The AIFMD is aimed at establishing an EU-wide harmonised framework for monitoring and supervising risks posed by alternative investment funds (AIFs) and those that manage them. It covers hedge funds, private equity funds, retail investment funds, investment companies and real estate funds.
Tim Hames, director general of the British Private Equity and Venture Capital Association (BVCA), said the demands being exacted on the industry by AIFMD, meant the question should be asked: “Will this action make Europe a less or more attractive place to outside investors and observers?
“If that is the simple test for the AIFMD process, then the honest answer is that there are people giving Europe a pass now, who would not have given Europe a pass previously,” said Hames.
He added that while there was no particular individual provision in the directive that is a deal breaker, “the collective weight, the sheer hassle, and the fact that there are other parts of the world that are not bothering you with this sort of thing, are a very powerful set of arguments.”
"There are people giving Europe a pass now, who would not have given Europe a pass previously,”
Layered process
Karen Sands, head of finance at Hermes GPE, said: “We early adopted for AIFMD and became an authorised AIF firm on 1 July 2014. We have found that AIFMD has layered the ordinary process, whether it be from an investment or investor perspective, with a whole heap of tasks to make sure you are compliant with AIFMD…So it’s quite cumbersome.
“I think delivering European private equity with co-mingled vehicles becomes even more complex, particularly if you are marketing to investors outside of Europe. They are put off by AIFMD and certainly some of the discussions that we’ve had have been around single investor funds.”
James Gee from Weil said that AIFMD had probably proved more onerous for those onshore rather than third countries such as Guernsey, which was able to offer access to the EU through national private placement regimes.
Robert Mellor, Tax Partner at PwC, said that Guernsey’s advantage was in having a dual regulatory regime – one which is AIFMD compliant and another which is free from the requirements of AIFMD – and the Island therefore provides flexibility and options.
