North American alts managers look to Europe to broaden investor base

North American alternative fund managers are increasingly looking to raise funds in Europe as they seek to broaden their investor base.

Research from fund administration firm Ocorian found that more than a third (35%) of  private equity, private debt, real estate, venture capital and infrastructure fund management executives in the US and Canada responsible for $1.591 trillion assets under management who do not currently raise capital in Europe plan to start doing so within 12 to 24 months.

Sixty-one percent of those surveyed say the growing recognition among North American fund managers of the benefits of broadening their investor base is among the top three reasons for increased capital raising in Europe over the next two years, while more than half (53%) say the high level of investment opportunities in North America are attracting European investors.

Sixty-two percent said the cost of entry against market upside is one of the top three reasons that would prevent increased capital raising in Europe, while 49% said problems recruiting people to lead capital raising in Europe is among their top three reasons.

Other issues identified include the attractiveness of their strategy to European investors cited by 46% with 42% pointing to difficulties distributing cross-border and 40% challenges with choosing the right jurisdiction.

Fund managers surveyed picked renewable energy and real estate as the asset classes they expect to see the biggest increase in European fundraising over the next 12 months.

Paul Spendiff, head of business development at Ocorian, said: “Many alternative fund managers from North America have been active in Europe for some time but the research shows that now they are increasingly looking to expand their capital raising and broaden their investor base in the region.

“There is also a strong belief amongst managers based there that European investors are looking to North America for more attractive investment opportunities than are available domestically and that they have substantial levels of dry powder to invest.

“There are, however, stumbling blocks for North American fund managers raising capital in Europe with concerns about the cost of entry and putting boots on the ground. Fund managers clearly need the right support from local strategic partners before raising money in Europe to ensure they meet local regulatory requirements and investor needs.”

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