Technology Impact Growth Fund Strategy (“TIGF”): Capricorn acts as investment
adviser to the TIGF private fund, which makes investments in growth stage companies
operating within the technology sector (Technology Impact Growth Fund, LP, the “TIGF
Fund”). The general partner of the TIGF Fund is TIGF Partners, LLC, a relying adviser of
Capricorn. The principals of TIGF are Ion Yadigaroglu and Dipender Saluja. Conflicts
relating to TIGF are discussed in Item 10 and Item 11B below.
Sustainable Investors Fund Strategy (“SIF”): Capricorn acts as investment adviser to
the SIF private fund, the investment strategy of which is to (i) invest in public and private
asset managers who incorporate sustainability as a primary attribute of its investment
thesis, providing initial limited partner capital and/or investing into a fund’s manager or
general partner, (ii) make early stage fund investments through material investments into
emerging managers, with governance and structural protections and discounted initial fees,
and (iii) make private equity investments in fund managers and general partners by
providing capital to build out asset management and impact capabilities through permanent
equity ownership (Sustainable Investors Fund, LP, the “SIF Fund”). The general partner of
the SIF Fund is SIF Partners, LLC, a relying adviser of Capricorn. The principals of SIF
are Ion Yadigaroglu, William Orum, Michaela Edwards and Eric Techel. Conflicts relating
to SIF are discussed in Item 10 and Item 11B below.
Employee Funds Qualifying officers and employees of Capricorn have made investments in vehicles which
have invested alongside Capricorn clients (the “Employee IHP Funds”). One such fund,
of which Capricorn serves as general partner, is not accepting additional capital nor is it
making new investments. The other fund is managed by the managing principal of
Capricorn. Neither fund pays management fees or makes an incentive allocation to
Capricorn.
Capricorn may in the future create additional vehicles to invest along-side one or more
Capricorn clients.
For a discussion of the potential conflicts of interest facing Capricorn in its management
of the Discretionary Client Program, the Discretionary and Non-Discretionary Legacy
Client Program and the Employee IHP Funds, see Item 10 and Item 11B of this ADV Part
2A below.
C. Tailoring of Advisory Services Capricorn does not tailor its investment advisory services to the investors in the private funds it
advises (collectively, the “Funds” and individually, a “Fund”). However, investors in the Funds
may negotiate certain terms of their investment prior to the time of investment. Investors in the
Funds generally may not impose restrictions on the types of securities that the Funds invest in.
Capricorn has tailored its advisory services for its high-net worth, charitable foundation clients, and
other clients who invest through investment vehicles other than the private funds.
Further, Capricorn works with its Discretionary Clients to develop an asset allocation strategy for
each Discretionary Client and this asset allocation serves as one of the focal points of the
Discretionary Client Program.
Clients in the Discretionary and Non-Discretionary Legacy Client Program may impose restrictions
on investing in certain securities or types of securities.
D. Wrap Fee Programs Not applicable to Capricorn. Capricorn does not participate in wrap fee programs.
E. Assets Under Management As of December 31, 2018, Capricorn managed $2,074,512,875.14 on a discretionary basis and
$2,467,756,957.09 on a non-discretionary basis.
ITEM 5 – FEES AND COMPENSATION A. Compensation and Fee Schedule Detailed information with respect to how Capricorn is compensated for the advisory services it
provides is contained in the operative governing documents and/or advisory contracts for the
clients. Generally, Capricorn is compensated by the receipt of management fees and certain
performance-based allocations, also described in Item 6 below. Prospective investors should
carefully review the operative documents for the relevant investing vehicle prior to making an
investment and/or retaining Capricorn as an investment adviser.
It should be noted that certain advisory fees are negotiable in that Capricorn has waived (in whole
or in part) the fees paid by certain clients and investors in the Funds and may enter into different
fee agreements with different clients or investors, including employees and affiliates of Capricorn,
in its discretion.
