MJ Hudson, an alternative assets consultancy and law firm, is establishing a Luxembourg Alternative Investment Fund Manager so it can continue operating client funds in Europe in the event of a hard Brexit.
It will be the same as its UK Fund Management Solutions operation in the UK, which functions as an AIFM for client funds and provides back office, administration, regulatory licensing and passporting services to general partners.
“Our existing UK AIFM operates 12 funds for clients. It is anticipated that we will operate a similar number and more from Luxembourg over the next three years,” Matthew Hudson, chief exective, told pfm.
The move is driven by a combination of issues that are likely to surface in 2019: a hard Brexit, the phasing out of National Private Placement Regimes and a potential delay in launching the replacement to the NPPR, the AIFMD passport.
Should they materialize it would mean that from 2019 all general partners that want to market funds in Europe – UK, European, US or Asian funds – will have to either have their own EU AIFM, or access the EU via another EU AIFM.
“As a business we are already [managing funds] for clients through our UK for-hire AIFM. Until Brexit came along, we thought we had this covered for clients – if Brexit is hard, then we will need another EU AIFM,” Hudson said.
The firm’s Luxembourg office will be manned by a team of new recruits, but some staff from London may be moved over. It will open when the firm receives its Luxembourg regulatory licenses in full, which is anticipated shortly, Hudson said.
Luxembourg is increasingly becoming a large market for private equity, venture capital and real estate funds, dictating the choice of country for the firm’s sixth European office.