VEMEX registered public investment.
Investment published on: 2012-10-21 18:18:00.
NEISIN code: MRVAHFTIP019.
Official discussion: ~1~.
Official audit: link to N.A.
Public Audits Records for this investment’s audit: N.A.
Archived by: Vaerah Vahrokha.
Contents
1. Introduction
2. Overview
3. Funds offering
4. VEMEX Exchange
5. Business Plan Overview
6. Management
7. Expansion and Exit Strategies
8. Investor Key Facts
9. Market Makers
10. Significant Risks
11. Reservations
12. Delegates
13. Purchase Details
1. Introduction
This document is the Initial Public Offering for Vahrokh Financial Technologies [VAHFT] series of Mutual Funds, NEISIN code MRVAHFTIP019.
VAHFT is the implementor and executor of the business ideas created by Vahrokh Consulting [VAHCO].
This document is a follow up to the original draft and material to be found at this location.
Perspective Investors are warmly encouraged reading the whole text paying attention to all the details. Due to the amount of involved facilties and prospectuses, this IPO will just refer to them as links to their official repository, located on Vahrokh.com. The prospectuses are very similar to the Vanguard(tm) RL funds ones.
For book keeping purpose, those documents will be translated into an EvE forums compatible version upon Investors request.
For general introductory texts about what funds are and how they work, please refer to this post.
2. Overview
VAHFT is about to launch a series of Mutual Funds within the Vahrokh’s EvE’s Merchantile Exchange [VEMEX]. The purpose of this IPO is to raise Investors capital to finance the initiative. VAHCO is going to be invested as well, for an amount of 10B evenly spread across the funds.
Funds are meant to be a long term investment, however Investors may choose to stay invested for as little as one month.
VAHFT opted to offer a series of multiple funds in order to cater to different Investor preferences.
The products cover a broad spectrum, from a “no brainer” simplified open end fund to more speculative funds based on Tech 2 materials.
3. Funds offering
This IPO covers five Funds: one open ended Fund and four close ended ones.
A comprehensive listing of VAHFT managed funds including the ones included in this offer is available on the VAHFT page.
A lot of discussion and explanations about the Funds has been done on the draft thread.
Easy Fund [ESYFND] is the no brainer, no-nonsense open end fund for everyone. Lowest fees, no secondary market, you just put money in and receive monthly (end of month) dividends. Like the other IPOs and unlike bonds, those dividends are variable. Due to its underlying portfolio, it is also the Fund with the smoothest (but not top) performance.
For a full description and details about the Easy Fund please refer to the official prospectus, available at this location.
Adaptive Minerals Basket [MINBSK] is the high liquidity and lowest cost closed fund for Investors who want to take advantage of being able and trade shares on an exchange. They will also receive monthly dividends. The Fund is based on an ever changing basket of minerals. For a full description about the Adaptive Minerals Basket Fund please refer to the official prospectus, available at this location.
Adaptive Ices Basket [ICEBSK] is the high liquidity and low cost closed fund for Investors who want to take advantage of being able and trade shares on an exchange. They will also receive monthly dividends. The Fund is based on an ever changing basket of ices and related materials (i.e. heavy water). For a full description about the Adaptive Ices Basket Fund please refer to the official prospectus, available at this location.
Adaptive Tech II Basket [T2BSK] is the speculative closed fund for Investors who want to take advantage of being able and trade shares on an exchange. They will also receive monthly dividends. The Fund is based on an ever changing basket of moon and advanced Tech II materials. For a full description about the Adaptive Tech II Basket Fund please refer to the official prospectus, available at this location.
Adaptive Planetary Interaction Basket [BSK] is another speculative closed fund for Investors who want to take advantage of being able and trade shares on an exchange. They will also receive monthly dividends. The Fund is based on an ever changing basket of Planetary Interaction commodities. For a full description about the Adaptive Planetary Interaction Basket Fund please refer to the official prospectus, available at this location.
