Hedge Funds vs. Private Equity Offshore

If you’ve ever sat with a term sheet in one hand and a domicile matrix in the other, you know the “offshore” decision isn’t a line item—it shapes your investor base, operations, tax outcomes, and fundraising cadence for years. Hedge funds and private equity funds both use offshore structures, but they do so for different reasons and with very different mechanics. Understanding those differences—and the traps—saves you time, cost, and negotiation pain.

Why managers go offshore

Investor compatibility. Offshore vehicles let non‑US investors and US tax‑exempt investors (pensions, endowments, foundations) invest without picking up US tax complexity, effectively blocking ECI/UBTI in many strategies.

Operational efficiency. Concentrating investors in one jurisdiction with predictable regulation and service providers simplifies onboarding, accounting, and audits.

Capital access. Many sovereign wealth funds and global pensions are mandated (or simply prefer) to invest through established offshore domiciles such as the Cayman Islands or Luxembourg.

Structuring flexibility. Parallel funds, feeders, blockers, co-invests, AIVs, and continuation funds are easier to implement and maintain with established, fund-friendly regimes.

Global numbers illustrate the scale: hedge funds manage roughly $4 trillion in assets, while private capital tops $13 trillion when you include buyout, venture, private credit, infrastructure, and real assets. A very large share of hedge funds are domiciled in the Cayman Islands (often cited as 60–70% by number), and Luxembourg has become a powerhouse for private equity, private credit, and infrastructure.

Time horizon and liquidity:

Hedge funds: Open-end, periodic liquidity (monthly/quarterly or, for credit, semi-annual) with NAV-based subscriptions and redemptions.

Private equity: Closed-end, no liquidity; capital called over time, distributions via realizations.

Structure:

Hedge funds: Master-feeder is common—one Cayman feeder for non‑US and US tax‑exempt investors, one Delaware feeder for US taxable investors, both investing into a Cayman master.

Private equity: Parallel partnerships (e.g., Cayman LP for non‑US and US tax‑exempt, Delaware LP for US taxable) plus blocker corporations and AIVs for specific investments or jurisdictions.

Valuation and reporting:

Hedge funds: Frequent NAVs, independent administration, custody/prime broking, daily/weekly/monthly price verification depending on liquidity profile.

Private equity: Quarterly valuations, fair value under US GAAP/IFRS, ILPA-aligned reporting, capital account statements rather than NAV redemptions.

Fees:

Hedge funds: Management fee on NAV (1–2%) plus performance fee (10–20%) with high-water marks and sometimes hurdle rates.

Private equity: Management fee on commitments during investment period (1.5–2.0%), stepping down post-investment period; carried interest (typically 20%) after an 8% preferred return with GP catch-up.

Compliance:

Hedge funds: Registration under offshore fund acts (e.g., Cayman Mutual Funds Act), ongoing NAV strikes, custody rules depending on manager’s regulator (SEC, FCA).

Private equity: Registered under private fund regimes (e.g., Cayman Private Funds Act), heavier emphasis on valuation policies, depositary-lite or depositary (EU), conflict governance (LPAC).

Investor expectations:

Hedge funds: Liquidity terms, gates, side pockets, transparency on leverage and counterparty exposures.

Private equity: ILPA-style fee/carry terms, co-invest rights, ESG disclosures, robust LPAC functionality, and distributions with clear waterfalls.

Choosing a jurisdiction

Cayman Islands

Why it’s popular: Predictable law (English common law lineage), fund-friendly statutes, deep bench of administrators, auditors, directors, and counsel. CIMA has streamlined registration for both open-end (Mutual Funds Act) and closed-end (Private Funds Act) funds.

Best for: Global hedge funds; private equity funds with non‑US and US tax‑exempt investors; private credit funds; venture and growth funds investing across regions.

Considerations:

Economic substance: The fund typically falls outside core ES tests, but Cayman managers/advisers and SPVs may not. Assess function-by-function.

Regulatory: CIMA registration, annual audit, valuation and safekeeping policies (especially for private funds), AML/CFT/CPF compliance, FATCA/CRS reporting.

Optics: Well-accepted with institutional investors, though some EU investors still prefer Luxembourg vehicles for treaty access and AIFMD marketing.

British Virgin Islands (BVI)

Why it’s used: Cost-effective formation and maintenance, modern corporate law.

Best for: Emerging managers and smaller/feeder or SPV components of larger structures.

