The introduction of the EU Alternative Investment Fund Managers Directive (AIFMD) is having little impact on the scale of US alternative fund managers’ activity in the European market, according to recent research looking specifically at US manager attitudes towards the regulation.
The ‘Impact of AIFMD on the European & US alternative fund industries’ research, conducted by IFI Global and sponsored by fund and corporate service provider Crestbridge, was published last month. Surveying US managers with total combined assets under management of US$306bn, the research focuses on how the AIFMD has impacted approaches across the hedge, private equity, infrastructure and real estate sectors to the European investor landscape.
Key findings from the research include:
- The AIFMD has 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
- Most US managers are focusing on just one or two European markets and private placement is overwhelmingly the preferred option for these managers
- 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
- Particularly in cases where funds are marketed into more than one market, the ManCo is proving a popular platform for accessing European capital. 36% of US managers active in the European market were using or were considering using a ManCo platform and growth in these structures is expected to continue
- The biggest concerns amongst US managers surrounding AIFMD were remuneration disclosure provisions and regulatory costs
These conclusions follow the publication of findings from a preliminary European-only piece of research carried out by IFI Global at the end of last year. It revealed that, although the AIFMD has required European managers to include extra items in their risk reporting, the majority had not been required to make wholesale changes to their systems.
Graeme McArthur, CEO, Crestbridge, commented: “There has been some comment on what American managers think about AIFMD, but until now no research has been done on this topic. As a pan-jurisdictional service provider supporting managers in both Europe and the US, we were therefore delighted to sponsor this research and shed some light on the impact of the Directive.
“Overall, the indications across Europe and the US are that, rather than AIFMD causing a revolution, the changes it is bringing about are part of an ongoing long-term process. 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.
“What is interesting, particularly from the point of view of a service provider with operations in both onshore and offshore locations, is that both the ManCo and private placement routes into Europe are being used by those US managers with European interests, with the rise of the ManCo set to be the most significant structural change brought about by AIFMD.”
Crestbridge has a well-established ManCo platform in Luxembourg and was granted a ManCo licence in Jersey last year, making it one of the only service providers in the jurisdiction to be able to act on behalf of fund managers as an appointed management company. The firm has also recently opened an office in the Cayman Islands.