.pwc.com Central Cluster Hedge Fund Leader Olwyn Alexander olwyn.m.alexander@ie.pwc.com Patrick Wall pat.wall@ie.pwc.com Andrea Kelly andrea.kelly@ie.pwc.com James Conaghan james.conaghan@ie.pwc.com Declan Murphy declan.g.murphy@ie.pwc.com Ciaran Flynn ciaran.flynn@ie.pwc.com Clodagh O Reilly clodagh.oreilly@ie.pwc.com Darrelle Dolan Darrelle.p.dolan@ie.pwc.com David McInerney david.mcinerney@ie.pwc.com Joseph Katchpole joseph.katchpole@ie.pwc.com Lesley Bell lesley.bell@ie.pwc.com Louise Bradley louise.bradley@ie.pwc.com Marie Coady marie.coady@ie.pwc.com Patrick Glover patrick.glover@ie.pwc.com Michael Lester michael.scott.lester@ie.pwc.com Rosaleen Maunsell rosaleen.maunsell@ie.pwc.com Suzanne Senior suzanne.senior@ie.pwc.com Gillian Lowth gillian.m.lowth@ie.pwc.com

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8 PricewaterhouseCoopers. All rights reserved. PwC refers to the Irish member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. Design Studio 03955