TRAINEE INSIGHTS – LEGAL LINGO DIRECTORY

A leveraged finance transaction involves borrowing money from a lender (such as a bank or a credit fund).  From a borrower’s perspective, a leveraged finance transaction will often be used for a specified purpose including, but not limited to, the acquisition of a public or private company througha leveraged buyout ("LBO") to pay the purchase price for the acquisition under the LBO, refinance any existing debt on the balance sheet, and any fees, costs and expenses that were incurred by the buyer in relation to the acquisition. 

A private equity firm (a “financial sponsor”) will typically back the purchaser and use debt to finance a significant proportion of the acquisition purchase price and will then take ownership of the target company. The target company’s assets will commonly be used as collateral for the debt used in the LBO transaction. An LBO is structured as to carry a high amount of debt and risk with a likely ratio of 90% debt to 10% equity. 

On the lender-side, a leveraged finance transaction is assumed to carry a higher-than-average risk (i.e., the risk of default) and will carry a higher margin (e.g., the interest to the lender above the cost of the funds) to the borrower. 

In leveraged transactions, the lenders may require certain financial covenants to be included in the loan documentation together with other general covenants which regulate the behaviour of the borrower and its subsidiaries.  

Over the past ten years, the market for leveraged transactions has been particularly busy and, accordingly, the terms that borrowers can benefit from under their transactions have, in the case of strong financial sponsor-backed borrowers, become more flexible. 

An example of this flexibility is through the so-called “cov-lite” loans. These cov-lite loans have features similar to high-yield bonds and, as a key feature, have no financial maintenance covenants.  They are also coupled with the “incurrence style” general covenants which are written in a “US style” as opposed to the more traditional “English style” under the LMA. 

Traditional “LMA style” leveraged loans have greater protections for lenders, including restrictions on the incurrence of debt, mandatory prepayments by the borrowers from asset sales, excess cash flow and other occurrences, and a wider pool of guarantees and security (e.g., charges over shares and mortgages over real assets) from the loan parties together with a more restrictive covenant package.

Want to find out more about leveraged finance? If so, here are links to three excellent articles on the subject: 

• Financial Times: The increasing complexity of modern leverage raises risks 
• Fidelity International: Chart Room: After a record-breaking year, where next for leveraged finance
• S&P Global: Navigating the Evolving Landscape of Leveraged Finance 

The EU’s General Data Protection Regulation 2016/679, (GDPR) is quite possibly the most comprehensive data protection law in the world.  The GDPR was previously applicable in the UK however, following Brexit, the UK data protection regime consists of the retained law version of the GDPR (UK GDPR), together with the Data Protection Act 2018 (DPA) and the Privacy and Electronic Communications (EC Directive) Regulations 2003 (as amended), (PECR).

The GDPR and the UK GDPR apply to the processing of personal data (essentially any information relating to an identified or identifiable individual).  Among other things, the GDPR and the UK GDPR confer certain rights on individuals (also known as data subjects) regarding their personal data, including the “right of access”. 

Data subjects have the right to obtain from controllers (persons or organisations that determine how and why personal data is processed) confirmation as to whether or not personal data concerning them is being processed and, if so, access to the relevant personal data and certain other supplementary information.  Data subjects may issue subject access requests (SARs) in this regard.  Controllers must respond to SARs by providing a copy of the relevant personal data in accordance with certain conditions and time limits and usually free of charge. 

In addition to the data subject’s personal data, controllers must provide the following information in response to a SAR:

• the purposes of the processing;
• the types of personal data concerned;
• the recipients or types of recipients with whom the personal data has been or will be shared;
• if possible, the expected time period that the personal data will be stored for (or how that time period will be decided);
• the right to ask the controller to correct or delete such personal data, restrict the processing of such personal data, or object to the processing of such personal data in certain circumstances;
• the individual's right to complain to a supervisory authority;
• any available information about where the personal data was obtained from if such data is not collected from the individual; 
• the existence of any automated decision-making, including profiling, meaningful information about the logic involved and the significance and envisaged consequences of such processing for the individual; and
• if the personal data is transferred internationally, details of the safeguards implemented to protect the transferred data.

Controllers may be able to refuse to respond to a SAR if a relevant exemption applies or where the SAR itself is manifestly unfounded or excessive (although data subjects must be informed of the reasons for refusal; their right to complain to the relevant supervisory authority; and their ability to seek a judicial remedy). 

