The European private funds industry has long expressed its dissatisfaction with the requirements of the Alternative Investment Fund Managers Directive (AIFMD). It should come as no surprise then, that when the Spanish regulator, the Comisión Nacional del Mercado de Valores (CNMV), finally transposed the directive into national law in November – a year past its deadline – Spanish GPs realized their fun was over.
Up until this moment Spanish GPs had not been able to access the AIFMD’s one and only incentive, the pan-European marketing passport that entitles AIFMD-compliant managers to market freely in Europe. But, sources say this was actually of little concern as most of Spain’s GPs raise money from within Spain anyway.
“It was very nice that Spain was slow in implementing the AIFMD because the old regime to raise funds in Spain was much more lenient,” says Salvador Ruiz Bachs, a Madrid-based partner at law firm Allen & Overy, who added that Spain permitted its fund managers to continue to solicit capital from Spanish investors using its existing marketing rules. And when Spanish GPs did require funds from outside of their jurisdiction, they could rely on “reverse solicitation” – which permits non-AIFMD-authorized GPs to accept capital from European investors and occurs when a LP is actually the one to initiate contact about a fund opportunity.
Fundraising figures also suggest life for Spanish GPs was good before the implementation of the AIFMD. In late 2013, Spanish firm ProA raised €350 million and back in September, Portobello raised €375 million, while Miura Private Equity closed its second fund, Miura Fund II, at its €200 million hard-cap.
Spanish investors too were unperturbed at the absence of the AIFMD regime. A common investor fear has been that access to the best GPs would be lost as fund managers ignore jurisdictions with uncertain regulatory regimes. Yet, Spain – unlike France, Germany and Luxembourg – did not tamper with its existing private placement regime, which gave non-EU fund managers marketing in Spain some clarity. In addition, the position for EU managers marketing in Spain was made clear back in July 2013 when European regulator, the European Securities and Markets Authority (ESMA), said AIFMD-authorized GPs were allowed to solicit investors in EU countries that have not yet transposed the directive into national law.
However, Spanish GPs have been left only a couple months to file their AIFMD applications, which some legal sources say could pose a problem as many GPs have put off AIFMD compliance. “Everything has been delayed. It has slipped down their list of priorities and so there will be quite a bit of work left to do,” says Ruiz Bachs.
Spanish fund managers may have enjoyed the lack of regulatory burden, which their European neighbors were suffering, but la buena vida is now over.