Part 1
The efficiency of a team tasked with the mandate to manage a private equity team dictates the lucrative performance of the investment portfolio or the loss of investment. As much as investors need to earn a profit from their investments, it is imperative that the funds be managed in a manner that guarantees tolerable risks and reduces the volatility of the investment (Schell, 2018). In this cases, a fund manager ought to possess a vast understanding of the economics of the new market in a bid to warrant the success of the strategy. In this regard, it is paramount that the fund manager relocates to the United States, conducts in-depth market analysis, and establishes financial projections that rationalize the assumption that the strategy will be profitable. Holistically, a fund manager at the grassroots is crucial in ensuring that the fund manager stays aware of economic shifts that are occurring in the real estate market in Europe and the United States.
The economy of the United States and Europe financial market is highly dynamic and dissimilar to the economy in developing African Countries (Harris, Jenkinson, & Kaplan, 2014). For instance, luxury apartments may be highly demanded in the European and the United States market as opposed to the African market, particularly in developing countries. The difference in the market targeted by the new strategy necessitates the establishment of a new team that will be based in Europe and the United States (Fang, Ivashina, & Lerner, 2015). The decision to base the personnel in the new market targeted by the strategy will allow the organization to collect vital and insightful information that will guide decisions pertaining to the demand, the market competition, and the current market price.
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I recommend the usage of limited partnership as an investment vehicle over the usage of a corporate investment vehicle. In the context of the United Kingdom, the government position of the UK as a domicile of choice for private investors in Europe has been motivated by the creation of a unique class of limited partnership called a private fund limited partnership (PFLP's). The PFLP's is useful because it is subjected, in the United Kingdom, to the simplified regulatory regime. The efficiency of the PFLP as an ideal investment vehicle is rationalized by the fact that it is a collective investment scheme that is governed by an agreement that has been exclusively outlined (Schell, 2018). Moreover, it is not a matter of necessity for limited partners to contribute to the capital contributed to the firm. In the event that there are no general partners, a third party may be appointed to facilitate the process of winding up the company.
Choosing different investment vehicles is vital to factoring the volatility of the individual market (Chandra, 2017). While a limited partnership vehicle may be suitable for the European market, a corporate investment vehicle is suitable for the United States market. It is paramount to note the degree of factors that contribute to the volatility of the real estate market differ markedly in the international spectrum. Choosing a corporate collective investment vehicle for the non-EU market is vital since it allows ease of investment even for foreign investors. To be precise, the release of the Treasury Laws Amendment bill 2017 by the federal government, has created a new collective investment vehicle that appeals to foreign investors. The segment that has been introduced into the corporate laws creates a provision that is anchored on recommendations derived from the Australian Financial Centre Forums. Ultimately, different investment vehicles should be chosen based on efficiency and suitability as a means of fostering optimal market performance.
Marketing considerations are aspects that I as the fund manager will have to tweak in a bid to align the real estate presented to the market with specific tastes and preferences of the target consumer population. Principally, market research findings that unravel consumer buying behavior and the willingness of target consumers to pay will be pivotal in making informed marketing decisions.
Part 2
The new interest shown by investors from China will compel me, as the fund manager, to employee new marketing consideration to factor the needs of the new potential investors. It is imperative to note that the corporate collective investment vehicle that can accommodate international investors will be ideal for this case. The adoption of such an approach will allow the fund to broaden the pool of funds available to it to actualize the strategy. Since the Asian investors bring a new dynamic to the fund, the marketing approach that will need to be made is targeting of both the middle class and the affluent by constructing structures in the Asian market that are affordable to the two socioeconomic classes. The rationale behind the decision to avoid the construction of low-cost housing is the return potential of such an endeavor may be unrewarding for the investors.
In a bid to ensure that the Asian investors are on board with the new investment strategy and plan, it is essential that the client is asked about his expectations on the projected returns and the if he or she understands the values, objectives, and the trajectory that the equity fund is striving to achieve in the global real estate market. It is vital to point out that clients need to understand the agenda of the organization to avoid internal wrangles and misunderstandings. Ensuring that all investors share a common goal with hugely contribute to the success of the private equity fund as it ventures in the European, Chinese, and the American markets.
References
Brown, G. W., Gredil, O. R., & Kaplan, S. N. (2018). Do private equity funds manipulate reported returns?. Journal of Financial Economics .
Chandra, P. (2017). Investment analysis and portfolio management . McGraw-Hill Education.
Fang, L., Ivashina, V., & Lerner, J. (2015). The disintermediation of financial markets: Direct investing in private equity. Journal of Financial Economics , 116 (1), 160-178.
Harris, R. S., Jenkinson, T., & Kaplan, S. N. (2014). Private equity performance: What do we know?. The Journal of Finance , 69 (5), 1851-1882.
Schell, J. M. (2018). Private equity funds: Business structure and operations . Law Journal Press.