Capricorn has in certain circumstances invested Discretionary Client assets in affiliated private
investment funds or in private funds for which Capricorn retains certain economic interests. Under
such circumstances, Capricorn’s clients may be subject to two layers of fees for the management
of these assets, one to Capricorn and one to the adviser of the vehicle, who may be Capricorn or a
Capricorn affiliate. For a discussion of the conflicts of interest posed by such related party
transactions, see Item 10 and 11.
Neither Capricorn nor its supervised persons accept compensation for the sales of securities or other
investment products, including asset-based sales charges or service fees from the sale of mutual
funds.
B. Deduction of Fees Capricorn deducts fees from its clients’ assets. As applicable, Capricorn management fees are
calculated and recorded in the last month of each calendar quarter, except for TIF, TIGF and SIF
which calculates and records fees at the beginning of the calendar quarter. With respect to certain
clients Capricorn does not receive a management fee. Capricorn’s incentive allocation, if
applicable, is calculated and recorded annually. Other expenses are generally calculated and
recorded as incurred.
C. Fees and Expenses Fees and Expenses of the Discretionary Client Program Each IHP will bear all direct costs and expenses incurred in the holding, purchase, sale or
exchange of any IHP investments (whether or not ultimately consummated), including, but
not by way of limitation, organizational expenses, private placement fees, finder's fees,
interest on borrowed money, real property or personal property taxes on investments,
brokerage fees, legal fees, audit and accounting fees, taxes applicable on account of its
operations, fees incurred in connection with the maintenance of bank or custodian
accounts, and all expenses incurred in connection with the registration of securities held by
the IHP under applicable securities laws or regulations. Each IHP will also bear all
expenses incurred by Capricorn (or an affiliate) in serving as the tax matters partner, the
cost of liability and other insurance premiums for each IHP, Capricorn (or an affiliate) and
Capricorn’s employees, officers, managers and directors, all out-of-pocket expenses of
preparing and distributing reports, record-keeping fees and expenses, out-of-pocket costs
associated with IHP meetings, all legal and accounting fees relating to each IHP and its
activities, all costs and expenses arising out of each IHP's indemnification obligations, and
all expenses that are not normal operating expenses incurred in connection with the
management of each IHP. Each IHP will also bear all liquidation costs, fees, and expenses
incurred by Capricorn (or an affiliate) in connection with the liquidation of the IHP at the
end of the IHP’s term, including but not limited to legal and accounting fees and expenses.
As each IHP will be required to cover brokerage-related expenses, please see Item 12
below.
The AIP Fund will bear all direct costs and expenses incurred in the holding, purchase, sale
or exchange of any investments (whether or not ultimately consummated), including, but
not by way of limitation, organizational expenses, private placement fees, finder's fees,
interest on borrowed money, real property or personal property taxes on investments,
brokerage fees, legal fees, audit and accounting fees, taxes applicable on account of its
operations, fees incurred in connection with the maintenance of bank or custodian
accounts, and all expenses incurred in connection with the registration of securities under
applicable securities laws or regulations. The AIP Fund will also bear all expenses incurred
by Capricorn (or an affiliate) in serving as the tax matters partner, the cost of liability and
other insurance premiums for the AIP Fund, Capricorn (or an affiliate) and Capricorn’s
employees, officers, managers and directors, all out-of-pocket expenses of preparing and
distributing reports, record-keeping fees and expenses, out-of-pocket costs associated with
AIP Fund meetings, all legal and accounting fees relating to the AIP Fund and its activities,
all costs and expenses arising out of the AIP Fund’s indemnification obligations, and all
expenses that are not normal operating expenses incurred in connection with the
management of the AIP Fund. The AIP Fund will also bear all liquidation costs, fees, and
expenses incurred by Capricorn (or an affiliate) in connection with the liquidation of the
AIP Fund at the end of the AIP Fund’s term, including but not limited to legal and
accounting fees and expenses.
The AIP Fund does not anticipate incurring brokerage-related expenses, please see Item 12
below.