Considerations: Investor preference often favors Cayman or Luxembourg for flagship funds, but BVI is common for SPVs, co-invest vehicles, or feeder funds.

Bermuda

Why it’s used: Strong regulatory reputation, Solvency II equivalence for insurance (useful for ILS strategies), sophisticated service providers.

Best for: Insurance-linked securities, catastrophe bonds, and some hedge fund strategies seeking Bermuda stamp.

Considerations: Slightly higher cost profile than Cayman/BVI in many cases.

Luxembourg

Why it’s popular: EU domicile with AIFMD-compliant frameworks (e.g., RAIF, SIF, SICAV, SCSp), robust treaty access, deep expertise in private equity, debt, infrastructure, and real assets.

Best for: Funds targeting EU investors or investing in Europe; strategies needing treaty benefits; structures aligned with depositary and AIFM requirements.

Considerations:

Governance and service stack: AIFM (external or self-managed with a third-party), depositary or depositary-lite, administrator, auditor.

Timelines and cost: Typically higher than Cayman; expect longer lead times for AIFM onboarding and regulatory filings.

Product choice: RAIF (regulatory oversight via AIFM), SCSp partnership flexibility, and growing use of ELTIF 2.0 for semi-liquid strategies.

Ireland and the Irish ICAV

Best for: Credit funds, semi-liquid alternatives, and UCITS/AIFs marketed across the EU/UK.

Considerations: Strong admin ecosystem and distribution capabilities; aligns well when you need product-level SFDR disclosures.

Singapore Variable Capital Company (VCC)

Why it’s rising: Government support, tax incentives, hub for Asia-focused managers, flexible umbrella/sub-fund model similar to Luxembourg umbrellas.

Best for: Asia strategies, managers with Singapore presence, family office platforms, and multi-strategy complexes.

Considerations: Requires local substance; MAS licensing/oversight; rapidly maturing ecosystem with thousands of VCC sub-funds launched.

Structures that actually work

Hedge fund structures

Master-feeder:

Cayman feeder: For non‑US and US tax‑exempt investors; avoids UBTI from trading via corporate blockers at the master when needed.

US feeder (Delaware LP/LLC): For US taxable investors; avoids PFIC and allows K‑1 reporting.

Cayman master: Executes strategy, consolidates trading, and simplifies operations and pricing.

Standalone Cayman fund: Efficient for non‑US and US tax‑exempt-only investor bases where US taxable investors aren’t targeted.

Segregated Portfolio Companies (SPC): Useful when running multiple share classes or sub-strategies with asset segregation—but be mindful of investor preference and audit complexity.

Operational notes:

Liquidity features: Gates (10–25% per period), lock-ups (1–3 years for less liquid strategies), side pockets for illiquids, and redemption suspensions in stress events.

Equalization mechanics: Series accounting or equalization credits ensure performance fees are allocated fairly to inflows across time.

Private equity structures

Parallel funds:

US parallel (Delaware LP) for US taxable investors, usually a pass-through to allow long-term capital gains and loss utilization.

Cayman or Luxembourg parallel for non‑US and US tax‑exempt investors.

Blockers and AIVs:

Corporate blockers at the investment level for US ECI or to manage withholding; often in treaty jurisdictions for specific deals (e.g., Luxembourg Sàrl holding companies).

Alternative Investment Vehicles (AIVs) to segregate certain investors for tax/regulatory reasons.

Co-investment vehicles: Single-deal vehicles for large LPs seeking lower fees; must be pre-wired in fund docs to avoid conflicts and allocation disputes.

Continuation funds: Used to extend the hold period for trophy assets; needs robust fairness opinions, LPAC consents, and conflict management.

Tax architecture that won’t bite you later

This is strategy-specific and investor-specific. Coordinate US, local deal country, and domicile tax advice early.

Investor categories and what they care about

US taxable investors:

Prefer US pass-throughs (Delaware LP/LLC) to avoid PFIC issues and access favorable capital gains treatment.

Care about K‑1 timing and SALT workarounds, and shy away from opaque offshore-only vehicles.

US tax-exempt investors (ERISA plans, endowments):

Want to avoid UBTI; trading strategies are often fine through offshore corporations or with proper structuring at the master level. Credit and direct lending create UBTI—often necessitating blockers or loan origination from non‑US platforms.

ERISA plan asset rule: Keep benefit plan investors under the 25% threshold per class or become subject to ERISA fiduciary rules.

