GPs advised to gain ‘AIFM label’

Smaller managers should consider full AIFM compliance if they want to impress investors on the fundraising trail, according to Ernst & Young’s Luxembourg private equity leader.

Despite the vast majority of fund managers in Luxembourg being out of the Alternative Investment Fund Mangers Directive’s (AIFM) reach, it is feared that fundraising will difficult without the “AIFM label”, said Ernst & Young Luxembourg’s leader of private equity Olivier Coekelbergs.

Speaking in a podcast for ALFI, the promotional agency for Luxembourg’s fund industry, Coekelbergs said that there is an implicit requirement for even small fund managers to be compliant with the directive if they want to raise money from institutional investors.

He added that this will be felt more acutely in Luxembourg as almost 90 percent of the country’s existing fund managers will not be required to comply with the directive. Most of the country’s managers run funds that fall below the directive's €500 million assets under management threshold.

However, not all is bad for Luxembourg’s private equity industry according to Coekelbergs. He believes that there will be minimal impact on existing private equity structures due to the directive’s flexibility.

Coekelbergs' remarks comes just weeks after the European Commission released long awaited level II implementation measures that played out many of the industry’s fears.

This technical advice, which confirmed many GPs’ worries that certain aspects of the directive would be difficult to interpret, allows GPs to begin getting their houses in order ahead of a 22 July deadline for AIFM compliance. 

For an in-depth look at the level II text, and what fund managers can and should be doing to gain full compliance, be sure to check out PE Manager’s February issue.