Wealth Management for Private equity professionals
We have expertise in helping private equity professionals. We pay keen attention to co-investment and carry cycles. We can help you to diversify your existing investments to lower your exposure to risk and market volatility. Our expertise in wealth planning can help ensure that your cash is put to work, whilst managing for future liquidity events.
Case study
‘I want to simplify my finances ahead of retirement’
Background
Our client is a private equity (PE) professional, working for a US-based private equity firm in London. He helped found the London office and has an excellent understanding of financial markets and portfolio construction. He is married with two adult children.
Key objectives
To simplify his finances ahead of retirement, which may be overseas, and invest part of his carried interest in a diversified portfolio, whilst managing cashflow for future capital calls.
How we helped
We began by using our cashflow planning tool to review our client’s short-term cashflow requirements, long-term investment objectives, as well as carried interest plans.
We were able to illustrate a range of different scenarios, including reserving cash for capital calls or investing with a lending facility. This was projected against the age and location of his retirement and various inflation and return assumptions.
Our client had been managing his family’s finances himself, but was looking to take a step back from this. He felt that our ‘bottom up’ approach to investing was similar to his company’s approach to private equity research, and liked how it complemented his PE commitments.
We combined both his and his wife’s self-invested personal pensions into our growth strategy and then consolidated their investments into one of our discretionary portfolios. We staggered the transfers over time to ensure tax efficiency.
We re-invested the proceeds into one of our tax-efficient investment structures, which doesn’t incur capital gains tax on an annual basis and reduces the taxable dividend yield. The structure is domiciled offshore, which provides for flexibility should they choose to retire overseas in the future.
We put in place a plan for our client’s future carried interest payments and discussed tax-efficient options for passing assets down to his children. This included trusts and family investment companies.
We helped him work out how much was needed for shorter-term expenditure and capital calls for PE arrangements, and allocated these to a range of deposit accounts and gilts.
For additional peace of mind, we arranged a lending facility secured against his investments with us, which can be used for any additional or unexpected capital calls. The facility is free of charge and clients often like having this in place as a short-term liquidity solution, should they ever need it.
We set up regular meetings for our client our investment team, to discuss views on markets. He is already in touch with our global advisory teams through his PE work. We also introduced him to a colleague to discuss retiring in Europe, which he found useful. He has also met our Five Arrows PE team to discuss Rothschild & Co PE funds, which he has subsequently invested in.