Fri, Mar 29, 2024
A A A
Welcome Guest
Free Trial RSS pod
Get FREE trial access to our award winning publications
Industry Updates

More US fund managers establishing fund structures in Europe

Friday, August 26, 2022
Opalesque Industry Update - Ocorian, a global leader in corporate and fiduciary services, fund administration and capital markets, says more US fund managers are looking to establish fund structures in Europe, and it expects this trend to further increase.

Marc van Rijckevorsel, Head of BD for Corporate & Fund Services, Americas said: "There's currently a lot of capital available for US fund managers from investors in other jurisdictions. Alternative assets surged in 2021, with record levels of fundraising, investment, exits, and performance across many asset classes. This is set to continue, with Preqin forecasting assets under management to grow from $13.32tn today to $23.21tn in 2026. Almost half (49 per cent) of that 2026 figure is expected to sit with private equity and venture capital, whilst Europe's alternatives market is predicted to grow at 14 per cent year-on-year to 2026.

"There is clearly strong demand for raising and investing capital. However, historically many US fund managers have focused on US investors. Yet, as the private equity and debt market has matured and more investors have entered these asset classes, there is a growing number of investors in Europe and the GCC region, who have capital to deploy and are interested in identifying specialist fund managers. "

Ocorian says it is seeing a growing number of US fund managers setting up fund structures in Europe. Luxembourg is the jurisdiction of choice as the largest investment fund centre in the world outside of the US. And the expectations are that Ireland will increase in popularity, following positive changes in its investment limited partnership (ILP) regime and several funds successfully having been launched.

Challenges for US fund managers

Ocorian says the challenges that arise for US fund managers relate to the regulatory perspective: US fund managers are very familiar with the SEC rulebook but once they get to Europe, they need to appreciate that they are not dealing with one market, even though AIFMD is creating a level playing field.

Ocorian says it is also important for US managers to consider how they incorporate ESG principles into their operations and investment decisions. European investors and regulators are increasingly focussed on managers' commitments to ESG, evident in the introduction of the EU's Sustainable Finance Disclosure Regulation in March 2021, with a second phase expected in early 2023.

New AIFMD regulation presents challenges for fund managers on pre-marketing rules AIFMD introduced rules to regulate the pre-marketing of alternative investment funds on 2 August 2021. The advantage of this new pre-marketing directive is there is now guidance on how to undertake pre-marketing activities across the EU. Before it was implemented there was already market testing, but there was no clear legal framework. Any activity that could be considered as pre-marketing was not defined in the original AIFMD and was left to the rules of the individual EU member states. That has now been clarified.

For US fund managers without experience, Ocorian says there was a discrepancy between jurisdictions in the EU as to what counted as pre-marketing, and that has now been defined. US fund managers can test whether there is appetite for a fund strategy, and there is a process for doing that without having to set up a fund structure from the start. If a US fund manager intends to test an investment idea of an investment fund with European investors, they can appoint an EU-AIFM to do the pre-marketing notification to local regulators. If there is little appetite, the manager can stop pre-marketing and they are not obliged set up a fund or incur many costs. There's now more clarity about that process.

Marc van Rijckevorsel said: "The private capital environment continues to grow in popularity and large fund managers are tapping into new investor bases. Most US fund managers see growing competition for capital and are looking to expand their investor bases into Europe and other regions such as the Gulf Cooperation Council (GCC) nations - both markets will continue to present compelling opportunities.

"Regulatory challenges are often an issue for US managers looking to fundraise in Europe, with managers facing different challenges in accessing investors capital and marketing their products. In Europe, US fund managers will benefit from working with the right service providers, whether those are legal advisers, placement agents or fund administrators."

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Previous Opalesque Exclusives                                  
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. KKR raises $6.4bn for the largest pan-Asia infrastructure fund[more]

    Laxman Pai, Opalesque Asia: The New York-based global investment firm KKR has raised a record $6.4bn for its second Asia-focused infrastructure fund, underlining investors' continued appetite for private markets. According to a media release from the alternative assets manager, the figure top

  2. Bucking the trend, top hedge fund makes plans for a second SPAC[more]

    From Institutional Investor: SPACs aren't dead. At least not to the folks at Cormorant Asset Management. The life sciences firm, whose hedge fund topped its peers in 2023, is confident it will match the success of its first blank-check company. Last week, the life sciences and biopharma speciali

  3. Benefit Street Partners closes fifth fund on $4.7 billion[more]

    Bailey McCann, Opalesque New York: Benefit Street Partners has closed its fifth flagship direct lending vehicle, BSP Debt Fund V, with $4.7 billion of investable capital across the strategy. Benefit Street invests primarily in privately originated, floating rate, senior secured loans. The fun

  4. 4 hedge fund themes that are working in 2024[more]

    From The Street: A poor earnings report from Tesla (TSLA) has not hurt the indexes on Thursday. The decline in Tesla stock, which is losing its position in the Magnificent Seven pantheon, is more than offset by strong earnings from IBM (IBM) and ServiceNow (NOW) . In addition, the much higher-t

  5. Opalesque Exclusive: A global macro fund eyes opportunities in bonds[more]

    Bailey McCann, Opalesque New York for New Managers: Munich-based ThirdYear Capital rebounded in 2023, following a tough year for global macro. The firm's flagship ART Global Macro strategy finished the year up 1