LIBRA Investors in the LIBRA Fund pay an advisory fee to the LIBRA Fund general partner.
Additionally, an incentive fee is accrued and paid to the LIBRA Fund general partner in
accordance with the governing documents of the LIBRA Fund. In general, the LIBRA Fund
is responsible for all expenses and fees related to an investment including, without
limitation, expenses related to (i) the purchase, management and sale of the investment,
including the cost of a third party administrator, third party valuation experts and
consultants, and related travel, lodging and meal expenses (as further detailed in the fund
documents), (ii) brokerage fees, commissions, private placement fees and finder’s fees,
(iii) the registration of securities acquired by the fund, (iv) the resolution of claims or
disputes involving investments and (v) transaction expenses. In addition the fund is
responsible for its operating expenses including, but not limited to (i) those incurred in
connection with the formation, organization, operation and dissolution of the fund,
including the legal fees, accounting fees and expenses related to reporting to the investors,
(ii) custodial fees, (iii) audit and tax expenses, including third party valuations, (iv) the cost
of directors and officers, professional liability and other similar insurance premiums, (v)
securities law and legal compliance (vi) indemnification (vii) meetings of the investors,
(viii) taxes or other governmental charges, (ix) expenses of acting as tax matters partner
and (x) any expenses indicated as allocated to the fund in the annual budget.
LIBRA does not anticipate incurring brokerage-related expenses, please see Item 12
below.
TIF Investors in the TIF Fund pay an advisory fee to the TIF Fund general partner.
Additionally, an incentive fee is accrued and paid to the TIF Fund general partner in
accordance with the governing documents of the TIF Fund. Generally, the TIF Fund is
responsible for costs, fees and expenses in connection with the formation, organization,
operation and dissolution of the fund, its portion of the costs and expenses incurred in
connection with the investments of the respective fund including, but not limited to, private
placement fees, finder’s fees, interest on borrowed money, certain taxes, brokerage fees or
commissions, legal fees, audit, consulting and accounting fees, custodial fees, all expenses
related to the registration of the relevant fund’s portfolio securities under applicable
securities laws or regulations, and travel expenses (as further detailed, and limited, in the
fund documents). The relevant fund will also bear its portion of the operating expenses
incurred by TIF including but not limited to insurance premiums for protecting the relevant
fund, the general partners, TIF, certain affiliates and its employees from liability, costs of
reports and communications to the limited partners (including annual meetings and
advisory committee meetings), all legal and accounting fees relating to the respective fund
and its activities, and all costs and expenses arising out of the fund’s indemnification
obligation.
TIF does not anticipate incurring brokerage-related expenses, please see Item 12 below.
TIGF Investors in the TIGF Fund pay an advisory fee to the TIGF Fund general partner.
Additionally, an incentive fee is accrued and paid to the TIGF Fund general partner in
accordance with the governing documents of the TIGF Fund. Generally, the TIGF Fund
is responsible for costs, fees and expenses in connection with the formation, organization,
operation and dissolution of the fund, its portion of the costs and expenses incurred in
connection with the investments of the respective fund including, but not limited to, private
placement fees, finder’s fees, interest on borrowed money, certain taxes, brokerage fees or
commissions, legal fees, audit, consulting and accounting fees, custodial fees, all expenses
related to the registration of the relevant fund’s portfolio securities under applicable
securities laws or regulations, and travel expenses (as further detailed, and limited, in the
fund documents). The relevant fund will also bear its portion of the operating expenses
incurred by TIGF including but not limited to insurance premiums for protecting the
relevant fund, the general partners, TIGF, certain affiliates and its employees from liability,
costs of reports and communications to the limited partners, all legal and accounting fees
relating to the respective fund and its activities, and all costs and expenses arising out of
the fund’s indemnification obligation.
TIGF does not anticipate incurring brokerage-related expenses, please see Item 12 below.
SIF Investors in the SIF Fund pay an advisory fee to the SIF Fund general partner.
