RANCHO SANTA FE, Calif., Jan. 7, 2021 /PRNewswire/ -- Aditum Alternatives announced the filing of a new patent application in response to the SEC's issuance of Rules 18f-4 and 12d1-4 (i.e., the "Derivatives" and "Fund of Funds" rules respectively). Rule 18f-4 places a "reasonable expectation" limit on a registered fund's undertaking private market unfunded commitments, which must be documented and cannot be based on future investment appreciation or fundraising. Rule 12d1-4 allows registered funds to invest in other funds in configurations that previously required exemptive relief. The patent application describes technology known as the Aditum Aqueduct, which enables novel private market investment products.
"Some registered funds lacking Aditum's liquidity features are having to incur additional leverage on highly levered PE assets, as they manage a cash crunch and over $100M in unfunded commitments. Some newly registered funds have acknowledged they will hold as much as 20% in cash in normal circumstances and even more otherwise. The Aditum Aqueduct addresses these challenges.", said Ken McGuire, President of Aditum Alternatives and Aditum Asset Management. He continued, "Without liquidity features like those of the Aqueduct, funds may need to limit or avoid primary PE investments, which are vehicles of choice for the wealthiest individuals and institutional investors, such as retirement plans."
In what Aditum believes is the last remaining structural hurdle to implementation of the Aqueduct as envisioned, they have approached the SEC regarding exemptive relief to expand the ability of an Aditum 12d1-4 "Acquired Fund" to invest in underlying private market funds.
Expanded opportunities for investor liquidity, and
Investor control of liquid assets, thereby eliminating "cash drag" without requiring over-commitment and its attendant risks as well as the need for additional leverage.
About the Aditum Companies
Aditum Alternatives LLC was founded in 2017 to advise asset managers. Aditum Asset Management LLC was founded in 2019 to sponsor investment products. Both are focused on "expanding access to non-traditional investments."
The information herein does not constitute an offer to sell, or a recommendation to buy any security or any other product or service by Aditum Alternatives or Aditum Asset Management regardless of whether such security, product or service is referenced. Furthermore, nothing herein is intended to provide investment advice and nothing herein should be construed as a recommendation to engage in any investment strategy.