AIFMD & Private Placement Assistance
The Alternative Fund Management Directive (AIFMD) seeks to regulate the non-UCITS fund sector, in particular private equity funds, hedge funds, real estate funds and other alternative funds.
National regulators can decide to apply exemption clauses to Alternative Investment Fund Managers (AIFMs), that collectively manage Alternative Investment Funds (AIFs) with AUM of less than €100m which are leveraged, or less than €500m which are unleveraged and do not grant investors redemption rights for a period of five years following the date of the initial investment in each AIF.
All AIFMs established in the European Union (EU), whether they manage an EU or non-EU AIF, are subject to the AIFMD. The Directive also governs the marketing into the EU of AIFs managed by an AIFM established outside the EU.
The AIFMD National Private Placement Regime enables AIFMs to market AIFs that are not allowed to be marketed under the AIFMD passporting regimes. Principally this relates to the marketing, by sub-threshold EU AIFMs, of any AIF. However, it also relates to marketing AIFs, where the AIFM is a non-EU AIFM.
Private placement is relatively straight forward in a number of jurisdictions including: the UK, Belgium, Finland, Ireland, Luxembourg, Netherlands, Spain and Sweden.
With the IFM Private Placement Solution we:
- act as an offshore AIFM to the Guernsey AIF which can be administered by Praxis Fund Services Limited, a sister company of IFM;
- delegate the portfolio management to the advisor, whilst retaining general oversight and the risk advisory function
The AIF and AIFM remain outside the EU, take advantage of private placement, and therefore avoid the need to comply with the majority of the AIFMD requirements. The Solution is potentially suitable for non-EU advisors looking to source professional investor monies, from a small number of EU countries, using the existing private placement regimes within the EU.
Whilst private placement into the EU does have some requirements, these are relatively straightforward and do not include certain AIFMD compliant restrictions and disclosures such as the capital requirements and remuneration restrictions. In addition the remuneration disclosures only have to be provided for the AIFM (i.e. International Fund Management) and not the advisor, resulting in significant overall time and cost savings.