Since the introduction of the Alternative Investment Fund Managers Directive (AIFMD), a question mark has hung over whether US alternative managers would still bother marketing into Europe. Standish Management, a US alternatives administrator, is banking that they will.
It has signed an agreement with Indos Financial, a UK AIFMD depositary, to support US private equity clients that have European investors.
The alliance gives US-based fund managers access to depositary services where they are required in Europe.
“As it’s become clearer that US-domiciled funds cannot rely on reverse solicitation to avoid registration in European countries where they have LPs [limited partners], we needed to be able to offer our clients advice and services in order for them to comply with AIFMD,” said Judy Tyler, managing partner at Standish in Los Angeles.
Bill Prew, chief executive of Indos Financial, said: “Compliance with the AIFMD marketing rules is not as complex as firms might expect and reduces compliance and business risk for US managers seeking to raise capital in Europe.”
Indos gained its despositary licence from the UK Financial Conduct Authority in January 2014 and provides services to over 50 funds.
Meanwhile, it emerged this week that AIFMD is having “little impact” on the scale of US alternative fund managers' activity in the European market, according to research sponsored by Crestbridge, a fund services provider.
A survey – called 'Impact of AIFMD on the European & US alternative fund industries' – it published recently found that the AIFMD had not caused US managers to take a strategic decision to expand into Europe or stay out of it. Instead, US managers continue to take an “opportunistic, investor-led approach to Europe”.
The survey covered US managers with total combined assets under management of US$ 306 billion (€276 billion).
The survey also found that most US managers are focusing on just one or two European markets, mainly using private placement. Also, US managers said they would become AIFMD compliant if there were sufficient investors for their funds to make it worthwhile, though AIFMD has raised the bar in terms of what 'sufficient' means.
Where funds are marketed into more than one market, the ‘ManCo’, or AIFMD management company, is proving a popular platform for accessing European capital, Crestbridge says.
The biggest concerns amongst US managers surrounding AIFMD were remuneration disclosure provisions and regulatory costs.
Graeme McArthur, chief executive of Crestbridge, said: "There has been some comment on what American managers think about AIFMD, but until now no research has been done on this topic.
"Whilst European managers are needing to focus more on risk, governance and reporting, it seems that for many US managers Europe is not a priority and that AIFMD is having relatively little impact.”
Last year it was revealed that only 15% of US hedge funds managers were AIFMD-compliant.
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