Since 2009, the European Union has been considering a Directive to regulate Alternative Investment Fund Managers (AIFMs), including private equity fund managers and investors who invest in such funds. EMPEA has been particularly concerned about third-party provisions that could greatly restrict or make it much more difficult for AIFMs based in emerging markets to raise capital in the EU, and for EU investors to invest in non-EU funds.
We have been monitoring the developments of this regulation, and recently determined that the potential negative impact on our markets remains substantial, despite numerous compromise proposals introduced over the past six months. Therefore, we have registered our concerns via a letter submitted to the Spanish Presidency of the EU, which is now leading negotiations on this Directive. EMPEA has sent similar letters to the European Commission and European Parliament.
To view the letters EMPEA sent, please click below:
Background on the EU Directive:
The proposed EU Directive on Alternative Investment Fund Managers (AIFM), published by the European Commission in April 2009, is said to have been drafted to address the issue of transparency and investor protection for those investing in private equity in Europe. The Directive has generated significant concern, particularly around the requirements for compliance, disclosure and marketing. The impact on Limited Partners and General Partners around the globe may be significant.
Among the reasons the Directive is important to EMPEA members, it currently states:
- That the only funds that may be marketed to European professional investors are those which have authorization under the Directive;
- That to have authorization under the Directive, fund managers, including those with funds that only market in, but do not invest in Europe, must be established in Europe; and,
- That European fund managers would need to set aside "regulatory capital" and appoint an independent valuer.
EMPEA will be staying abreast of the Directive as it is shaped by various European institutions and will be communicating, as appropriate, the possible impact on emerging markets private equity. EMPEA may hold a subsequent webcast focused exclusively on the impact of the Directive on private equity in emerging markets.
Related Documents:
On January 26th, 2010, EMPEA members were invited to join a special complimentary webcast on the Draft EU Alternative Investment Fund Managers Directive, hosted by the Institutional Limited Partners Association (ILPA). For more information about that webcast, please contact EMPEA at webcasts@empea.net.