France joins battle for British alternatives business

The French regulator has dialled up its efforts to lure foreign alternative asset managers to the country with the launch of a new regime that will fast-track applications to set up business operations in France.

The Agile programme, unveiled by the Autorite des Marches Financiers at the end of September, enables Financial Conduct Authority-registered fund managers to apply for a 2WeekTicket, a 14-day pre-authorisation process which determines the AMF sees no obstacles for a firm to do business in France.

“As soon as [a fund manager] receives pre-authorisation, [it] will benefit from the advice of a dedicated English-speaking AMF coach who will accompany [the firm] and answer queries during the full authorisation process, with the view to facilitate your domiciliation in France,” AMF said in a statement.

The full authorisation process will take around two months, but a firm can start planning by looking for office space and recruiting staff.

While it did not explicitly state the regime is targeting UK asset managers, the regulator said setting up operations in France would grant a fund manager access to the single market, negating the need for an Alternative Investment Fund Managers Directive passport.

UK-based funds with no Europe-based operations will need a passport to market funds to EU investors post-Brexit if the country does not negotiate continued access to this market.

Third strike

The launch of the Agile programme builds on changes approved earlier in the summer which were designed to open up the French private equity market to external participants.

In August AMF launched the France Société de Libre Partenariat, a new partnership structure designed to attract foreign investment into French private equity funds. Unlike the existing Fonds Professionnel de Capital Investissement, which include investment quotas, there will be no constraints on what an SLP can invest in.

It also revised its policy on the marketing of alternative investment funds in and into France. Its previous incarnation was considered one of the most restrictive in the bloc, but the new policy allows for the pre-marketing of AIFs in France in certain circumstances.

Revised regimes

France is not alone in unveiling regime changes designed to increase its attractiveness as a fund domicile.

Cyprus is revising its partnership law so it includes a safe harbour list, and allows general partners to set up a separate legal personality. The changes are expected to come into force by the end of the year.

It is also launching a Registered Alternative Investment Fund, and a sub-threshold AIFM or mini manager regime at the same time. This means Cyprus’ funds registered as AIFs under the AIFMD will no longer need to be authorised by the country’s securities and exchanges commission (see pfm, 29 September).

Malta made a similar move in February, with the launch of the Notified AIF (NAIF), while in July, the Luxembourg parliament approved the set-up of a similar investment vehicle, also known as a RAIF.

Previously, the country required both a private equity firm subject to the AIFMD and each fund it supervises to be authorised and supervised by the country’s regulator CSSF. But the management firm will be responsible for supervision of the RAIF, which cuts back on the administrative burden.

“While the implications of Brexit for the UK’s status with the AIFMD are still totally uncertain, should it have a negative effect, the RAIF could put Luxembourg in an excellent position to acquire market share at the UK’s expense,” Kavitha Ramachandran, senior manager of business development at fund administrator Maitland said in a statement earlier in the year.

And in May, Guernsey launched a new fund category, the Manager Led Product (MLP) to facilitate funds marketing into Europe.

“The Guernsey Manager Led Product (MLP) has been developed due to the shift of regulatory focus on AIFMD away from funds themselves and onto managers,” Bryon Rees, partner in law firm Ogier’s funds and corporate practice in Guernsey told pfm at the time.

“It places regulation at the manager level and removes duplication of regulation at fund level which gives an effective platform to market through national private placement regimes into the EU,” he said.