GPs don’t need to be compliant with the Alternative Investment Fund Managers Directive (AIFMD) to gain investor support, according to a survey conducted by fund administrator and custodian Northern Trust.
Surprisingly, survey respondents were primarily based in the EU, where compliance with the directive is required by July 22. The survey, of 50 GPs, revealed more than 50 percent of fund managers and consultants said investors do not require their GPs to be AIFMD-authorized. The results mirror Northern Trust’s 2012 survey where close to 70 percent of respondents said their investors were not interested in AIFMD compliance at the time.
Ian Headon, vice president at Northern Trust, thinks this is partly due to GPs not communicating the potential benefits of the directive to investors.
“The debate on the AIFMD has been nuanced and very dense technically and with many managers looking at this as a compliance exercise,” said Ian Headon, vice president at Northern Trust. “I’m not sure they [fund managers] have all had the room to step back and articulate ‘this is what it means for you’ to the investor community.”
However, head of legal at fund of funds Pantheon, John Morgan, previously said he has seen request for proposals from large state pension funds looking for funds that are AIFMD-authorized.
Headon too said “the AIFMD question is starting to come up” from LPs but added it has not been consistently seen in investor due diligence.
Due to the lack of LP engagement with the directive, market sources speaking to PEM said fund managers are bolstering their presence offshore in order to skirt the regulation. Fund managers located outside of the EU are not within the scope of the AIFMD and can still market within the EU using existing private placement regimes.