Foreign Direct Investment (FDI) is defined by the Organization for Economic Co-operation and Development (OECD) as:

‘a category of cross-border investment in which an investor resident in one economy establishes a lasting interest in and a significant degree of influence over an enterprise resident in another economy.’

Over the last few years (and following the global COVID-19 pandemic), governments around the world have implemented FDI regimes to protect what they consider to be strategically important businesses from foreign acquisition or influence.  An FDI regime offers a national government the ability to investigate and potentially block or impose conditions with respect to a proposed investment from (typically) foreign investors in companies operating in key sectors of the economy.

Historically, these sectors focused on key areas of national security, such as military and defence-related companies. However, driven in part by increased geopolitical threats elsewhere and developments in powerful technologies, the concept of national security now includes critical infrastructure (including energy networks and ports), communications assets, and advanced technology and data (e.g., artificial intelligence, quantum computing, and advanced encryption technologies and materials).  The COVID-19 pandemic has also highlighted the relevance of a much wider range of businesses being directly related to matters of national security and public health (e.g., companies working on vaccines and personal protective equipment). 

Against a backdrop of increasing global protectionism, FDI regulation has become a critical piece of the regulatory jigsaw in recent years, such that careful consideration must be given to the application of FDI rules to cross-border M&A from the outset, alongside merger control and other regulatory clearances.  This can be the case even for acquisitions of minority interests as little as 1%.  While most investors are unlikely to be viewed as ‘problematic’, these regimes have significant implications for investors, particularly in terms of transaction timetables.  Investors need to consider both their own position but also that of any investment partners, and factor in these approval requirements into their acquisition strategies.

Want to find out more about FDI? If so, here are links to three excellent articles on the subject: 

• Forbes: Twitter, Your Time Is Up
• Reuters: Germany blocks Chinese takeover of satellite firm on security concerns
• The Economist: The pandemic cut annual FDI flows by one-third

In the event of a sale, usually of a controlling interest, by a private equity investor or by a certain majority of the existing shareholders to a purchaser:

1. “drag-along rights” allow the selling majority shareholders to procure an exit by forcing the remaining minority shareholders to sell their shares on the same terms as have been negotiated by the majority shareholders for the sale of their own shares; whereas
2. “tag-along rights” allow the minority shareholders to require the majority shareholders to procure an offer for the sale of the minority shareholders’ own shares on the same terms.

The advantage of a drag-along provision is that it gives the majority shareholders the right to require that the minority shareholders also sell their shares, thereby allowing a purchaser to acquire 100% of the share capital of the company, rather than being left with a (potentially uncooperative or even hostile) minority shareholder group.

The tag-along provision is the quid-pro-quo of the majority shareholders demanding a drag-along right and is designed to give minority shareholders the right to sell all or a portion of their shares during a sale process. Without it, minority shareholders have limited exit rights due to their lack of controlling interest in the company.

Both of these are contractual mechanisms and are usually set out in the articles of association or shareholders’ agreement relating to the company.

When pricing is predatory, it’s not the consumer that’s the prey – well, at least not in the short term.

Predatory pricing can be a strategy used by a dominant company to drive competitors out of the market by temporarily lowering its prices below the cost of production.  By selling products at a loss in the short run, the company aims to eliminate competitors who are unable to sustainably match these prices, often driving them out of the market.  Below cost pricing can also deter new businesses from entering the market, as they deem it unprofitable. 

Such exclusion (or “foreclosure”) of rivals allows the dominant company to later recoup lost profits, for example, by raising prices above a competitive level.  Despite the immediate, short-term benefit to the consumer, in the long term, this strategy can lead to higher prices, decreased quality or less choice in the market.  Predatory pricing is therefore harmful to both competitors and consumers.

However, clearly not all price reductions amount to predatory pricing.  The European Commission (EC) has established legal benchmarks from the case of AKZO for assessing potential predatory behaviour which may have the effect of excluding a dominant firm’s “as-efficient competitors”:

• Pricing below “average variable costs” (costs that vary with the level of output such as labour and material costs) is presumed to be predatory; whereas
• Pricing above “average variable costs” but below “average total costs” (which includes both variable and fixed costs) requires competition authorities to prove a company’s intention to eliminate competitors by looking at the specifics of the price cut, including timing and duration.