Additionally, an incentive fee is accrued and paid to the SIF Fund general partner in
accordance with the governing documents of the SIF Fund. Generally, the SIF Fund is
responsible for costs, fees and expenses in connection with the formation, organization,
operation and dissolution of the fund, its portion of the costs and expenses incurred in
connection with the investments of the respective fund including, but not limited to, private
placement fees, finder’s fees, interest on borrowed money, certain taxes, brokerage fees or
commissions, legal fees, audit, consulting and accounting fees, custodial fees, all expenses
related to the registration of the relevant fund’s portfolio securities under applicable
securities laws or regulations, and travel expenses (as further detailed, and limited, in the
fund documents). The relevant fund will also bear its portion of the operating expenses
incurred by SIF including but not limited to insurance premiums for protecting the relevant
fund, the general partners, SIF, certain affiliates and its employees from liability, costs of
reports and communications to the limited partners, all legal and accounting fees relating
to the respective fund and its activities, and all costs and expenses arising out of the fund’s
indemnification obligation.
SIF does not anticipate incurring brokerage-related expenses, please see Item 12 below.
Ancillary Fees and Management Fee Offsets
As described in greater detail in the applicable Fund’s governing documents, Capricorn,
certain affiliates and its employees may receive break-up and topping fees, commitment
fees, monitoring and directors’ fees and transaction, financing, divestment and other fees
from portfolio companies as compensation for financial advisory and other services such
persons provide to portfolio companies. If Capricorn (and/or any affiliate or employee) is
paid such fees, such fees will be directly or indirectly offset against the management fees
payable by the applicable Fund to the extent required by such Fund’s governing documents.
For additional details regarding the management fee offset arrangements in effect for of a
particular Fund, please review such Fund’s governing documents. These fees, and the
associated conflicts of interest they present, are further described in Item 11 below.
D. Prepayment of Fees With respect to the clients in the Discretionary and Non-Discretionary Legacy Client Program, a
portion of the fees are paid in advance and if an advisory contract is terminated before the end of a
billing period, the amount of the fee paid in advance will be pro-rated and rebated.
With respect to clients in the Discretionary Client Program, fees are paid in arrears with the
exception of any fees arising from investment in LIBRA, TIF, TIGF and SIF which are discussed
below.
With respect to the LIBRA Fund, operating expenses are paid as incurred. Typically limited
partners cannot withdraw from the LIBRA Fund prior to the termination of the LIBRA Fund.
Accordingly, such limited partners would not be entitled to a refund.
With respect to TIF Fund, TIGF Fund and SIF Fund, the management fee is paid quarterly in
advance. Typically limited partners cannot withdraw from the TIF Fund, the TIGF Fund or the SIF
Fund prior to the termination of such fund. Accordingly, such limited partners would not be entitled
to a refund.
ITEM 6 - PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT The fact that Capricorn is eligible to receive performance-based compensation creates a potential conflict
of interest in that it may create an incentive for Capricorn to make more speculative investments than it
might otherwise make. Such performance-based compensation arrangements also create an incentive to
favor higher fee paying accounts over other accounts in the allocation of investment opportunities. It should
be noted that investors are provided with clear disclosure as to the risks associated with the payment of such
performance-based compensation.
Capricorn (or an affiliate) will receive performance-based compensation from certain clients, but not from
others. In addition, the amount of performance-based compensation that Capricorn is entitled to receive
varies from client to client. Each of these creates a potential conflict of interest in that it may create an
incentive for Capricorn to direct more profitable investment ideas to, or allocate trades in a manner that
favors, those clients and investors that pay a performance fee or allocation. In order to manage such
potential conflicts, the client portfolios are under continuous review by the key individuals of the firm (as
described in Item 13A). In an effort to mitigate this inherent conflict of interest, Capricorn has
implemented a detailed allocation policy and Capricorn regularly reviews its trade allocations to seek to
confirm that investments are allocated among its clients on what Capricorn deems to be an equitable basis.
