A Private Fund is a collective investment scheme that is limited to no more than 50 participants from a known category of persons. Typically, these are ideally suited to family arrangements or employee situations, or where a group of individuals or friends wish to run their investments in a fund structure.
Unlike the EIF, they do not need to apply for registration with the Regulator and neither are they obliged to appoint formal counterparties, such as a depositary, administrator, resident directors or an investment manager. This allows private schemes to be set up cost-effectively and quickly.
However the flip side of absence of regulation is that there are restrictions on the marketing of such funds. Many schemes commence life as a private fund, but convert to an EIF at a later stage if successful, in order to benefit from increased marketing exposure and additional governance provisions.