Master Feeder structure. Difference between blocker and feeder

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A master-feeder structure is a common investment structure in private equity funds. Blockers and feeders are two types of entities within this structure.

A master-feeder structure is used to pool capital from different types of investors into a single investment vehicle.
The master fund is the main investment vehicle that holds the assets and makes the investments.
Feeder funds are separate entities that pool capital from specific types of investors, such as individuals or institutions, and then invest that capital into the master fund.
Blocker entities are used to prevent certain types of investors, such as tax-exempt entities, from directly investing in the master fund.
Blockers are typically set up in jurisdictions with favorable tax laws to minimize tax liabilities for the investors.
The feeder funds invest in the blocker entity, which then invests in the master fund.
The blocker entity acts as a 'blocker' between the tax-exempt investors and the master fund.
The master-feeder structure allows for efficient management of different types of investors and their specific requirements.
It also provides tax advantages and simplifies the reporting and administration processes for the fund.
For example, a private equity fund may have feeder funds in different countries to attract investors from those jurisdictions, and a blocker entity in a tax-friendly jurisdiction to minimize tax obligations.

Master Feeder structure. Difference between blocker and feeder

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