AlbourneMoatspace

Information for Fund Managers

Global Edition
May 2018
 

Who we are and what we do

This document is for the information of managers / general partners of hedge funds, private markets funds and other alternative investment vehicles (together, “managers” and, individually, a “manager”, or “you”).

“We” and “us” are the Albourne Group, or just “Albourne”, comprising the parent company, Albourne Partners Limited (“APL”), its branches and its subsidiaries from time to time. At present, the subsidiaries are Albourne America LLC, Albourne Partners (Asia) Limited, Albourne Partners Japan, Albourne Partners (Singapore) Pte. Ltd., Albourne Partners Deutschland AG, Albourne Partners (Canada) Limited, Albourne Partners (Cyprus) Limited and Albourne Partners (Bermuda) Limited.

Albourne is an investment consultant that was established in the UK in 1994, as an independent firm with no outside ownership. Today, it has around 340 employees located in offices worldwide. The principal offices are in London, San Francisco, Connecticut, Canada, Hong Kong, Singapore, Cyprus and Germany.

Albourne provides research and advisory services for a fixed fee in relation to its clients’ investments in hedge funds, private equity funds, real estate funds, real asset funds, long only funds, private credit funds, dynamic beta products and other alternative investments. Albourne works for many prestigious professional investors around the world, comprising foundations, endowments, sovereign wealth funds, pension plans, family offices and financial intermediaries. We differ from many of our competitors because we do not manage any capital and we do not run a fund of funds.

To complement its research and advisory services, Albourne provides additional services to its clients. These include:

  • Portfolio Monitoring: Albourne provides periodic monitoring services on client portfolios, which can include the use of the client’s information to run quantitative analysis on the portfolio and the underlying funds, a qualitative assessment of the portfolio and further monitoring by reference to Albourne’s fund-level research and externally-gathered news (“Portfolio Monitoring”).
  • Implementation: Albourne offers middle- and back-office services (“Implementation Services”) to assist clients when they make their investments and to monitor and maintain those investments.

Albourne also constructs, maintains and administers indices with respect to hedge funds and, in due course, private markets funds (each an “Index”, and together, “Indices”). These Indices are designed to measure the aggregate performance of a segment of the funds universe.

Regulation

A number of the Albourne companies are regulated. APL is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Albourne America LLC is registered as an investment adviser with the US Securities and Exchange Commission. Albourne Partners (Canada) Limited is registered with the Ontario Securities Commission. Albourne Partners (Asia) Limited is regulated by the Securities and Futures Commission in Hong Kong. Albourne Partners Japan is registered with the Kanto Finance Bureau. APL’s Bahrain branch is licensed and regulated by the Central Bank of Bahrain.

Data

APL owns and manages Albourne’s secure internal central database which stores both the data used generally in Albourne’s investment advisory business (“Reports Information”) and, separately, data received from or on behalf of clients (“Client Information”) in connection with client-specific services provided to those clients, such as Portfolio Monitoring and Implementation Services. Reports Information is the source of the information used in Albourne’s research reports held in the Albourne Castle, which is a secure, password protected internet portal for Albourne clients. The Castle can only be accessed by clients who have signed a service agreement with Albourne.

Safeguards over data

We conduct pre-employment checks on all new members of staff globally. All staff are required to comply with strict confidentiality clauses and Albourne’s Group Compliance Manuals and Policies as part of their employment terms.

Our contracts with clients include strict confidentiality clauses that prohibit them from sharing our research beyond a pre-agreed client user group. All Albourne research reports bear confidentiality legends and are watermarked with the recipient’s name. Given the increasing use of cloud computing storage and services by entities in the financial sector, Albourne reminds its client Castle users that any use of such facilities by the client must include safeguards enabling the client to comply with its confidentiality obligations.

Albourne operates globally and stores data in various countries, including the UK, US, Hong Kong, Singapore, Cyprus, Canada and Germany. Data is monitored and secured to industry standards and complies with all relevant regulation.

Albourne Village

In addition to providing investment advisory services, APL runs a free, non-profit website called the Albourne Village. The Village provides links to news articles, industry research papers and job postings for the alternative investment fund community. The Village is run separately from Albourne’s core investment advisory business and other services mentioned above. Accordingly, we never post or otherwise disseminate any data obtained in connection with our fund due diligence activities on or through the Village website.

