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- 🛠️ Offshore Parallel Offerings, Part 1
🛠️ Offshore Parallel Offerings, Part 1
Why Form a Fund in a Non-US Jurisdiction?

Happy Friday, Funds Family!
Today we’re going to learn about raising capital outside of the U.S. in “offshore” vehicles.
U.S. investment fund managers seeking to expand their investor base can leverage offshore parallel fundraises to access foreign capital markets. By establishing parallel funds in different jurisdictions, managers can cater to the specific regulatory obligations, tax requirements, and personal preferences and sensitivities of diverse investor groups.
But first, let’s sit down with MADDPROJECT in our client café ☕️

Asset Class:
Residential Condominiums in Manhattan
Executive Summary:
MADDPROJECT Development is seeking to raise capital for its Fund One offering, which will be deployed to build ground-up condominium and/or office-to-residential condo conversions in New York City. The Fund will be targeting projects between 40k and 200k buildable feet, with target equity returns between 2x and 4x. Project timelines are expected to be between 4 and 7 years from site acquisition to final sell-out, with deal level target IRRs between 17% and 25%. MADDPROJECT Development uses a design centric approach with efficient layouts, appropriate amenities, and natural materials. Commitments are requested by February 21st, with signed documents due by March 7th.
The Sponsor:
The MADDPROJECT team has over 20 years of development experience all over the US, including 10 years in Manhattan as an architect, project manager, general contractor, and developer. The company has a deep network of real estate professionals in New York City and a proven track record of process-driven, design-led development management. They use institutional-quality budgeting, planning, and tracking methods to ensure projects remain on budget and schedule.
To receive more information about the sponsor and the fund, please register your interest here:
Alternatively, you can contact the sponsor at [email protected]
Note: Client Cafe is a free service we provide to our clients. We do not earn any fees from introductions, investments, or anything else (other than being lawyers). We are not investment advisers and make no recommendation as to any highlighted investments.
Alright, get back to the fun(d)! 😃
⚖️ Why Access Foreign Capital Markets?
The global investment landscape is booming. McKinsey estimated that global assets under management surpassed 🔗$130 trillion in 2024, a figure 🔗PwC expects to reach nearly $150 trillion in 2025. North America dominates this market, holding more than half of these assets. This home-field advantage naturally makes domestic fundraising attractive for U.S. fund managers.
But there’s a world beyond U.S. borders! Many fund managers are expanding their reach. By accessing offshore markets, they can:
💼Avoid Market Saturation: Avoid competition within the U.S. market and potential cannibalization of domestic opportunities.
🌎️Diversify Investor Base: Tap into new pools of capital, like 🔗Europe’s $34 trillion investment market.
🏝️Leverage Tax and Structuring Benefits: Utilize jurisdictions like the 🔗Cayman Islands, home to 80% of non-U.S. hedge fund vehicles, for advantageous structures that may appeal to subsets of investors for which U.S.-based structures do not.
However, a myriad of regulatory, practical, transactional, and other challenges can make it complex to ‘onshore’ investor capital from foreign jurisdictions. A common example would be non-U.S. investors investing in U.S.-based real estate which, absent special tax structuring, can have negative consequences for foreign investors.
To solve these issues, U.S. fund managers regularly utilize parallel fund structures in popular jurisdictions known for stable legal regimes, investor familiarity, and access to competent service providers.
🔀 How Parallel Fund Structures Work
In parallel fund structures, there are two or more “entry points” for investors. Common jurisdictions where these entry points are located include:
Delaware: Traditional access for taxable U.S. investors.
Luxembourg / Ireland: Efficient access to investors located within the European Economic Area (EEA) and other non-EEA and non-U.S. investors that cannot take advantage of the benefits provided by an entry point in the Cayman Islands or otherwise want an alternative.
Cayman Islands: Structuring and tax benefits for non-taxable U.S. persons and non-U.S. persons outside the EEA.
A common component of parallel fund structures is the master-feeder structure whereby individual entry points for investors (the feeder funds) invest their pooled capital into one or more master funds, which make the underlying investments. For example, a U.S.-based master fund could have a Cayman Islands feeder fund to accommodate non-U.S. investors, and that feeder fund would invest all of its assets in the U.S.-based master fund.
Regardless of the exact structure, the goal is for portfolio management and investment control to be consistent between all entry points, whereby all investors invest in parallel. This way, investors from around the world can receive the benefits of a single investment strategy even though the entry points into which they invested (the feeder funds) are housed thousands of miles away from each other in completely different countries.
⚠️ It's worth noting that fund structures are uniquely tailored to the specifics of individual fund managers, strategies, and targeted investor bases. These are only broad statements and may appear different fund-to-fund.
To learn about parallel funds in other contexts, check out this article on the ⚖️ Investment Company Act.
📜 What About the Legal Docs?
A common question for U.S. fund managers considering parallel fund structures is: “How do I handle the legal documentation?” 🤔
Parallel fund structures involving onshore and offshore entry points often use a two-step ‘layered’ approach to drafting the relevant operating agreements, marketing materials, etc.
📄Start with the U.S. Foundation: Begin by drafting the🛠️Core documents for the onshore vehicle (e.g., limited partnership agreement, private placement memorandum, subscription documents).
🌎️‘Localize’ for Each Jurisdiction: Once the onshore documentation is finalized, engaged local counsel then ‘localizes’ these documents for their respective jurisdictions to include updated legal provisions, required disclosures, additional information, etc. “Caymanize” may become a new word in your vocabulary.
🤝Collaboration is Key: Successful U.S. fund managers often use U.S.-based counsel to advise on engaging service providers in the other jurisdictions where entry points are to be set up. Additionally, U.S.-based counsel will often handle liaising with local counsel to ensure that documents are appropriately localized and that local entry points are operated in compliance with applicable law.
🗓️Planning is Critical: Even before the document drafting process begins, managers should factor in (i) licensing and registration requirements in anticipated offshore jurisdictions, (ii) time and cost implications of creating and operating multiple fund vehicles in multiple jurisdictions, and (iii) diligence local service providers and understanding what questions to ask. This advanced planning can expedite the legal drafting process and help narrow the time window between marketing and closing on investor capital.
Once the process is finished, you’ll typically have a full set of fund documents for each master fund, feeder fund, and/or parallel fund. The documents will look similar, but each will have key provisions based on where the entity sits in your structure and the jurisdiction in which it was formed.
That’s it for this week! 🙏Next week, we’ll learn about three common offshore jurisdictions, including the costs and benefits of each. 🌎️
/ WRAPPING THE CASE
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Thanks for reading, everyone.
Have a great weekend! 🙌
/ ABOUT THE AUTHOR
Philip Wiseman

Philip Wiseman is a securities and investment funds attorney with extensive experience advising sponsors, advisors, investors, and service providers throughout the global funds industry. He has practiced in the United States and Luxembourg, serving clients across the Americas, Europe, the Middle East, and Asia in the middle-market, top-of-market, and specialty funds spaces. Philip serves as in-house counsel to a leading global financial institution, providing comprehensive legal guidance across the entire lifecycle of funds, including their structuring and formation, capital raising and negotiations, as well as regulatory compliance and corporate governance. He also advises on ‘hot topics’ within the funds industry, including the use of artificial intelligence, implementation of blockchain technologies, and monitoring the constantly evolving regulatory landscape in both U.S. and non-U.S. jurisdictions. Outside of his professional endeavors, Philip enjoys mentoring startups, traveling wherever a culinary adventure is to be had, and “pwning noobs” in video games.
You can reach Philip directly with any questions or inquiries at [email protected].
/ JURY TRIAL
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