Non‑US investors:

Avoiding US filing/withholding complexity is key; offshore feeders work well.

Treaty access matters primarily in PE and private credit; Luxembourg or Ireland often used for EU deals, with local SPVs to achieve withholding efficiencies.

Hedge funds: UBTI/ECI and PFIC pitfalls

Trading vs. lending: Pure securities trading is generally not ECI for non‑US investors. Direct lending or loan origination is different—expect blockers and careful routing.

PFIC: US taxable investors generally invest via a domestic feeder to avoid PFIC issues. If you must include US taxable investors in offshore vehicles, consider QEF or mark-to-market elections, but it’s rarely the preferred path.

Private equity: Blocking ECI and using treaties

ECI risk arises from pass-through ownership of US portfolio companies; US tax-exempt and non‑US investors typically invest via blocker corporations.

Treaty planning can reduce withholding on dividends and exit gains; Luxembourg SCSp with treaty-eligible holdcos is a common route for European deals.

Carried interest: Location of the GP and carry vehicle affects tax outcomes; US managers may favor US GP entities for carry, while non‑US carry platforms exist but need careful substance.

Management company and transfer pricing

If you run a Cayman or Singapore advisory entity, expect to demonstrate substance and arm’s-length pricing with your onshore management entity. Document transfer pricing policies, especially if significant functions move offshore.

Global reforms to watch

Economic substance rules in Cayman, BVI, and Bermuda require local activity for certain entities.

OECD Pillar Two (minimum global tax) and evolving CFC rules may affect holding companies and blockers over time. Private equity transactions particularly need updated tax modeling.

Regulation and compliance map

Cayman:

Hedge funds: Mutual Funds Act—registration with CIMA, annual audit, independent admin (practically required), valuation policies.

Private funds: Private Funds Act—registration, annual audit, valuation function, cash monitoring, title verification arrangements.

BVI: SIBA-regulated funds—incubator, approved, professional, and private funds each with distinct thresholds and obligations.

Bermuda: Investment Funds Act—classification based on investor type and size; robust oversight for ILS.

EU/AIFMD:

EU AIFMs gain passporting but assume depositary and reporting burdens.

Non‑EU AIFMs rely on National Private Placement Regimes (NPPR) for marketing into specific EU states. Requirements vary widely.

SFDR: If marketed in the EU or managed by an EU AIFM, product-level ESG disclosures may apply (Articles 6, 8, or 9 classifications).

SEC registration for larger advisers; Form ADV, Form PF (liquidity, leverage, exposures), marketing rule compliance.

Private Fund Adviser Rules tightening reporting and fee/expense practices remain in flux, but LP transparency expectations are rising regardless.

FATCA/CRS:

Offshore funds are Reporting Financial Institutions—register, obtain GIIN where needed, collect self-certifications, and file annual reports.

AML/KYC and sanctions:

Expect rigorous IDV for investors, PEP/sanctions screening, source-of-funds checks. Russia-related restrictions and other geo-sanctions materially affect onboarding timelines.

Operations and governance: where funds distinguish themselves

Service provider stack

Legal counsel: Onshore (US/UK/EU/Asia) and offshore counsel (Cayman/Lux/SG) should be in lockstep from day one.

Administrator: NAV calculation, investor services, FATCA/CRS reporting, capital account statements; for PE, capital call/distribution processing and waterfall modeling.

Auditor: Big Four or reputable mid-tier firms; hedge funds often leverage administrators’ daily books; PE focuses on fair value reviews.

Custodian/prime broker: Essential for hedge funds; expect margin and collateral mechanics and rehypothecation terms.

Depositary (EU): Required for EU AIFs; depositary-lite for some non-EU marketing.

Directors/GP: Independent directors are standard in Cayman hedge funds; PE uses GP and LPAC governance. Document conflicts policy and escalation pathways.

Valuation

Hedge funds: Independent pricing sources where possible; hard-to-value assets trigger Valuation Committee oversight; set side pocket rules carefully.

Private equity: Quarterly fair value (ASC 820/IFRS 13), calibration at entry, triangulation with market comps and transaction evidence, audit-ready memos. Consistency beats aggressiveness.

Liquidity mechanics

Hedge funds: Redemption gates, lock-ups, hard vs. soft lock-ups with early redemption fees, suspension rights tied to market closures or pricing disruptions. Align with asset liquidity—2008 and March 2020 taught tough lessons.