In the UK, the Competition and Markets Authority (CMA) has found predatory pricing infringements involving potentially loss-making bus services (Cardiff Bus), the sale of newspaper advertising space (Aberdeen Journals) and the supply of morphine tablets (Napp Pharmaceuticals).

There are many fantastic pharmaceutical innovations currently being developed to save lives and to keep us healthy. They range from simple tablets to complex personalised medicines.

Irrespective of how convincing the clinical trial data is, or how iron-clad the intellectual property rights are, before a medicinal product can be commercialised in the UK, the developer must obtain a marketing authorisation (MA). Without this, a developer can pour millions of pounds into the development of a medicinal product and never see a return on its investment.

In order to obtain a MA in the UK, the developer must demonstrate to the Medicines and Healthcare products Regulatory Agency (MHRA) that its medicine is safe, effective and of a sufficiently high quality. This means that products must undergo lengthy research and development programmes.

In relation to innovative medicinal products, this involves the conduct of preclinical testing (e.g., experiments involving the use of cell cultures and animals) and clinical trials (i.e., experiments involving human subjects). In relation to generic medicinal products, this involves referring to the MA application dossier of the innovative medicinal product of which it is a copy.

Clinical trials are generally organised into four phases, each of which is designed to look at a particular aspect of the investigational medicinal product. Clinical trials involve a sponsor (i.e., the developer), a principal investigator (PI) and trial site(s). The sponsor is responsible for the initiation, management, set-up and financing of the clinical trial, the PI is responsible for the overall care and management of the participants, and the site(s) ensures that the facilities are appropriate for the clinical trial to be carried out.

Once sufficient clinical data has been generated, the developer of an innovative medicinal product can submit an MA application to the MHRA. The assessors will look at whether the benefits of the medicinal product outweigh its risks. No medicinal products are completely risk-free; the specific risks posed by a medicinal product must be considered in a proper context. For example, a well-known side effect of chemotherapy is temporary hair loss. Whilst this is a traumatic experience, it is considered acceptable given the severity of the condition it is intended to treat. In contrast, this side effect would be unacceptable if caused by over-the-counter pain-relief.

If the MA is granted for an innovative medicinal product that is confirmed by the regulatory authority to contain a new active substance, it will benefit from an eight-year period of regulatory exclusivity. Once this period has expired, generic manufacturers can refer to the MA application dossier, instead of generating preclinical and clinical data themselves.

Even if the generic medicinal product is approved, it cannot be launched for a further two years until the innovator’s market exclusivity has expired. The total exclusivity period can be extended by a further year if one or more new indications, considered to be of significant benefit, are approved within the first eight years following the initial product approval. The regulatory framework governing regulatory data exclusivity seeks to ensure a fair balance between the protection of innovative companies and general interests that are served by the marketing of generic medicinal products.

After a medicinal product has been launched, the developer is required to monitor its long-term safety and effectiveness.

At Ropes & Gray, we provide strategic advice to clients of various sizes to manage every stage of the product lifecycle – from research to commercialisation (including pricing and reimbursement) and safety monitoring. We routinely work with teams in the US and Asia on commercially sensitive matters. If you want to find out more about the Life Sciences Regulation & Compliance practice in Europe, please click here.

UK Real estate investment trusts (REITs), despite the name, are not trusts. They are companies that carry on a property rental business; they typically own and operate income-producing real estate with money that has been pooled from a large number of investors.

In common with various other jurisdictions, the UK has a specific REIT regime which enables qualifying companies and groups of companies to elect to be treated as REITs for tax purposes.

The range of tax benefits that results from election to be treated as a REIT is a key driver in structuring real estate investment through this vehicle. The tax treatment of REITs includes:

• Exemption from UK corporation tax on the profits (income and capital gains) derived from their qualifying property rental business;
• Instead, distributions of income profits and capital gains by REITs are treated as income from a property business in the hands of the REIT’s shareholders (the investors); and
• 20% withholding tax is imposed on any “property income distributions” made to REIT investors, subject to exceptions and reduced rates for some treaty qualified investors (and with a credit against income tax).
  