Capricorn, to the extent within its control, will act in a manner that it believes over the long term is fair and
equitable to all its clients.
There are other significant risks related to the management of multiple client accounts, please see the
response to Item 11 for a description of some of those risks.
ITEM 7 – TYPES OF CLIENTS As described in Item 4B, Capricorn (as of the date of this ADV Part 2A) provides investment advisory
services to pooled investment vehicles, high net-worth individuals, trust accounts and charitable
organizations. Clients of Capricorn must be sophisticated in financial matters and be qualified purchasers
as defined in Section 2(a)(51) of the Investment Company Act of 1940. Capricorn does not impose a
minimum account size for client accounts.
ITEM 8 – METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS A. Method of Analysis and Investment Strategies Discretionary Client Program and the Discretionary and Non-Discretionary Legacy Client Program The following relates primarily to the discretionary investing activities engaged in by Capricorn.
The method of analysis and investment strategies used in formulating advice for Capricorn’s
Discretionary Client Program and the Discretionary and Non-Discretionary Legacy Client Program
are the same, but the decision whether an investment is actually made is determined by the clients
of the Non-Discretionary Legacy Client Program.
Capricorn’s principal objective in managing client assets is to construct and manage an investment
portfolio oriented toward long-term capital appreciation. The basic elements underpinning this
objective include the following:
• Developing, in conjunction with the client, a strategic asset allocation strategy for
the client which will guide the client’s allocations among a variety of asset classes
and investment strategies;
• Integration of environment, social and governance (ESG) factors in developing
clients’ investment portfolios;
• Implementing the client’s asset allocation strategy by constructing and actively
managing a portfolio of investments across one or more asset classes;
• Constructing and actively managing a portfolio for each IHP that is expected to be
generally consistent with such IHP’s investment objectives.
Capricorn employs a scenario-based model to determine the appropriate long-term strategic asset
allocation for each client. This approach also incorporates the risk, return, and liquidity parameters
of the client, as well as Capricorn’s subjective investment perspectives on future opportunities. It
is important to note that the asset allocation strategies are long-term targets and not expected, due
to the time required for investment ramp-up, asset valuation volatility, the natural flows of capital
and other factors, to be fixed or static at the target levels. Rather, these strategic targets will
function as objectives guiding the overall portfolio exposures. Capricorn’s investment strategy
provides diversified exposure to the following asset classes. Capricorn expects to modify this list
of investment strategies as necessary from time to time.
• Cash
• Fixed income
• Absolute return
• Global public equities
• Private equity & venture capital
• Real Assets
• Distressed Credit
• Hard assets (e.g. gold)
Selection of Underlying Investments Capricorn will conduct sourcing, due diligence, and selection of the Underlying Investments, and
will monitor and manage such selections across asset classes on an ongoing basis. The ultimate
number of Underlying Investments will be determined in the discretion of Capricorn. Capricorn
will seek to have an adequate level of diversification among the Underlying Investments while
maintaining enough concentration to achieve the client’s investment objectives. The objective of
the investment analysis process is to select a set of investments that assist in meeting the overall
investment objective of long-term capital growth.
Capricorn intends to follow a comprehensive investment selection process. In general, the selection
process begins by assessing a wide variety of investment funds and opportunities across the various
investment strategies. A high number of investments are rejected at an initial high-level review if
they do not meet Capricorn’s quality standards or the prevailing strategic framework. Investment
opportunities that are deemed a potential fit with the investment objectives are then subject to a due
diligence and review process during which additional research is performed on the investment
opportunity. Many investment opportunities are rejected at this stage and do not proceed past the
comprehensive due diligence process. Investment opportunities that are not rejected move to a
final phase of due diligence, which is the final step toward investment. The objective of the
investment analysis process is to select a set of investments that assist in meeting the overall
investment objective of long-term capital growth.
