On Thursday, the UK government eased industry concerns that applications for authorization under the Alternative Investment Fund Managers Directive (AIFMD) would not be approved in time to meet a July 22, 2014 deadline.
Private equity firms that submit AIFMD applications by the July deadline can continue operating even if regulators have not yet approved their request for authorization.
Originally, UK regulator the Financial Conduct Authority said applications should be submitted by January to allow for enough time to process submissions.
“It can take up to six months to review an application – particularly if there are a high volume of applications at the same time,” said an FCA spokesperson in a previous email to PE Manager.
The spokesperson said the application process is a “fairly rigorous exercise, and can involve lots of detailed discussion and reviews.”
With the additional time, fund advisors can now submit more “complete” applications, said industry compliance consultant Jonathan Wilson of Cordium. “It means less back and forth with the FCA because many firms would have submitted January applications without being fully prepared with all the information the FCA requires.”
In one respect, the extension takes GPs back to their original position, said Gus Black, a London-based funds partner at law firm Dechert. “The directive always stated fund managers need to apply, not be authorized, by July 22.”
Other industry sources say the government’s decision allows GPs more time to select service providers required by the directive, including depositories, and for some GPs, outside valuation service providers.