  

This means that qualifying property rental business profits are not taxed at the REIT level and are only taxed once distributed to investors, i.e., subject to income tax for UK individuals (maximum rate of 45%) or corporation tax for UK companies (19% but rising to 25% in April 2023). In most cases the withholding tax acts as a final UK tax for non-UK investors. The policy rationale of the regime is to shift the tax burden up a level, to the investors. To achieve this, REITs must distribute 90% of their tax-exempt income profits each year (gains can be rolled up in the vehicle). As the profits are not being taxed at the REIT level, there should be more profits available for distribution while transfers of property-owning REIT subsidiaries should also not carry any “latent” capital gains. This can make REITS a very attractive holding vehicle for UK real estate investments.

REITs are typically listed on a stock exchange, but since April 2022 – and a liberalisation of the rules – it has been possible to have unlisted REITs where certain “institutional investors” hold at least 70% of the ordinary share capital. This liberalisation and the pending increase in UK corporation tax rates means that smaller, private REITs are attracting investor interest.

A real estate fund (REF) is an investment fund, often in the form of a limited partnership, that uses money invested by private / institutional investors to acquire interests in underlying real estate assets, either directly or via interests in holding entities.

There are three main forms of REF:

• Private real estate investment funds: A professionally managed fund that directly invests in real estate assets. Typically involving a significant minimum investment, such funds are generally restricted to institutional, high net-worth, qualified investors (i.e. non-retail investors).
• Real estate exchange-traded funds (ETFs): ETFs buy shares in real estate companies and REITs which then trade on major stock markets with share prices fluctuating throughout the course of trading.
• Real estate mutual funds: Similar to private real estate investment funds, these funds are professionally managed but involve pooled investments in a varied number of vehicles e.g. stocks and bonds. Like real estate ETFs, they invest predominantly in REITs and real estate companies, providing a diverse investment portfolio. However, unlike ETFs, they only trade once a day after the market closes.
  
  

REF investment strategies

REFs are usually discussed as employing one or more of four key investment strategies:

• Core: Investments in low-risk, high-quality assets with a long realisation horizon on individual assets. The low risk profile of such assets is matched by their high value and comparatively lower rate of return.
• Core-Plus: Core-Plus strategies take a similar approach to Core, but seek investments with a slightly higher risk profile and that may require inputs, such as improvements or renovations, in order to realise their full potential. As a result, Core-Plus strategies typically target higher returns than Core.
• Value Add: Value-Add strategies aim to make investments that have a higher risk profile than Core-Plus and typically require physical improvement, development or operational reorganisation with a view to achieving moderate-to-high returns.
• Opportunistic: Opportunistic strategies focus on finding even higher returning investments than Value-Add with an even higher risk profile. Examples include entirely new developments and brownfield investments in land to be developed. The level of development needed typically requires a larger amount of upfront capital to be deployed raising the risk profile of such investments.
  
  

The use of leverage in REFs varies according to the strategy employed. The majority of REF investments will use leverage. However, the more capital that is required to develop an asset and the higher the return target, the more likely greater levels of debt finance will be used. As a result, Core strategies typically represent the least leveraged position, often with 0-10% leverage, and Opportunistic strategies the most at 60%+. Core-Plus and Value Added are less easily distinguished by their leverage ratios, but typically use 30-50% and 50-60% respectively.

The ability of real estate to hold a more consistent value throughout economic periods has often been a key attraction of REFs over higher risk alternative investment models. Yet REFs were by no means immune to the effects of the pandemic, being among some of worst hit asset classes with valuations tumbling.

The historically low-risk appeal of REFs is also under threat both from within the sector, with interest rates weakening the fundraising climate for higher-risk strategies, such as Value-add and Opportunistic strategies, and as a result of the macro environment where the market for low-risk long-term investment strategies is being increasingly dominated by the infrastructure fund market.

Large scale financing – be it for project finance, acquisition finance or working capital – often requires more than one lender. A syndicated loan is an arrangement whereby a group of lenders (the “syndicate”), which may consist of banks and/or non-banks, provide funds to a borrower. The syndicated loan facility may comprise a single loan facility or a variety of facilities such as a term loan, a revolving credit facility, a letter of credit facility, a swingline facility or other similar financing arrangements. Together, these make up a total facility commitment under a single facility agreement which, in the European market, is usually largely based on the recommended forms of primary syndicated loan agreements produced by the Loan Market Association.

