Germany and Gibraltar strike private placement deal

As part of a new reciprocal private placement policy, German regulator BaFin will allow Gibraltar funds that do not fall under AIFMD to enjoy a fast-track marketing process in Germany.

German financial regulator BaFin has adopted a new reciprocal private placement policy, according to Gibraltar-based law firm Hassans. The policy will allow funds from EU member states not within the scope of AIFMD to be privately placed into Germany on an expedited basis as long as German funds can be privately placed into those jurisdictions in return.

Hassans drafted a new private placement regime for Gibraltar in order to satisfy BaFin’s requirements and gain reciprocal rights. One Gibraltar fund Hassans is working on has already begun privately placing into Germany, according to Hassan partner and head of funds James Lasry.

This preferential procedure is available to Gibraltar funds that are not within the scope of AIFMD (“passport” rights are available for funds in-scope of AIFMD), including Gibraltar self-managed funds and Gibraltar fund managers with assets under management less than €100 million (or €500million if the fund is closed ended and unleveraged).

It is unlikely that many jurisdictions will gain this approved status because, in order to qualify, the jurisdiction must have a sufficiently open private placement regime to satisfy BaFin, noted Lasry. Also, although some jurisdictions may be interested in marketing to German investors, they may not be as willing to allow German funds to privately place in their jurisdiction.

No jurisdiction outside the EU may use the new process, so European funds in approved jurisdictions will have an advantage over funds established in offshore domiciles, such as the Cayman Islands or the Channel Islands, added Lasry.

BaFin did not immediately return a request for comment.