Our due diligence process

The extent of due diligence carried out by Albourne varies considerably, in response to client requirements. Any or all of the following steps may be taken:

  1. We interview portfolio managers in order to build an understanding of a firm’s strategy, investment process, portfolio, management team, risk process and performance. Our analysts seek to understand the key drivers of a given strategy and the inherent risks involved. This includes an assessment of the team and their professional backgrounds.
  2. We model the fund’s performance against key benchmarks, indices and the performance of peer funds. We try to identify correlations if they exist. We capture portfolio breakdowns as provided by the manager, review underlying investments to support analysis of a fund’s regional and industry exposures and provide trends in a graphical format. We also review underlying investments to support our analysis of a fund’s strengths and issues. We model AUM and fee trends and, for some clients, perform fee reconciliations.
  3. We obtain information concerning the manager and key individuals from various sources, including fund documents, surveys and interviews. Information obtained may include sensitive personal data (see “Personal Data / Privacy Notice” at the end of this document for further information). We also check the manager and names of key individuals against regulatory, legal, subscription and media databases (e.g., SEC, FCA, Bloomberg, Complinet, PACER, LexisNexis) to confirm matters, such as any regulatory registrations, regulatory status and history, litigation and disciplinary records, and to identify issues and information that may have an impact on our clients’ investment decisions. In some cases, we may seek explanation or clarification from the manager or the individual. Information from these searches and enquiries may be included in the reports we provide to our clients.
  4. We interview the COO, CFO, CCO, CTO and other key individuals involved in the middle and back office operations of the manager. The focus is on operations, systems and staffing, and our analysts may ask to examine certain documents and processes.
  5. In conducting its research, Albourne does not wish to receive any Material Non-Public Information from any person (including, but not limited to, any fund, manager or advisor). Please do not provide Albourne with Material Non-Public Information concerning your firm or fund or any of its investments unless expressly asked by Albourne to do so.
  6. We contact service providers, including fund administrators, prime brokers, auditors and lawyers, to confirm these service providers’ involvement with the manager and/or the fund. We also obtain character and professional references for key individuals involved with the fund. These references may or may not have been provided to us by the manager. We undertake educational and professional qualification verifications of key individuals at a fund, and where required, Albourne will obtain necessary release forms in advance. We may engage a background check provider to conduct more detailed checks covering items such as employment verification and litigation records not in the public domain. If we do, the background check provider may contact the individuals subject to those checks directly to obtain further information and to secure any necessary consent, if required. Information from these checks and enquiries may be included in the reports we provide to our clients.
  7. We capture fundraising information such as closing dates and relevant fund sizes.
  8. We review newsletters and other communications issued by the manager and summarise the key points. We may follow up with the manager if there are key changes, e.g., staff departures or changes of strategy or terms.
  9. We review the financial statements of the fund, report on fund activity and performance and identify any issues for follow up. We reconcile the fund’s AUM with newsletters and other sources. We also look at the level of unrealised gains and the extent of related-party transactions.
  10. We conduct a commercial review of offering documents, the principal contractual and constitutional documents and any supplements thereto, and summarise the terms.
  11. We review client-specific capital account statements, capital call and distribution notices and capture relevant performance activity to support portfolio-level performance analysis. We may follow up with the manager to clarify client-specific commitment and performance-related information.
  12. The results of our due diligence process are generally contained in written reports. Such reports and any associated ratings are only made available to our clients (on a confidential basis and subject to the protections referred to herein) and may contain personal data on the key and other individuals connected with the manager, the fund or the investment vehicle on which we have conducted due diligence. Albourne will not share its reports and any associated ratings with the manager or the fund or investment vehicle that is the subject of the report and rating.

The process described above also generally applies to any due diligence conducted for Albourne clients on any other investment (including, but not limited to, any non-fund investments, e.g., co-investments).

Albourne Indices

Albourne uses certain fund data provided by managers on an aggregated basis in its proprietary Indices.

