For many non-EU fund managers, the ability to market funds seamlessly across Europe will not be incentive enough to comply with the burdensome Alternative Investment Fund Managers Directive (AIFMD), predicted a recent roundtable of industry professionals tracking the directive assembled by PE Manager in late October.
The AIFMD seeks to harmonize and tighten Europe’s patchwork of fund marketing rules. For AIFMD compliance, fund managers are rewarded with a pan-EU marketing passport.
The introduction of AIFMD has caused individual EU states to examine their existing private placement regimes, which non-EU managers must continue using until at least 2015 – the time when a marketing passport will be made available to them. However, if private placement regimes continue to be accessible after 2015, industry sources believe they will be the preferred marketing route for non-EU managers seeking EU capital.
“If they [private placements] are significantly curtailed, then the premium is on the passport. If they are not curtailed, and they are operating efficiently…then I can’t see many people taking the passport so long as they can get by on the private placement regimes,” said at the roundtable John Morgan, head of legal at Pantheon Ventures.
A related question is whether all non-EU fund managers will even be able to take advantage of the passport come 2015, added at the roundtable Ben Robins, chairman of the Jersey Funds Association, the island’s promotional body for the funds industry.
“Will the SEC [the US Securities and Exchange Commission] put an AIFMD compliant regime in place for US managers? The answer is no, it’s not going to happen. You are probably not going to get a Singaporean one either. So where does that leave managers in those larger third countries?”
Robins expects this to lead to bifurcation within the industry with many non-EU fund managers avoiding marketing in Europe.
“We will see those that focus on European investors through AIFMD compliance and those that turn their back on that and focus on the rest of the world and do the best they can in the European market using available private placement regimes and reverse solicitation, whatever it might be.”
For full coverage of the roundtable’s conversation, including an in-depth discussion on depositary rules under the directive, see the December edition of PE Manager.