At the outset of the deal, the borrower mandates one or more financial institutions to act as mandated lead arranger(s) (“MLAs”) to negotiate the terms of the facility agreement. Once the MLAs have sold down parts of the total loan amount to interested lenders in the primary market, the loan is syndicated. The MLAs often keep a larger portion of the loan on their balance sheets while the other lenders often sell their tranches on the secondary market. A lender in the syndicate (usually the MLA) will act as facility agent to administer the loan and, if the syndicated loan is secured, the facility agent (or other lender) will typically act as security trustee. 

Syndication is generally beneficial to lenders as they can participate in a variety of financings of different sizes and split the overall commitment with other lenders. This reduces their exposure to risk as each lender’s liability is contractually limited to the amount of its own commitment. With access to more lenders, borrowers are better able to secure loans of a greater quantum and fund bigger projects.

An introduction to carried interest, a.k.a. “incentive fee”, “performance fee” or “carry”.

Carried interest is a method of compensation received by individual fund managers (ie. executives) in private FUND or hedge fund structures.

These executives receive a share of the profits generated by the realization of the fund’s investments in portfolio companies. It is typically paid to the carried interest recipients at a rate of 20% of the fund’s profits (with 80% paid to the fund’s investors). However, carried interest is generally only paid after the fund returns the initial capital investors put into the fund plus a certain minimum return (known as the preferred return or hurdle rate) to investors.

Therefore, the level of Carried Interest paid to executives is derived from the performance of the underlying investments and the amount (if any) is not guaranteed. It aligns the interests of the executives with the performance of the fund and creates an additional incentive to maximize the fund’s returns for investors.  

Typically, the amounts of Carried Interest paid to executives is also subject to other restrictions. For example, if the fund fails to meet a certain level of return or an unforeseen liability arises, any overpayment of Carried Interest previously paid to the executives could be required to be repaid back to the fund and paid to investors via a process known as “Clawback” to ensure that no more than 20% of the profits have been paid as carry.

Most fund managers also charge a management fee (typically of around 1.5 - 2% per annum of an investor’s commitment), however unlike carried interest the management fee is not dependent on fund performance.

“Institutional strip" and “sweet equity” are two cornerstone terms used in private equity transactions.  

Institutional strip refers to securities invested into by (institutional) private equity sponsors to fund the purchase of a target business. 

Institutional strip will typically consist of a combination of ordinary shares and preference shares or loan notes.  Alongside the private equity sponsors, senior / key members of a target’s management team will be expected to either rollover existing equity interests in the target or otherwise invest their own cash to subscribe for institutional strip.  The intention is for the management team to put “skin in the game” (i.e. bear the financial risk of the acquisition alongside the private equity sponsor), thereby creating alignment between the sponsor and the management team.  

Alongside the concept of institutional strip, sweet equity operates to incentivise the management team with the growth / performance of the target business.  In UK private equity transactions, sweet equity typically takes the form of ordinary shares held by the management team, which will appreciate in value as the target business grows.  This serves to incentivise management to promote the success of the business and maximise its value.

Most people are comfortable with the term 'private equity'. Firms like Bain Capital, TPG and Advent in the US and 3i, Bridgepoint and Cinven in the UK have been investing money in businesses, developing them and selling them on for decades. But private equity and venture capital are just part of a wider private capital universe. It is an area of finance that has been around forever but has become increasingly commented on in the last couple of years. 

The term 'private capital' refers to investments in unlisted assets, often (but not always) by private pools of money such as buyout firms, sovereign wealth funds, private investment funds and wealthy investors.  Institutions with a long-term view, such as pension funds and university endowment funds are also active in the market (either via direct investments or through investments in funds), as are banks. The distinction between private capital and private equity is that the former is the umbrella term for all types of investments in unlisted assets. This includes private equity (investments in private companies and/or buyouts of public companies) but also encompasses venture capital (investments in early stage companies with high growth potential), real estate (investments in real estate assets), private debt (debt investments that are not publicly traded), infrastructure (investments in infrastructure assets) etc.  