Risk Management Capricorn intends to follow a rigorous program to seek to manage investment risks. Overall,
managing risks in an investment portfolio begins with a quality sourcing, due diligence and
selection process with the objective of having a diversified portfolio of Underlying Investments.
Once investments are executed, Capricorn uses a series of portfolio reporting and management
systems and tools to track investments against expectations and reviews a range of return and risk
analyses on a regular basis. As part of the risk management process, Capricorn monitors allocations
across the Underlying Investments, and allocations across other categories including geographies
and industries. A series of regular internal reports are provided by the Operations team and
reviewed frequently by the Portfolio Management team. Capricorn seeks regular interactions with
representatives from Underlying Investments, which include in-person meetings and
teleconferences.
LIBRA LIBRA’s focus area is early to expansion stage energy technology, IT, agriculture, and emerging
markets.
TIF TIF’s focus area is early to expansion stage companies operating within the technology sector.
TIGF TIGF’s focus area is growth stage companies operating within the technology sector.
SIF SIF’s focus area is early stage investment and ownership in public and private asset managers who
incorporate sustainability as a primary attribute of its investment thesis.
B. Risk Factors Capricorn is of the view that all of the investment strategies used by Capricorn are subject to
significant risks and are meant for financially sophisticated clients and investors. These risks
include the risk of total loss as well as risks related to making illiquid investments. Clients should
not retain Capricorn as an investment adviser unless they are able to bear these risks and are able
to sustain long periods of illiquidity with respect to the investments made by Capricorn and in funds
managed by Capricorn.
As noted above, Discretionary Clients of Capricorn presently access Capricorn’s investment
strategies through an investment in an IHP, through an investment in the AIP Fund, through the
private funds and other investment vehicles that comprise LIBRA, TIF, TIGF and SIF or, in the
case of clients in the Discretionary Legacy Client Program, by investing directly in Underlying
Investments. A significant portion of these investments, and the investments of LIBRA, TIF, TIGF
and SIF, tend to be with privately-placed vehicles with significant liquidity constraints. Clients
need to be ready to bear their investments for an extended period of time.
The investment decisions of the Capricorn-managed private funds are made exclusively by
Capricorn. Investors will have no right or power to take part in the management of the Capricorn-
managed funds. Capricorn’s operations are substantially dependent upon the skill, judgment, and
expertise of certain key personnel and its employees or agents. The death, disability, departure, or
other unavailability of any key personnel could have a material and adverse effect on the advisory
clients managed by Capricorn.
Capricorn and its respective affiliates may encounter potential conflicts of interest in connection
with advisory client interests, assets or activities (including certain conflicts of interest as among
the interests of different private fund vehicles). If any matter arises that Capricorn determines in its
good faith judgment constitutes an actual conflict of interest, Capricorn will take such actions as
may be necessary or appropriate to ameliorate the conflict.
Capricorn, its service providers, and other market participants increasingly depend on complex
information technology and communications systems to conduct business functions. These systems
are subject to a number of different threats or risks that could adversely affect the advisory clients
and investors, despite the efforts of Capricorn and its service providers to adopt technologies,
processes and practices intended to mitigate these risks and protect the security of their computer
systems, software, networks and other technology assets, as well as the confidentiality, integrity
and availability of information belonging to the Funds and its Investors. For example, unauthorized
third-parties may attempt to improperly access, modify, disrupt the operations of, or prevent access
to these systems of Capricorn, its service providers, counterparties or data within these systems.
Third-parties may also attempt to fraudulently induce employees, customers, third-party service
providers or other users of Capricorn’s systems to disclose sensitive information in order to gain
access to Capricorn’s data or that of Capricorn’s advisory clients and investors. A successful
penetration or circumvention of the security of Capricorn’s systems could result in the loss or theft
of an investor’s data or funds, the inability to access electronic systems, loss or theft of proprietary
information or corporate data, physical damage to a computer or network system or costs associated
with system repairs. Such incidents could cause the advisory clients, Capricorn, or their service
providers to incur regulatory penalties, reputational damage, additional compliance costs or
financial loss.
