GPs may opt in to AIFMD regime

A segment of the LP population will prefer fund managers who comply with the pan-EU directive, even if they fall outside of its scope, delegates heard at a recent industry conference.

Non-EU fund managers who feel unscathed by Europe's new regulatory regime covering alternative asset managers may want to reassess their situation, according to delegates and speakers attending the Association of the Luxembourg Fund Industry's conference on Tuesday.

Some private equity investors will view compliance with the Alternative Investment Fund Managers Directive (AIFMD) as a must have requirement for their chosen fund managers, said one GP on stage.

“AIFMD will be as strong a brand as UCITS [Europe's open-ended funds regime],” echoed in sentiment Laurent Vanderweyen, global head of fund services at Alter Domus. “If you are not an AIFM, people will not invest.”

Further supporting this viewpoint at the conference was Jeff Rupp, director of public affairs at real estate trade body the European Association for Investors in Non-Listed Real Estate Vehicles (INREV).

“Institutional investors are increasingly asking funds to be AIFMD compliant and there is recognition that AIFMD was created to protect investors. It’s being seen as a brand of security that investors want to take advantage of.”

Delegates, comprised of private equity, hedge fund, and real estate fund managers, as well as industry service providers, agreed with the points made on stage. Roughly 88 percent of delegates polled at the event said that the AIFMD offers fund managers' brand value, either immediately or after some period of time for the directive to take hold.

Genii Capital is one example of a firm that falls outside of the directive's scope but will opt-in anyways.

“There are added benefits of transparency and discipline and we have applied because we think it will be a brand to comfort our investors,” said at the conference Jérôme Wittamer, head of investment management at Genii Capital, a firm specializing in private equity, venture capital and real estate investment.

However, not all at the conference agreed that a rush of fund managers who do not have to comply with the directive will seek AIFMD authorization. “Most information we have is anecdotal, but I've heard views that for the time being, the hassle from trying to raise money from European investors outweighs the benefit,” said Michael Collins, public affairs director of the European Private Equity & Venture Capital Association, who agreed that some LPs were requiring AIFMD authorization as part of their GP selection process.