Expanding into new markets often requires adapting fund structures to meet local investor needs. This case study explores how Marex supported a private equity firm in broadening its investor base while managing FX risk through cross-currency share classes.
Overview
Our client is a private equity firm, with offices in Paris, Stockholm and Madrid. They invest into small-medium sized companies across Europe, with deal sizes in the £10-50m range, where they take a sole majority stake.
In this case study we look at how we helped this fund broaden its investor base without incurring undue risks.
Our client was interested in expanding their investment portfolio to new markets, including the Middle East and Latin America, but did not deep experience of working in these territories.
They were clear that not only did they want to do deals in these regions, but they also wanted to raise money for their new funds from there.
FX strategy and proposed solution
It was clear that our client had strong growth ambitions and the experience in their core market to create significant value in new markets.
Their plan encompassed many parts of the world with many variables, and we helped them to prioritise two key markets – Mexico and the UAE.
We started with the fund-raising aspect of their expansion plans and identified that having a local currency share class would be beneficial: allowing Mexican investors to invest in Mexican Peso and Emirati investors to invest in Dirhams.
Money invested into the fund in Pesos or Dirhams was converted into the fund’s primary currency, Euros, before being invested into various target companies.
As such, we needed to implement strategies to hedge Mexican and Emirati share classes, to ensure that the FX market did not reduce the value of their initial investment over time.
Hedge duration and structure
We knew what we were hedging, but the next question was around the duration of the hedges.
The fund had a five-year lock-up period, so it made sense that we were hedging the repayment back into local currency for at least five years. If the fund was not divested by then, we could roll the hedge further to a later date.
We discussed with the client whether they would be more comfortable using a shorter hedge duration and consistently rolling the position. But with the lock-up of five years, it was more cost effective with less administration to have a single long-dated hedge in place.
Implementation and delivery
FX swaps and forward contracts were not new concepts to our client. We wanted to ensure that the fund had the necessary collateral available to post against the trades and, although they did, we agreed on a credit line to facilitate the trades without the need to lodge cash with us.
This was a better solution for the client as it gave them additional money to invest. It worked for us because we charge a small cost of credit, which covers the cost of allocating our own cash against a credit line.
Reporting and visibility
With swaps and forwards reporting and valuations are key. Our reporting is fully IFRS9 compliant and we provide the fund with daily position reports with valuations in both local currency and the fund’s functional currency, Euro.
This allows the client to have continued visibility of their currency positions against daily movements in the spot market.
Results and outcomes
Our client now had a fund structure that was more appealing to more investors across geographies.
Their FX risks were identified and mitigated, and we were able to help solve a challenge with a solution that could later be scaled to their lower priority geographies simply and with the same efficacy.
By building a simple, yet robust solution, the general partner is able to focus their energy on their core business rather than worrying about the FX market, which is out of their control.
As part of our continuing work with this fund, we now work within their acquired companies to ensure best practice in their own FX and treasury management challenges.
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Work referenced in this case study was completed prior to HCFX Group’s merger into Marex on 1 April 2026.
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