Item 5 – Fees and Compensation
A. Compensation for Advisory Services
Fees for Hanwha’s investment management or investment advisory services are negotiated on an
account-by-account basis and are set forth in the applicable investment management
agreement/entrustment agreement or investment advisory agreement.
As compensation for investment management services provided to its Private Funds, Hanwha generally
receives a quarterly management fee from each Private Fund based on (i) the aggregate capital
commitments of the investors of the Private Fund (during the investment period) and (ii) the amount of
invested capital contributions of investors used to make portfolio investments that have not been
disposed of or written off (after the investment period). The precise amount of, and the manner and
calculation of, the management fees for each Private Fund are set forth in each Private Fund’s
Organizational Documents, which are received by each investor prior to its investment in a Private Fund.
Hanwha may under certain conditions specified in the Organizational Documents of a Private Fund reduce
(even up to 100% of) its management fee with respect to one or more investors.
In addition, the general partner of a Private Fund (which are subsidiaries of Hanwha) may receive certain
allocations and distributions calculated and charged based on a share of capital gains on or capital
appreciation of the assets of the Private Fund, as negotiated and determined at the time such Private
1Hanwha’s total assets under management (“AUM”) include the assets of a discretionary account to manage certain assets of a
private fund whereby Hanwha was appointed to invest a minimum of 30% of the fund’s committed capital and up to 50% of the
fund’s committed capital. For the purposes of the AUM calculation, Hanwha factored in the fund’s committed capital and used
the 50% figure as it reasonably believes that it will invest up to 50% of such committed capital.
Fund is established and as set forth in its Organizational Documents. These allocations and distributions
are commonly known as “carried interest”.
With respect to carried interest, Hanwha may in addition to the above also receive a portion of carried
interest (if any) received by its clients or their related parties (such as general partner entities) with respect
to private equity discretionary or advisory accounts as agreed in the applicable investment management
agreement/entrustment agreement or investment advisory agreement.
B. Billing
Generally, Hanwha receives an annual investment management fee or investment advisory fee for each
account, which is payable quarterly in arrears within 30 days after receipt of the invoice for the services.
Fees are not directly deducted from account assets. Generally, such fees are based on the average daily
market value of the assets in an account or value of investments advised during the respective quarter.
Fees will be prorated if the relevant quarterly period for payment is less than a full quarter.
Some accounts may have fee and payment terms that deviate from the above, but Hanwha’s practices
will follow the billing and payment terms as agreed with the relevant client.
Private Fund annual management fees payable are deducted from an investor’s capital account and paid
to Hanwha quarterly in advance.
C. Other Fees and Expenses
Hanwha’s fees are exclusive of brokerage commissions, transaction costs, and other related costs and
expenses of making investments, if any, which shall be borne by clients. Clients also incur charges imposed
by custodians, brokers, and other third-parties. Such costs, expenses, or charges are exclusive of and in
addition to Hanwha’s management and/or advisory fees, but Hanwha does not receive any portion of
such amounts.
For example, clients incur transaction costs charged by broker-dealers on fixed-income transactions.
Please see Item 12 below for more information regarding fixed income brokerage. Or, discretionary
account clients in private equities incur legal, tax, or other costs that are incurred by Hanwha on their
behalf in relation to executing or managing portfolio company investments.
As described in the Organizational Documents of a Private Fund, Hanwha (and/or the general partner of
the Private Fund) will bear their own general overhead and administrative costs and expenses, including
employee salaries and benefits. However, each Private Fund will bear all expenses, costs, and liabilities
incurred with or related to the conduct of the business of the Private Fund (except for the expenses borne
by Hanwha or the general partner of the Private Fund as previously described).
Investors should refer to the Organizational Documents of a specific Private Fund for a complete
understanding of costs and expenses associated with such Private Fund. The information contained
above is a summary only, is generalized, and is qualified in its entirety by such Organizational
Documents.
D. Advance Payment of Fees, Termination of Agreements, and Refunds
Unless agreed otherwise, for its investment management and/or investment advisory accounts, Hanwha
does not require its clients to pay management fees in advance. The termination provisions of agreements
between clients and Hanwha are negotiable. In the event of a termination with an effective date other
than a quarter end, fees payable will be pro-rated to the effective date of termination.
For its Private Funds, management fees are payable quarterly in advance. Due to the investment strategy
of our Private Funds, which hold private securities that are illiquid and/or subject to transfer restrictions,
investors generally may not withdraw any capital.
E. Compensation for the Sale of Securities or Other Investment Products
Hanwha and its supervised persons do not receive any compensation for the sale of securities or other
investment products.