Finance Industry Glossary

Term

Meaning

AIFM

Alternative Investment Fund Manager, the manager of an Alternative Investment Fund (such as a private equity fund or a venture capital fund) under the EU Alternative Investment Fund Managers Directive

AML

Anti-money laundering, which means the process of establishing the credentials of a person to establish that the person is not engaged in money laundering

BIR

UK Business Investment Relief

BPR

UK Business Property Relief

CRS

Common Reporting Standard (which is the global non-US equivalent of FATCA)

Custody

Custody is the safekeeping of assets belonging to another

ESG policy

The approach adopted by a company in relation to Environmental, Social and corporate Governance issues

FATCA

The US legislation, the Foreign Account Tax Compliance Act, enacted to prevent tax evasion by a US person who invests outside the US

GP

A general partner (or the manager) of a limited partnership, which is being used as a fund structure

IHT

UK inheritance tax, payable upon the value of assets held by an individual at death which are left to others

IRR

The internal rate of return calculated on an investment

KYC

The “know your customer” regulations

LLP

A limited liability partnership

LP

A limited partner of (or an investor in) a limited partnership, which is being used as a fund structure

NAV

Net asset value, so the figure calculated by valuing assets and deducting any liabilities relating thereto

Nominee

A legal entity that holds assets on behalf of the beneficial owner of those assets,

Private Equity (PE)

Private Equity is the process by which investments are made in private (so not publicly listed) companies, which have an established business. Typically, this can take the shape of development capital, with the new money used to help a portfolio company grow, or through a leveraged purchase of a company (meaning debt is used to help buy the company, akin to how a mortgage is used to help to buy a house).

SPV

A special purpose vehicle, usually established to acquire a particular investment(s)

TPA

A third-party administrator of assets

Venture Capital (VC)

Venture Capital is the process by which investments are made in private (so not publicly listed) companies that are at an early stage in their development. Typically, this will be new money coming into a portfolio company to assist with growing it.