1. Background and Basis of Disclosure
This document sets out the Pillar 3 disclosures of Hengistbury Investment Partners LLP (“the Firm”) for the year ended 31 December 2023. The disclosures have been prepared in accordance with the requirements of the UK Capital Requirements Regulation (“UK CRR”) and related provisions of the Prudential Sourcebook for Banks, Building Societies and Investment Firms (“BIPRU”) as they apply to the Firm.
The Firm is authorised and regulated by the Financial Conduct Authority (“FCA”) and is classified as a BIPRU limited licence firm for regulatory capital purposes. The Firm’s principal activities comprise alternative investment fund management.
Pillar 3 disclosures are intended to complement the minimum capital requirements established under Pillar 1 and the supervisory review process under Pillar 2. They are designed to promote market discipline by providing market participants with key information on a firm’s risk exposures and risk management processes.
These disclosures are made on an annual basis and are reviewed and approved by the Firm’s management. The Firm is not part of a group for regulatory purposes.
2. Risk Management Objectives and Policies
2.1 Overview
The Firm’s approach to risk management is designed to identify, assess, monitor and control risks to which the Firm is, or may be, exposed. The Firm’s management is responsible for implementing and maintaining an appropriate risk management framework.
2.2 Credit Risk
Credit risk arises from the possibility that a counterparty will fail to meet its obligations in accordance with agreed terms. The Firm’s credit risk exposure is limited principally to cash and cash equivalents held at regulated financial institutions and receivables from managed accounts. The Firm monitors counterparty exposures on an ongoing basis.
2.3 Market Risk
The Firm does not take proprietary positions in securities or other financial instruments in the course of its regulated activities. Market risk at the entity level is accordingly limited. The Firm’s revenue is linked to assets under management, which may vary with market conditions.
2.4 Operational Risk
Operational risk is the risk of loss arising from inadequate or failed internal processes, people and systems or from external events. The Firm maintains documented operational procedures, segregation of duties, and appropriate controls to mitigate operational risk. Business continuity and disaster recovery arrangements are in place.
2.5 Liquidity Risk
The Firm maintains liquid capital resources in excess of its regulatory capital requirement. Liquidity is monitored on a regular basis and the Firm is satisfied that it maintains sufficient liquidity to meet its obligations as they fall due.
3. Capital Resources
The Firm’s capital resources consist entirely of Tier 1 capital. As at 31 December 2023, the Firm held capital resources in excess of its regulatory capital requirement. The Firm’s Tier 1 capital comprises members’ capital, retained earnings and other reserves.
Detailed financial information is set out in the Firm’s annual accounts filed at Companies House. The Firm confirms that its capital resources were sufficient at all times during the reporting period to meet the applicable regulatory minimum.
4. Capital Requirements
The Firm is classified as a BIPRU limited licence firm. Accordingly, its Pillar 1 capital requirement is calculated as the higher of:
- the Base Capital Requirement (£50,000);
- the sum of the Firm’s Credit Risk Capital Requirement and its Fixed Overheads Requirement; and
- the Firm’s Fixed Overheads Requirement.
The Firm conducts an Internal Capital Adequacy Assessment Process (“ICAAP”) on an annual basis, or more frequently where circumstances require. The ICAAP identifies and assesses all material risks to the Firm and determines the appropriate level of capital to be held.
5. Remuneration
Detailed information regarding the Firm’s remuneration policies and practices is set out in our separate Remuneration Policy Disclosure. As a limited licence BIPRU firm, the Firm is subject to proportionate application of the remuneration requirements under MIFIDPRU.