4. VEMEX Exchange
All the Funds covered by this IPO will be traded on the Vahrokh’s EvE’s Merchantile Exchange [VEMEX].
Easy Fund Investors will have little interaction with it, in fact at IPO launch they’ll receive their shares and everything will go on autopilot until they want to redeem them (redeeming is done by “selling” on the Exchange). Perspective Easy Fund Investors who will join the Fund after the IPO launch will have to use the Exchange to purchase the shares instead.
In this first iteration, VEMEX is a traditional, teller based securities trading exchange.
There’s a quite detailed page explaining in detail how it works, possible fees and so on.
This version of VEMEX is based on a Google Spreadsheet available at this location.
Illustrated usage examples about how to use the exchange to setup orders are provided in the draft thread, at this post.
In case of difficulties, please feel free to EvE-Mail me and ask about your issue.
5. Business Plan Overview
The Funds Manager will perform a number of activities, namely:
– Invest in fully collateralized loans and bonds (Easy Fund only).
– Buy and hold and then sell the various Funds underlying commodities (long term strategy).
– Station trade the various Funds underlying commodities (short term strategy).
– Decide if and when to switch from long to short term strategy or when use a mix of the two. The short term strategy will be mostly used during downturns of the markets (see summer). As a safety precaution, lower profits will be chosen over overwork leading to burnout.
– Constantly evaluate the current baskets underlying commodities, in order to take in the better performers and out the worse performers.
– Decide one or multiple hedging strategies, including saving some of the profits made in the best seasons in order to release them during the worst ones (this makes the investment curve smoother).
– Decide how much capital to keep liquid. This is going to be expecially prevalent on the Easy Fund, because Investors may come and go as they wish and thus a certain guaranteed liquidity has to be held.
6. Management
Due to the number of tasks involved at managing the Funds, there will be a management fee, in the meausure of 7 percent on the net capital gains.
Full details about this and other aspects about the Funds are available at each Fund’s prospectus page.
After the reservation phase is over and Investors have sent their money, each of them will receive a corresponding number of shares. From now on, Easy Fund Investors have nothing else to do, while the others may either do nothing (and just take dividends) or trade their shares.
7. Expansion and Exit Strategies
In case the funds are performing very well and are close to their caps, they may be expanded.
Closed end funds will have additional shares issued and current Investors holdings will be adjusted so that their shares don’t get diluted. Notice how this is going to be a very rare event.
The Easy Fund is open ended instead, so it may potentially grow forever. It is going to be capped however, the planned total NAV across all the funds is 100B, with a forecast ability to output a 2 percent ROI.
In case the Funds have to shut down, the Management will do the possible to liquidate the underlying stock as fast as possible. This may take a while in case of low EvE activity periods of the year.
8. Investor Key Facts
– At IPO launch, the shares face value is 1M ISK. This applies to all the funds.
– Dividends will be paid monthly, possibly within the end of the first week of the month. The first dividends will be paid on December.
– Dividends will be calculated as 90 percent of the profit less the management fee. It is possible that some profits could be held to improve the “low of the year” months performance.
– VAHFT may force buyback of shares at their nominal value (in example, in case of Funds shutdown or downsizing). If possible buybacks will be notified a month in advance. Buybacks will be spread across all the Investors of the affected Fund.
– There is a grand total NAV cap currently set at 100B. The closed end Funds total NAV cap is currently set at 60B, leaving 40B for the Easy Fund. Depending on the IPO success, these caps may be altered but the 100B grand total cap is here to stay. At first, Market Makers will be limited to 40B (of the closed end Funds, the only available to them).
– All the IPO launch shares incur in no fee whatsoever and they will not need to do anything on the exchange at all. Only post launch activities will and usually only in case of sales.