Private equity: Capital call pacing, recycling provisions, and DPI/TVPI reporting. Subscription facilities smooth capital calls and improve IRR optics—disclose usage transparently.

Fund finance

Subscription lines: Pledged capital commitments support short-term borrowing; be clear on covenant packages and investor notice requirements.

NAV facilities: Secured by fund-level asset value—growing in PE and private credit. Match tenor to asset liquidity and monitor LTV covenants.

Hybrid facilities: Combine sub-line and NAV collateral; more complex, cheaper than pure NAV but require meticulous documentation.

Reporting and data

Hedge funds: Monthly factsheets, risk reports (VaR, stress tests), transparency on gross and net exposures; Form PF reporting for large advisers.

Private equity: ILPA-style quarterly reports, fee and expense templates, ESG KPI packs where applicable, capital account statements, and portfolio company updates.

Fees and waterfalls in practice

Hedge fund fees

Management fee: 1–2% of NAV, with founder classes at lower rates. Credit and quant managers often adopt tiered fees based on AUM.

Performance fee: 10–20%, usually with a high-water mark. Some strategies use hurdles (e.g., cash or benchmark plus spread). Crystallization annually or quarterly—coordination with lock-ups is key.

Equalization: Series accounting assigns incentive fees based on the investor’s investment date, preventing cross-subsidization.

Common mistakes:

Misaligned crystallization schedules that trigger redemptions near fee dates.

Overly complex share class trees that confuse investors and complicate audits.

Private equity economics

Management fee:

1.5–2.0% on commitments during the investment period (typically 4–6 years).

Steps down to invested capital or net invested capital thereafter.

Offsets: Transaction, monitoring, and director fees often offset 50–100% against the management fee; LPs increasingly push for 100%.

Carried interest and waterfall:

Preferred return: Commonly 8% per annum.

Catch-up: Often 100% to GP until 20% catch-up achieved, then 80/20 split.

Whole-of-fund vs. deal-by-deal: European waterfalls (whole-of-fund) delay carry until more capital is returned; US deal-by-deal requires escrow/clawbacks to protect LPs.

GP commitment: 1–3% of commitments is typical for alignment.

Governance details that matter:

GP clawback with net-of-tax considerations and time limits.

Escrow of carry to manage clawback risk.

True-up mechanics for late closers to equalize management fees and preferred return.

Costs, timing, and budget

Ballpark ranges vary by complexity and geography, but here’s a pragmatic guide:

Hedge fund launch (Cayman master-feeder with US feeder):

Legal setup: $100k–$250k (more with multiple share classes/side pockets).

Administrator: 5–15 bps of NAV; minimums often $75k–$150k.

Audit: $40k–$120k depending on size and asset complexity.

Directors: $15k–$30k per director annually; two independents is common.

Timeline: 8–12 weeks if the strategy and docs are straightforward; longer if prime brokerage and ISDA/GMRA/CSA negotiations drag.

Private equity fund (Cayman + Delaware parallels, Lux SPVs):

Legal setup: $150k–$400k+, driven by parallel vehicles, AIVs, co-invest templates, and tax structuring.

Administrator: 10–25 bps of commitments or invested capital; minimums $100k–$200k.

Audit: $50k–$150k; valuation complexity can increase scope.

Lux platform (if used): Add AIFM, depositary, and local counsel costs; annual run-rate can add $200k–$400k+ for a full EU stack.

Timeline: 12–20 weeks to first close, depending on AIFM onboarding, NPPR filings, and side letter negotiations.

Marketing and investor relations

Documentation:

Hedge funds: PPM, subscription docs with AML/CRS/FATCA attachments, investment management agreement, admin agreement, and prime brokerage agreements.

Private equity: LPA, PPM, subscription booklet with side letter provisions, ILPA DDQ, data room with track record methodology and attribution.

Regulatory marketing rules:

AIFMD NPPR requires pre-marketing notices in some EU states, ongoing reporting, and sometimes local agent appointments.

SEC marketing rule governs performance presentation, hypothetical performance, and testimonials/endorsements. Have a repeatable performance calculation policy.

ERISA and “plan asset” considerations:

Monitor the 25% test per class and across feeder vehicles.

If plan assets are tripped, you become an ERISA fiduciary; many managers avoid this via careful class design and monitoring.

Side letters and MFN:

Expect favored nations for large tickets.

Manage conflicts: equal access vs. regulatory constraints (e.g., side letter terms for a sovereign that can’t be broadly offered).

