What is the purpose of the Alternative Investment Fund (AIF)?
ONE Funds AG (previously BENDURA FUND MANAGEMENT ALPHA AG) is setting up an alternative investment fund for Storylines. It’s a private equity fund that holds one asset, the vessel, at the end by different Lease Hold Funds via 12-year, 24-year, and Life-of-Vessel leases. You are investing in an investment fund that holds lease rights for your residence which you use on the ship. The fund is just a vehicle to enable us to work with a diverse group of clients in a global marketplace who live in different countries and tax jurisdictions.
What is the overall financial viability, stability, and reputation of the fund management company?
ONE Funds AG is one of the most established fund management groups in Vaduz, Liechtenstein. It is licensed by AIFM (2014), UCITS (2013) and IUA (2007). It has sustained growth for many years in all market environments. It has reputable auditors and supervisors: BDO AG Switzerland and the Financial Market Authority (FMA) Liechtenstein. Both guarantee the highest international standards. It is located in a favorable jurisdiction as Liechtenstein is triple AAA rated country due to being politically, socially and economically stable.
What are the considerations for American investors?
We involved a US-based securities law firm. In order to offer the fund in the US, these funds have to be exempted from a public offering in the US.
We will have different fund structures administered and managed by ONE Funds AG. Investors who invest into an investment fund need to be qualified due to US Securities Laws either as ‘Sophisticated Investors’, ‘Accredited Investors’ or ‘Qualified Purchasers’ depending on their annual income or wealth. Thus we have to qualify every investor to make sure that smaller investors are legally entitled to invest into the investment fund. For example, due to specific exemption by the US Securities Act of 1933 in conjunction with the US Investment Company Act of 1940, only a limited number of ‘sophisticated investors’ (in addition to ‘accredited investors’ or ‘qualified purchasers’) are allowed to invest into a fund which is exempted from a public offering. All of our clients will fill out specific investors´ questionnaires when they subscribe to the lease-hold fund as a means to hold the rights to use their apartments/cabins/residences. By US Securities Laws regulations;
- people who own assets of more than USD $5M excluding property are ‘Qualified Purchasers’
- those who have an annual income of US$ 200.000 (single) US$ 300.000 (couple) or a wealth excluding property of US$ 1.000.000 are considered ‘Accredited Investors’
- and all those who have assets below these thresholds are ‘Sophisticated Investors’
How is the investment registered and regulated?
It is regulated in Vaduz, Liechtenstein by the Financial Market Authority (FMA) under the Alternative Investment Fund Management Directive (AIFMD )
How does the alternative investment fund work?
- You give a commitment (like in private equity) regarding the purchase into the fund which holds the individual lease right for the apartment.
- A limited partnership holds the lease rights. The fund contains the proceeds from the installments you pay.
- You sign all the documents.
- The service provider, ONE Funds AG, does KYC and AML to accept you.
- After you have been accepted a capital call of 20% after signing is issued, so that you can make a wire transfer of 20% to the bank account of the fund.
- ONE Funds AG accumulates all the proceeds in the fund. These proceeds will accumulate/grow as we onboard more clients.
- The accrued money is used as collateral to get a credit line from a third party for funding to build the vessel.
- All the payments from the capital calls are accumulated in the investment fund’s bank account then transferred to the limited partnership which holds the funds in an escrow account. Any funds that are utilized are backed by a refund guarantee.
- The limited partnership grants you the use of your apartment through the leaseholds legally embedded (e.g. in the 24 year fund you have invested in.)
- The accumulated funds will be used to pay back the third party lender for building the ship.
What is the underlying investment mix of the alternative investment fund? How is the money being invested?
- This is entirely for the construction of the ship.
- Approximately up to 1.5% is kept aside for the fees for the fund, but all the remaining proceeds are transferred to the bank account of the limited partnership in Vaduz.
How are the investors/investments secured?
- The funds are secure because any transfer from the bank account of a limited partnership can only be done by the approval of a fund manager and approval of Storylines and only for the purpose of building the ship.
- Storylines will have state-backed guarantees so any investment regardless of where it sits is always secure. This ensures that the ship will be built regardless of unforeseen circumstances.
- It is a regulated and audited fund which must follow the rules set out in the agreements with its investors/shareholders/residents. The money stays secure by the refund guarantees by the Croatian government until the ship is delivered. This is far more secure than a bank as the EU is not going to fail (whereas banks sometimes do).
- The bank account of the limited partnership is also with the same bank the Fund is using.
What is the liquidity of the investment?
The liquidity of the investment after the ship is built is in the secondary market; there is no day-to-day market price. You can sell your apartment or your fund shares via ONE Funds AG. The Fund Manager and Storylines will assist you in finding a potential buyer on the secondary market.
When is the ship going to start being constructed?
- We have a shipbuilding contract signed.
- All of the pre-construction work is happening at the shipyard such as the finalization of the plans and construction drawings.
- Once the shipbuilding contract comes into effect, we’ll have some key dates that we can share.
Is there a redemption window or could we sell? What would we need to do to get out if we need to?
If you need to get out prior to delivery, that has to be discussed with Storylines to find a replacement buyer. In the unfortunate event someone needs to back out, we’ll put that unit back out to the market (fees apply).
What is the projected investment return on the investment fund?
When the money is completely transferred to the limited partnership it will be kept as collateral for the third party funding. There will be no additional return in the fund itself. It’s not like a traditional fund where you put money in and expect a return on your investment. The return is the right to occupy (and re-sell) your unit on the ship and to utilize it over the time you have bought the leasehold for (via the investment fund in which you are subscribed).
When will we get the paperwork on the investment fund?
It has to be approved first by the FMA.
Will there be a minimum income requirement to make sure everyone will be able to pay their annual fees?
The fund regulators have a vetting process which exists to protect consumers by law. We work within those frameworks, however, there are exceptions we can make to work with individuals to ensure they can live this lifestyle. We have several contingencies and safeguards in place to make sure the other residents don’t suffer from potential shortcomings.
We are sorry that this post was not useful for you!
Tell us how we can improve this post?