Page 6 - SIBC Brochure
P. 6

Anatomy of a PCC
APCC is a company which can segregate its assets into cells. Each cell is statutorily protected and remote from other cells in bankruptcy. This means that if one cell incurs a liability, the creditors of that cell will be unable to satisfy their debt from assets attributable to another cell. This is particularly useful in the establishment of tailor-made private equity funds where capital is being raised for one particular purpose and needs to be protected from potential liabilities of other, more general cell funds that may be managed by the PCC.
SIBC is authorised to establish an unlimited number of cell funds, each of which may issue any class of security in any amount without the imposition of capital duties. Furthermore, the investment objectives and investment instrument may be completely different for each cell fund.
Cells will typically offer EIF investors preference shares or open ended units which will be growth instruments issued for a minimum period before they may be redeemed or sold. In order to accommodate redemption, the PCC will invest into preference shares of the underlying project company which will become convertible into ordinary shares at the point of exit, usually through an IPO, a management buyout or a rollover into another Private Equity fund. Alternatively, a secondary market can be established for the fund's shares on an organised stock exchange, giving investors the opportunity of trading out their investment earlier than may have been initially anticipated.
The investment strategy is to offer substantial capital growth to investors rather than income potential. However, we may optionally recommend small, interim preference dividend payments where we feel this may be an added benefit.
Utilising a PCC structure for the establishment of tailor-made funds can represent a significant cost saving. The usual high legal,
administrative and compliance costs of establishing a dedicated
fund raising vehicle has already been absorbed by the PCC
itself. This only leaves the relatively low cost of cell fund establishment and ongoing administration. Ongoing costs are collectively shared by the individual cell funds managed by SIBC.
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