An Overview of Tender Offer Funds

Unlike interval funds, which conduct scheduled repurchases pursuant to Rule 23c-3, tender offer funds repurchase shares at the Board of Trustees (Board)’s discretion pursuant to Rule 13e-4, Section 14, and Schedule TO under the Exchange Act.

Rule 13e-4 governs tender offers by issuers. It sets forth the parameters for commencing, terminating, filing, disseminating, and generally conducting a tender offer. In contrast to Rule 23c-3, Rule 13e-4 does not require predetermined repurchase offers nor limit the repurchase offer amount. At the commencement of a tender offer, the tender offer fund will notify shareholders of the repurchase offer, complete Schedule TO, deliver the Letter of Transmittal to shareholders, and file all repurchase offer documents with the U.S. Securities and Exchange Commission (SEC).

Schedule TO is the tender offer statement of the fund and includes, typically by exhibit, the Offer to Purchase and other key documents. Schedule TO must be filed as soon as practicable on the commencement of the tender offer. Schedule TO and the Offer to Purchase disclose the material information regarding what is being offered, why, when it will expire, approximate price, and any other conditions and details. The Offer to Purchase is delivered to shareholders as the official terms of the offering. Shareholders receive the Letter of Transmittal for purposes of specifying the shares that are to be tendered and providing investor identification and payment instructions. Tender offer funds will also provide a Notice of Tender Cancellation for shareholders to cancel previously submitted tenders.

Download our white paper

Considering launching a closed-end fund interval or tender offer fund? Download our white paper for more information to help you choose the right path. 
This white paper distills closed-end funds’ regulatory framework and operational considerations for existing and prospective closed-end fund asset managers. We will guide you through their regulatory intricacies, offering comparisons between interval funds and tender offer funds along the way. Later we will connect their structure with an examination of how closed-end funds should be approached from a distribution perspective.

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How we help

Since 2005, we have been helping asset management firms achieve compliant distribution of their products, through the use of our broker-dealers. Interval funds require a broker-dealer to provide statutory distributor/legal underwriting, DTCC/NSCC fund sponsorship, and registered rep licensing to promote the fund.

ACA Foreside can support your interval fund launch and will work with your compliance, marketing, and sales teams to review fund marketing material, engage in dealer/selling agreements, establish NSCC/AIP connectivity, license your business development staff, and consult with you to design an effective distribution strategy for your product. We can also work with the administrator or law firm of your choice, or provide introductions as needed.

Contact us today to find out how we can help your firm launch a new fund or convert an existing fund.