Capricorn and its Advisory Clients generally rely on information technology systems for current
and planned operations. Capricorn’s information and technology systems may be vulnerable to
damage and interruption from computer viruses, network failures, computer and
telecommunication failures, infiltration by unauthorized persons and security breaches, usage
errors by their respective professionals, power outages and catastrophic events such as fires,
tornadoes, floods, hurricanes and earthquakes. If any systems designed to manage such risks are
compromised, become inoperable for extended periods of time or cease to function properly,
Capricorn or Advisory Client(s) may have to make a significant investment to fix or replace them.
Any disruption in any of these systems or the failure of any of these systems to operate as expected
could, depending on the magnitude of the problem, adversely affect an Advisory Client’s
investment results and its ability to make distributions to its partners. The failure of these systems
and/or of disaster recovery plans for any reason could cause significant interruptions in Capricorn’s
and/or Advisory Clients’ operations and result in a failure to maintain the security, confidentiality
or privacy of sensitive data, including personal information relating to investors (and the beneficial
owners of investors). Such a failure could harm Capricorn or Advisory Clients’ reputation, subject
them to legal claims and otherwise affect their business and financial performance.
All clients in Capricorn’s Discretionary Client Program, LIBRA, TIF, TIGF, and SIF are
provided with very detailed risk disclosures in the offering documents provided to such
clients prior to making an investment with Capricorn. The offering documents provided
to Capricorn’s Discretionary Client Program, LIBRA, TIF, TIGF, and SIF contain details
related to liquidity terms. Those risk disclosures, as applicable, and liquidity terms should
be carefully reviewed prior to making an investment to be managed by Capricorn. If you
have any further questions about this, please contact Capricorn’s Chief Compliance
Officer. Please refer to the offering documents for a more fulsome discussion of risk factors
inherent in Capricorn’s investment strategies.
C. Recommendations of Specific Securities See Items 8.A and 8.B.
ITEM 9 – DISCIPLINARY INFORMATION Capricorn has experienced no legal or disciplinary events that are material to a client’s or prospective
client’s evaluation of Capricorn or the integrity of its management.
ACTIVITIES AND AFFILIATIONS A. Broker-Dealer Registration Not applicable. Capricorn and its management persons are not registered and do not have an
application pending to register as a broker-dealer, or as a registered representative of a broker-
dealer.
B. Futures Commissions Merchant, Commodity Pool Operator, Commodity Trading Advisor Registration
Capricorn and its management persons are not registered and do not have an application pending
to register as a futures commission merchant, a commodity pool operator, a commodity trading
advisor, or an associated person of the foregoing entities.
C. Material Relationships Relying Advisers As discussed in Item 4 Capricorn has four relying advisers. Capricorn manages any potential
conflict of interest by ensuring that each relying adviser and its supervised persons are subject to
the Capricorn compliance program and Code of Ethics.
1. Capricorn Advisers, LLC: Capricorn has entered into services agreements with a wholly-
owned subsidiary, Capricorn Advisers, pursuant to which it will provide investment advice to
Capricorn. Certain employees of Capricorn Advisers are officers and/or members of
Capricorn.
2. Capricorn Management, LLC: Capricorn provides certain non-discretionary investment
advisory services to the Individual Client pursuant to the Advisory Agreement and is wholly-
owned by the Individual Client. Capricorn is 50% owned by an entity that itself is wholly-
owned by a trust under the control of the Individual Client. The wholly-owned entity holds
50% of the voting authority of Capricorn.
3. LIBRA Fund: The general partner of the LIBRA Fund is a relying adviser of Capricorn and
Capricorn acts as an investment adviser to the LIBRA Fund. Please see additional disclosure
regarding conflicts of interest in Item 10D and 11B.