– Easy Fund Investors may simply redeem their shares, they don’t have a secondary market. They may also trade their shares out of the exchange but then they will have to notify VAHFT about that, otherwise the old shareholder will still receive the dividends. In case of private trading, the former share holder is meant to give a pro-rated dividend to the new share holder. In no circumstance VAHFT or VEMEX will disburse missing dividends.
– Closed end Fund Investors may not just redeem shares. Like for stocks trading, they have to find a buyer on the exchange. VAHFT provides a “bailout” emergency mechanism so that even closed end Fund Investors may directly sell their shares back to VAHFT itself, but with a fixed penalty of 8 percent. Added to the exchange fee, this easily becomes 10 percent.
– The ability to short sell is only available to closed end Funds. VAHFT may decide at their sole discretion to stop accepting short sell orders (they require additional liquidity).
– Only the current owner of a share receives the full dividend. Therefore it’s advised to sell shares near the end of the month. This includes Easy Fund Investors who want to redeem their shares.
– In case of large redeeming operations, VAHFT reserve the undisputable right to partially liquidate Investors ASAP and the remaining part as stock is liquidated. This issue will be greatly reduced in case the Investor contacts the Management (Vaerah Vahrokha, please always use EvE Mail so to have written records) in advance. Two weeks would be the optimum.
9. Market Makers
Only at IPO launch and at expansions, large Investors may choose to be a Market Maker. Market Makers have unique features and limitations:
– They will only pay 96 percent of face value, that is 0.96M per share. This is a potential 400M profit – fees just by flipping those shares on the secondary market.
– They must tell about their will to be Market Maker at reservation phase and no later.
– They only belong to the closed end funds, since there’s no market to make in the Easy Fund.
– Minimum shares block: 10B in the preferred fund(s). It’s possible to spread those 10B across multiple close ended funds.
– They cannot emergency redeem shares for 3 months. They have to tell Vaerah Vahrokha about their intention to bail out well in advance, since taking away their large investment will cause liquidity issues on the Fund(s).
10. Significant Risks
No investment is without risks. Please don’t invest more than you may affort do lose. Past performance is not indicative of future results.
A list of potential investment risks is provided at the end of each Fund Prospectus.
Besides the above list, there are others:
– Risk of scam. The Fund Manager strives to be as honest as humanly possible. Trust is earned, not given. The Fund Manager knows it and accepts Investors may have their doubts.
– Risk of injury: in case of non disabling disease / sickness / trauma, the The Fund Manager will try resume the Funds operation ASAP.
– External causes: in case of debilitating technical issues or any kind of game stopping issues, The Fund Manager will try resume the Funds operation ASAP.
– Risk of death: this IPO is an extremely complex project. I don’t know anybody in RL who could take over or even who could manage how to liquidate everything. Therefore in case of death the invested money will be probably lost or partially lost.
11. Reservations
As anticipated in another post, no shares reservations will be accepted before a post of mine will state that the reservations are open. Such post should appear at 2012-10-21 9pm EvE time.
Reservations will work on a first come, first served basis up to the stated caps. Investors indicating their interest past those caps have been reached have still chances. In fact if some Investor will not send ISK within 3 days after the reservations are over or if a cap is modified then they’ll be the next in line.
12. Delegations
It’s possible to name a Delegate to reserve your shares in your place. This is expecially useful in case you cannot participate to the reservations. Both the Delegate and the Investor have to post about their intention. During the reservations, the Delegate will have to specify the exact portfolio else his reservation will be void.
13. Purchase Details
The IPO will work as follows:
1) A specific message posted as described at chapter 11. Reservations will begin the reservation phase.
2) Once the reservation phase is over (might take some days) a second message will state how the reservations are over. However. if the Funds are still not capped, perspective Investors will still be able to place reservations.
The message is only to remind everybody that there are 3 (three) days left to send ISK.
After those 3 days, their reservation will automatically be void and whever wants in will be free to invest in their place.
Please feel free to ask for any clarification. Most of the answers are probably covered by the draft discussion thread.