The Equity (PE) Tracker
Sample text to a prospect:
The equity tracker can be synthetic or via an effective transfer of shares. We can launch this format from Guernsey, Malta and Luxembourg. In Guernsey this format is classified as a structured product. In Malta and Luxembourg these products are fully segregated and are considered as bonds.
Synthetically, it would be replicated via a performance loan. The current shareholder promises the performance via a performance agreement.
In the true sale approach, the issuer takes over an existing share position or capital increase. This effective change of ownership is later reversed.
In most cases, a valuation of the company is performed at the beginning and at the end (e.g. via BDO), based on the company's annual balance sheet. At exit, other methods may be used, such as a maximum payout, which eliminates the need for a new valuation.
Since, unlike debt solutions, we cannot charge a yield spread for ongoing fees, the fees for the lifetime of the tracker must be charged by the product as an upfront fee.
From which jurisdiction the equity tracker should be launched should depend on the main or anchor investor. Here, tax aspects on the profits as well as possible dividends could be crucial for the decision. Your main investor will clarify this with his tax advisor and let you know in which format he is willing to invest.