4. TIF Fund: The general partner of the TIF Fund is a relying adviser of Capricorn and Capricorn
acts as an investment adviser to the TIF Fund. Please see additional disclosure regarding
conflicts of interest in Item 10D and 11B.
5. TIGF Fund: The general partner of the TIGF Fund is a relying adviser of Capricorn and
Capricorn acts as an investment adviser to the TIGF Fund. Please see additional disclosure
regarding conflicts of interest in Item 10D and 11B.
6. SIF Fund: The general partner of the SIF Fund is a relying adviser of Capricorn and Capricorn
acts as an investment adviser to the SIF Fund. Please see additional disclosure regarding
conflicts of interest in Item 10D and 11B.
Strategic Relationships Capricorn has formed certain strategic relationships with third party investment managers to private
funds whereby Capricorn, its affiliates and/or Advisory Clients receive a share of the management
fee and incentive allocation payable to the manager of the private fund (“Third-Party Managers”).
Such advisers may or may not be registered with the SEC as investment advisers. In some cases
Capricorn, its affiliates and/or an Advisory Client has acquired an interest in such Third-Party
Managers. Additionally, Capricorn personnel may hold a limited partner interest in a vehicle
managed by such Third-Party Managers. From time to time, in connection with such strategic
relationships, Capricorn may provide strategic advice, or support services to a Third-Party Manager
and/or any investment vehicles it manages.
This poses a potential conflict of interest in that Capricorn may spend a portion of its business time
providing such advice or support services. In addition, the investment vehicles managed by the
Third-Party Managers may be in competition with Capricorn for investment opportunities. It
should be noted that certain of the clients share in the revenues generated in connection with these
relationships and therefore Capricorn’s interests are aligned with its clients’ interests. Capricorn
manages this conflict of interest by disclosing such relationship to clients, through adherence with
its allocation policy, and by ensuring that all Access Persons adhere to the Capricorn Code of
Ethics. Please see Item 10D and Item 11B below for further discussion regarding conflicts of
interests related to recommending clients to invest in the funds or vehicles managed by Third-Party
Managers.
D. Selection of Third-Party Managers and Other Compensation As noted throughout this Item 10 Capricorn, its Advisory Clients, and Capricorn affiliates have
relationships with Third-Party Mangers, and their respective investment vehicles that could present
potential or actual conflicts of interest.
Capricorn may recommend that its clients invest in funds or vehicles managed by Third-Party
Managers. Capricorn and its affiliates may have a conflict of interest recommending Third-Party
Managers to clients in that Capricorn, its affiliates and Capricorn Advisory Clients may have a
financial interest (including but not limited to receipt of management fees, or incentive fees) that
could create an incentive for Capricorn to recommend investments in Third-Party Managers over
other, more suitable investments from which no such supplemental financial benefit is derived.
Capricorn mitigates such potential conflicts through disclosure to clients, and adherence to its
allocation policy and Code of Ethics.
Capricorn clients may be subject to additional layers of asset-based fees and performance-based
fees or allocations in respect of investments managed by Third-Party Managers.
E. Other Outside Activities
Principals, employees and consultants (together “access persons”) of Capricorn and the relying
advisers may engage in outside activities unrelated to Capricorn or the relying advisers. While the
amount of time spent by access persons on such activities may vary, such activities could be viewed
as competing with the time needed in fulfilling fiduciary obligations to clients of Capricorn and/or
the relying advisers. Capricorn manages this conflict of interest by ensuring that access persons
adhere to the Capricorn Code of Ethics.
Ion Yadigaroglu acts as manager of an investment vehicle in which certain officers, employees,
and friends of Capricorn hold a passive economic interest. While the vehicle is not managed by
Capricorn, actual or potential conflicts of interest could result in that this vehicle may compete with
Capricorn clients in obtaining an allocation in future investment opportunities. Capricorn manages
this conflict of interest by ensuring that Ion adheres to the Capricorn Code of Ethics.
If you have any questions about these conflicts, please contact Capricorn’s Chief Compliance
Officer.
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