A manager may decide to set up a “Parallel Fund” in order to accommodate the needs of certain limited partners that have tax, regulatory or other issues in investing in the primary fund. For example, a non U.S. limited partner may want to take advantage of a certain tax treaty available to them by investing in a Parallel Fund. The Parallel Fund would be set up in a different jurisdiction and would make the same investments as the primary fund, subject to certain exceptions given the issues necessitating the need for the parallel structure.
The Cornerstone includes an optional provision that allows for the manager to set up such a Parallel Fund to accommodate legal, tax, or regulatory considerations of certain investors subject to the requirement that the manager treat all investors in a fair manner as further described in the Cornerstone.
Obviously, a manager should evaluate the costs and administrative burden prior to setting up any Parallel Fund.