In the case of hedge fund data, the information so used consists of monthly fund returns and monthly assets under management figures. As regards data on private market funds, it comprises (i) Total Committed Capital and, quarterly since inception, IRR, Paid-In Capital, DPI and TVPI; and (ii) Quarterly Paid-In Capital, Distributed Capital, NAV and Adjustments to Commitments. Where a fund has more than one share class, Albourne may include in an Index the returns of a representative share class only, or alternatively, a composite return series, in either case, as determined by Albourne.

At present, the current and historic levels of any Index maintained by Albourne and the names of its constituents are only available to Albourne clients. In time, Albourne may decide to make the daily and historic levels of the Indices (aggregated as Indices) publicly available, such as through publication on its website www.albourne.com. Before that happens, Albourne will provide managers with further information on such decision.

MoatSpace

Both hedge fund and private markets fund data can be provided to us using MoatSpace, which is a web portal through which investment managers can supply information on their funds or client information at the request and on behalf of investors that are Albourne clients. Data uploaded to MoatSpace is capable of being verified by the investment manager submitting the fund information and, in the case of Reports Information, may be viewed by our clients in one or more of Albourne’s reports.

A fund document uploaded to MoatSpace or otherwise provided to Albourne will not be passed onto any client without prior approval from the fund or its manager.

Contacts

For questions about due diligence, please contact the sender of this document or any Albourne analyst with whom you normally correspond. For questions on MoatSpace, please contact moatspace@albourne.com. For information about Albourne’s business generally, please contact your local Albourne office, details of which can be found at www.albourne.com.

Personal Data / Privacy Notice

Introduction

This Notice replaces all prior Personal Data / Privacy Notices of Albourne Partners Limited (“APL”) and its branches and subsidiaries (together with APL, the “Albourne Group” or “Albourne”) which may have been previously provided to you (“you”, “your”) from time to time. Each member of the Albourne Group, whether a branch or a subsidiary, is in this Notice called an “Albourne Group Company”. This Notice has been drafted to comply with the EU General Data Protection Regulation 2016/679 (“GDPR”) and any replacement or amended laws enforceable in the United Kingdom together with any and all other applicable privacy laws and standards in those jurisdictions in which Albourne operates (together “Applicable Data Laws”).

In respect of your personal data, Albourne Partners Limited, 16 Palace Street, London, SW1E 5JD, Tel +44 (0)207 346 7000, is the data controller.

General Notice and Purpose of Processing

Albourne takes its data protection and privacy responsibilities seriously.

Albourne will process your personal data (which may include your sensitive personal data[1]) in order to carry on its investment advisory business, and in particular, in the process of undertaking due diligence and analysis on funds and other investment opportunities and any associated managers and advisers in order to fulfil its contractual obligations to its clients.

Your personal data may be provided to clients and prospective clients who have signed appropriate confidentiality undertakings with Albourne. In particular, your personal data may be included in research reports prepared for clients of Albourne.

Personal data may be collected from various sources, including meetings, calls, fund documents, the internet generally, internet search engines, publicly-available records and subscription databases. These sources may include regulatory and disciplinary records, litigation records, news and media reports etc and third parties. Such personal data may include sensitive personal data processed in connection with Albourne’s due diligence and analysis activities, such as personal data relating to any proceedings for any offence committed or alleged to have been committed by you, the disposal of such proceedings or the sentence of any court in such proceedings.

Albourne may also contact individuals in search of references in respect of your professional performance and character. Referee contact details may have been provided by you, by your employer or by third parties which form part of Albourne’s own network.

Albourne may also process your personal data in order to allow it to comply with its legal and regulatory obligations. Albourne may, from time to time, where required, inform you of additional uses of personal data for other reasonable purposes.

Albourne will use your personal data (including sensitive personal data) to:

  • assess your skills, qualifications and suitability to manage investments;
  • conduct due diligence;
  • maintain records relating to its fund selection process and investment advisory business;
  • comply with contractual, legal and/or regulatory requirements; and
  • provide investment advice to clients.

Albourne has a legitimate interest in processing your personal data in connection with its investment advisory business.