Centralize terms in a matrix and watch for “most favored nations except for (i) regulatory, (ii) tax, or (iii) jurisdiction-specific” carve-outs.

Risk hotspots and how to avoid them

Liquidity mismatch (hedge funds): Running quarterly liquidity on assets that take months to sell invites gates and reputational damage. Align liquidity to asset half-life. Use lock-ups and side pockets judiciously and disclose triggers clearly.

Valuation drift (both): Aggressive marks may survive one audit cycle but hurt fundraising when DPI lags. Keep valuation memos current, calibrate to entry, and triangulate methods.

Tax leakage (PE/credit): Rushing into deals without local tax structuring can cost 5–15% in avoidable leakage. Treat tax SPVs and WHT planning as a workstream, not a closing afterthought.

Marketing slippage (EU): “Soft-circling” LPs without NPPR filings still counts as marketing in many states. Coordinate with counsel before roadshows.

Sanctions and AML: Onboarding delays and blocked redemptions are worse than lost tickets. Use strong AML/KYC pipelines, ongoing screening, and dual-control signoffs for high-risk profiles.

Governance gaps: Insufficiently independent boards, weak LPACs, or undocumented conflicts policies create audit and LP issues. Formalize delegations and minutes.

Documentation sprawl: Version control failures between LPAs, side letters, and MFN elections create compliance risk. Maintain a consolidated obligations register.

Decision framework: a step-by-step approach

Map your investors and strategy liquidity.

What’s the expected split of US taxable, US tax-exempt, and non‑US capital?

How liquid are your positions or deals?

Pick the core domicile(s) to fit investors.

Liquid, trading-heavy: Cayman hedge fund structure with US feeder.

Illiquid private markets: Cayman and/or Luxembourg private fund with US parallel; consider Ireland for credit and semi-liquid formats; Singapore VCC for Asia hubs.

Decide feeders, parallels, blockers, and AIVs.

US taxable in US pass-throughs.

US tax-exempt and non‑US in offshore feeders/parallel funds.

Block ECI for lending and US operating businesses; use treaty jurisdictions for cross-border deals.

Choose the regulatory path and marketing footprint.

Will you market in EU/UK? NPPR or AIFM passport? SFDR classification and disclosures?

SEC/FCA registration status and reporting obligations.

Build the service provider bench.

Administrator with the right asset class experience.

Auditor that your target LPs respect.

Independent directors (hedge funds) and an empowered LPAC (private equity).

Draft documents with alignment in mind.

Hedge funds: Clear liquidity terms, fee mechanics, side pocket triggers, and pricing sources.

Private equity: ILPA-aligned fees and expenses policy, waterfall with clawback, conflict processes, co-invest allocation policy.

Set up compliance rails.

AML/KYC workflow and investor classification.

FATCA/CRS registration and reporting calendar.

Valuation policy, best execution, and conflicts register.

Model costs and timelines.

Lock down admin and audit quotes, AIFM/depositary fees if relevant, and director retainers.

Build a realistic Gantt chart to first close or day-one NAV.

Prepare for ODD.

Document cybersecurity controls, BCP/DR testing, trade surveillance, and pricing policy.

Maintain SOC 1/2 reports where applicable, or at least administrator SOC coverage.

Launch, monitor, and iterate.

Run post-launch reviews at 90 days and 1 year.

Update policies as investor base and strategy evolve.

Scenario walkthroughs

1) Global macro hedge fund targeting US tax-exempt and non‑US capital

Structure: Cayman master with Cayman feeder and Delaware feeder. The Cayman feeder houses non‑US and US tax-exempt investors; the Delaware feeder houses US taxable investors.

Key terms: Monthly liquidity with 30–60 days’ notice, 1-year soft lock-up, 2/20 fees with annual crystallization and high-water mark. 15% gate at fund level, manager-level suspension mechanics tied to market closures and operational breakpoints.

Operations: Two independent Cayman directors, tier-1 administrator with daily NAV support, prime broker tri-party structure for margin efficiency. Valuation committee charter addresses OTC pricing and side pocket protocol for rare illiquids.

Tax/Compliance: FATCA/CRS via the administrator, CIMA registration under the Mutual Funds Act, Form PF filing due to AUM thresholds. US feeder issues K‑1s; Cayman feeder issues annual statements and CRS reports.

Pitfalls avoided: Kept lending exposures below thresholds to avoid ECI; documented a hard cap on side pockets; ensured robust ISDA CSA terms to cope with March-2020-style volatility.