Want to find out more about private capital? If so, here are links to three excellent articles on the subject: 

• Financial Times
• The Economist: Everyone now believes that private markets are better than public ones
• The Economist: The rise and rise of private capital
  
  

“Withholding tax” or “WHT” refers broadly to tax which the person making a payment has to deduct from that payment and account for to the tax authorities. The UK makes some payers withhold tax on certain types of payment including, amongst other things, certain salary and interest payments. Instead of requiring the recipient to pay all the applicable tax following receipt of the full amount, a portion of the payment is withheld and paid directly to HMRC by the payer and the recipient gets a “credit” for that in their tax return. Withholding tax can therefore be considered a collection mechanic.

For example, if income tax were charged at 20% on a £100 salary payment, the employer would instead pay the employee £80, and hand £20 directly to HMRC. The employee should then not have to pay the same tax again in their annual tax return.

Withholding tax benefits tax authorities in several ways, for example:

1. It often means the tax accounting and payment is done by the party better equipped to do so – for example, employer payroll departments rather than individual employees.
2. It provides a tool against tax evasion/ non-compliance. Where payments are made “gross,” i.e. including the tax amount of a payment, they can become more difficult to tax, particularly where a payee is located overseas. Taxing at the source can mean catching the payment while it is still in the tax authority’s control.
3. It can offer a cash flow advantage. Rather than waiting for the end of the period when the recipient completes their tax returns, the tax authorities are paid the tax earlier by the recipient.

Definition:

A Sovereign Wealth Fund is a state-owned investment vehicle run and managed by a government agency. A nation typically establishes a sovereign wealth fund when there are budget or trade surpluses on its balance of payments. The surplus capital can then be pooled into a state-owned fund which the government uses to make investments for the benefit of its citizens and their economy. 

Common types of Sovereign Wealth Funds include:

Stabilization funds: used to insulate the economy from inflation and volatile commodity prices, a common risk with the large influxes of revenue from mineral wealth like oil.

Future generation funds: designed to invest surplus revenue into a diverse portfolio of assets to provide for future generations.

Public pension reserve funds: set up to put money aside to finance a nation’s pension system.

The world’s largest sovereign wealth funds:

Norway: Norway’s sovereign wealth fund is currently the largest in the world with $1.27tn worth of assets under management. The Norway Government Pension Fund was established in 1990 to invest the large revenues derived from the nation’s oil wealth. 

China: China’s sovereign wealth fund is the second largest with $941bn worth of assets under management. The China Investment Corporation Fund was established in 2007 due to surplus foreign exchange reserves. 

Abu Dhabi: The Abu Dhabi Investment Authority was established in 1976 to manage the budgetary surplus derived from state-owned oil and has $578bn worth of assets under management.

Emerging Trends:

Countries with budget deficits, such as Turkey, South-Africa and Senegal, are establishing sovereign wealth funds to better manage state owned assets in a government’s portfolio.

Investments made by private equity buyout funds have the following key characteristics:

1. The fund’s participation in the target is anticipated to be a 4 to 6-year investment horizon in order to realize a profit for investors. This contrasts with corporate M&A where the buyer may well expect to own the target in perpetuity;
2. Private equity funds seek out competent management teams to manage the company day-to-day under the guiding hand of the fund’s overarching growth strategy;
3. This management team is incentivized by receiving equity in the target company, pro rata to a personal investment on the same terms that the fund invests on (“strip equity”) and/or via shares purchased at a low initial cost that have the potential for significant upside (“sweet equity”), allowing managers to directly benefit from any increase in the company’s value; and
4. The target business is acquired via a mixture of the funds received from fund investors and debt finance, known as leveraged finance. On a successful investment, the leveraged finance will enhance returns for investors.

A “private equity fund” is an investment fund, often in the form of a limited partnership, that uses money invested by private investors to acquire shares in private companies, either directly or by delisting public securities (hence “Private Equity” or “PE”). There are also funds that lend debt but these are usually referred to as “credit funds”. Investors in the PE fund, for example sovereign wealth funds or pension funds, become limited partners (or “LPs”) in the PE fund. Via the PE fund, these investors deploy considerable capital in moderate-term investments (often referred to as “portfolio companies”) in expectation of significant returns from the pre-agreed fund investment strategy. 

The investments for the PE fund are sourced, implemented and managed by the general partner, or manager, of the fund. In practice, this is a group of individuals otherwise known as the “private equity deal executives” who are rewarded through a combination of bonuses, co-investment and carried interest for executing investments and, in particular, making successful returns. 

The investments are then sold for a capital gain with the profits divided between the LPs and the fund managers.