European Economic Area-based individuals

Albourne will process personal data obtained via its due diligence processes fairly and in accordance with Applicable Data Laws. In particular, Albourne will ensure that your personal data is:

  • used lawfully, fairly and in a transparent way;
  • collected only for valid purposes that Albourne has clearly explained and not used in any way that is incompatible with those purposes;
  • relevant to the purposes notified to you and limited only to those purposes;
  • accurate and kept up to date;
  • kept only as long as necessary for the purposes Albourne has told you about; and
  • kept securely.

For the purposes of this section “processing” shall be interpreted in accordance with the GDPR.

When Albourne needs to process any of your sensitive personal data, it will contact you to obtain your consent to do so, including by way of its Notice and Consent Form. You may withdraw your consent at any time by sending a request to the Personal Data Protection Officer at dataprotection@albourne.com.

You may exercise your rights under the GDPR at any time (see the Notice and Consent Form for further details).

Albourne may transfer your personal data outside of the European Economic Area (“EEA”) in order to carry on its investment advisory business, to undertake due diligence and analysis on funds and to fulfil its contractual obligations to its clients. Your personal data may be transferred to and between various Albourne Group Companies globally, and in particular, amongst Albourne’s offices in the United Kingdom, United States, Hong Kong, Japan, Singapore, Bermuda, Canada, Cyprus, Germany and Bahrain, as well as to Albourne’s clients globally, subject to any confidentiality agreement Albourne may have with a fund manager. Albourne shall ensure that, where a transfer of personal data to a country outside the EEA is necessary, the data are protected by security measures that are appropriate to the risks presented by the processing and the nature of the data.

Non-EEA-based individuals

To the extent that APL’s branches and subsidiaries are also subject to any local data protection legislation in their respective jurisdictions, the collection, use, storage, disclosure and transfer of personal data may be subject to such laws and the relevant Albourne Group company will comply with the same.

Security and Retention

Albourne takes appropriate technical and organisational measures to ensure the confidentiality and security of personal data it holds or transfers and to safeguard such personal data against unauthorised or unlawful use and against accidental loss, damage or corruption.

Albourne maintains a secure computing environment and an application security process that is monitored and regularly tested. Systems are managed by reference to the risk management processes defined in the ISO27001:2013 guidelines. Albourne makes use of Center for Internet Security templates and SANS best practice documents.

Albourne’s data centres all offer high-levels of physical security. Key to the resilience of Albourne’s service delivery is that its data centres are geographically dispersed. If a technical failure occurs in any single data centre, users are redirected to one of the other data centres. Network services in the data centres are provided by separate companies, so that a failure on one company’s network does not affect the other data centres.

Data is compartmentalised in accordance with appropriate access control lists and is not transferred outside Albourne except via our extranet websites. Albourne’s websites are currently rated as “A+” on Qualys’ SSL test and their security is tested twice a year by an external security firm.

Internal penetration tests are performed regularly on the infrastructure and web application stack. Pre-employment screening checks are conducted on all employees.

Albourne will not keep personal data for longer than necessary and will dispose of any such data securely. Albourne uses a range of IT security tools on its network in order to protect the information held, including monitoring the sending of data and documents to recipients outside the network, in order to detect unauthorised sharing or transmission of personal data or Albourne confidential material.

Questions or concerns

Please contact Albourne at dataprotection@albourne.com if you would like to exercise any of your rights relating to your personal data (in particular the rights of access, rectification, erasure, objection, restriction of processing or portability). Further details can be found in the Notice and Consent Form. Your rights are subject to applicable legal restrictions and Albourne may take reasonable steps to verify your identity before processing your request. Alternatively, you may contact the applicable data protection authority, which, if you are located in the UK, is the Information Commissioner’s Office: https://ico.org.uk/concerns/.

Changes

Albourne may update or revise this Notice from time to time and shall notify you as and when it does so. If Albourne intends to use, process or disclose personal data for purposes materially different than those described in this Notice, Albourne will inform you before proceeding with the use, processing or disclosure.


 

[1]Sensitive personal data includes racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, genetic data, biometric data for the purpose of uniquely identifying a natural person, data concerning health or data concerning a natural person’s sex life or sexual orientation, information about the commission or alleged commission by a natural person of any offence, or about any proceedings for any offence committed or alleged to have been committed by a natural person, the disposal of such proceedings or the sentence of any court in such proceedings, or such information linked to related security measures.