2) Emerging markets growth equity fund courting EU pensions and Asian SWFs

Structure: Luxembourg RAIF with SCSp as the main EU vehicle managed by an external AIFM, with a Cayman parallel for certain non‑EU investors; Delaware parallel for US taxable. Lux SPV holdcos to optimize treaty access in target jurisdictions.

Economics: 2% management fee on commitments (years 1–5), stepping down to 1.25% on invested cost; 20% carry over 8% hurdle, European-style whole-of-fund waterfall, 30% carry escrow, GP clawback net-of-tax with 5-year tail.

Governance: Depositary-lite where eligible; LPAC with clear conflict policies and approval thresholds for related-party transactions and continuation processes.

Fund finance: Subscription line sized at 20–30% of commitments to smooth capital calls; policy discloses the impact on IRR and sets maximum usage duration (e.g., 180 days).

Reporting: ILPA templates, ESG KPIs for Article 8-style disclosures under SFDR, third-party valuations for complex situations, and annual ESG assurance on selected metrics.

Pitfalls avoided: Secured NPPR filings before soft marketing; matched currency of capital calls and distributions to avoid FX noise for LPs; designed co-invest policy with pro-rata, speed, and minimum-check guidelines.

Trends to watch

Continuation funds and GP-led secondaries: Now mainstream for high-conviction assets; LPs demand fairness opinions, third-party processes, and rolling options with incentives aligned to legacy LPs.

NAV financing: Gaining ground across PE and private credit; improves liquidity but adds covenant considerations and asset-level encumbrances—disclose early.

Semi-liquid products: ELTIF 2.0 and Irish AIF structures support quarterly/ semi-annual liquidity for less liquid credit and private market strategies—expect more retail-adjacent capital here.

ESG and data: LP diligence now asks for carbon footprints, DEI metrics, and governance audits. Even Article 6 funds are expected to explain their sustainability risks.

Tokenization and digital fund admin: Early-stage but promising for transferability and cap table efficiency. Regulators are cautious; operational readiness matters more than the tech novelty.

Regulatory intensity: SEC private fund rules, UK SDR, AIFMD II—regardless of the final form, trendlines point to more transparency and fee/expense discipline.

Common mistakes and simple fixes

Copy-paste terms from a different strategy:

Fix: Start from a term sheet aligned with the asset’s liquidity and valuation profile. Credit ≠ equity ≠ macro.

Ignoring investor tax buckets:

Fix: Build feeders/parallel funds to match US taxable, US tax-exempt, and non‑US needs. Add blockers for lending and US operating companies.

Building for a single close:

Fix: Design true-up mechanics for late closers; be explicit about expenses borne pre-first close and how they’re allocated.

Underestimating admin complexity:

Fix: Choose administrators with real experience in your asset class. Get a demo of their waterfall model or series accounting before signing.

Weak co-invest policy:

Fix: Put allocation order, minimums, timelines, fee/carry terms, and LP communication protocol in writing.

Leaving compliance to the end:

Fix: Establish AML/KYC, FATCA/CRS, valuation policy, and conflicts register early. Set up a compliance calendar that includes regulatory filings and investor deadlines.

Practical checklist

Investor map completed (US taxable, US tax-exempt, non‑US) with volumes and constraints.

Jurisdiction selected with tax and marketing rationale (Cayman/Lux/Ireland/Singapore).

Structure agreed (master-feeder, parallels, blockers, AIVs, co-invests, continuation rights).

Core terms aligned to strategy liquidity (fees, gates/lockups, side pockets, waterfall).

Service providers engaged (legal, admin, auditor, directors, AIFM/depositary if needed).

Compliance stack running (AML/KYC, FATCA/CRS, valuation policy, sanctions screening).

Marketing permissions sorted (NPPR, SEC marketing rule readiness, SFDR positioning).

Fund finance policy documented (sub-lines/NAV facilities limits, disclosure).

ODD-ready documentation (SOC reports, cybersecurity, BCP/DR, pricing).

Budget and timeline approved; first-close or day-one schedule locked.

Setting up offshore isn’t about chasing a trend or a tax flag; it’s about matching your investment engine to your investors and operating with fewer surprises. Hedge funds and private equity share some DNA offshore—but they live on different calendars, handle risk through different toolkits, and answer to investors with different priorities. Build your structure for the way you actually invest, and the capital—and the audits—tend to cooperate.