NEWS

Resentment builds over AIFM Directive

Two-thirds of Europe’s alternative assets fund managers oppose the AIFM Directive, with the EU passport and disclosure requirements topping the list of concerns.

Research by Preqin showed that the directive, which passed in a vote by the European Parliament on November 11 this year, would also cause compliance problems for non-EU funds managers.

More than 100 alternative assets funds managers were surveyed, and the findings showed that two-thirds opposed the directive as a vote-catching exercise driven by uninformed politicians.

The peak venture capital bodies said the directive needed more work. The lack of tailoring was its biggest flaw, according to Javier Echarri, chair of the European Private Equity and Venture Capital Association.

“There is a lesson here for all architects of financial legislation: it must either be broad and principles-based … or specific and tailored.

“AIFMD was neither one thing nor the other, and what tailoring there is for our industry was only achieved through painstaking dialogue.”

Similarly, Simon Walker, chair of the equivalent British association, BVCA, said the directive would inflict “needless damage” on the private equity and venture capital industry.

“Neither asset class has been shown to have contributed to the financial crisis in any way, yet they are now faced with increased costs and disproportionate burdens.”

Key findings of the survey included:

  • 89 per cent believed the directive should be amended to further take into account the differences between the various asset classes
  • 59 per cent foresaw the directive creating a European lock-in/lock-out
  • 45 per cent thought that it was likely or very likely that funds managers would relocate outside Europe as a result of the directive; 26 per cent thought that it was likely their firm specifically would relocate
  • 28 per cent believed that the introduction of the EU Passport would have the biggest impact on the industry
  • 22 per cent thought the requirement that non-EU funds managers comply with the directive would be the most significant measure
  • 3 per cent believed that increased regulations relating to retail investors would have the greatest impact
  • the impact of the directive on innovation, the additional costs firms would incur, and the effect of these costs on profitability were all major causes for concern
  • a significant number felt that venture capital firms should be excluded from the jurisdiction