"The Alternative Investment Fund Managers (AIFM) Directive will have a profound structural impact on the fund industry, both in Europe and internationally"
Michael Hornsby

While the main focus of the AIFM Directive (the AIFMD) is on managers of funds, the AIFMD will not only impact European Union (EU) and non-EU AIFM, but also EU and non-EU domiciled Alternative Investment Funds (AIF), service providers to these funds and their investors.

The AIFMD covers all alternative sectors such as hedge funds, real estate and private equity, but also traditional sectors where the funds are not registered as UCITS. It applies to funds and certain corporate collective investment vehicles. Such products are generally for professional investors, but may also be sold to retail investors.

The AIFMD lays down requirements which must be met by AIFM, covering authorization, capital, marketing, organization, remuneration, conduct of business, conflicts of interest, functions and service providers and transparency. Specific provisions cover the use of leverage and acquisition of major holdings and control.

In return for more regulation of AIFM, their service providers and funds, the proposed Directive provides for the introduction of passports enabling AIFM to offer their management services and market their AIF throughout the EU.

In our view

We believe that the AIFMD has ramifications far beyond achieving basic compliance:

• Alternative investment groups (including promoters, sponsors, advisers, general partners and managers of all types of non-UCITS funds) should conduct a strategic review of their fund ranges and their operating models
• Service providers, especially depositaries, custodians, administrators and valuers, will also need to assess the strategic impact on their service offering and operating model and consider how they will react to new obligations and risks introduced by the AIFMD
• Investors will need to consider the accessibility of products, and the AIFMD’s impact on their investment process

Overall, the AIFMD will mean new opportunities and challenges for all the key stakeholders in the alternatives sectors’ value chain.

 Download our thought leadership:

	The Luxembourg Financial Connection - Issue 19		A new dawn for alternative investments Navigating the challenges and opportunities of the AIFM Directive
	Marketing in Europe in the post-AIFM Directive era Effectively navigating the regime		Navigating the post-AIFM Directive challenges and opportunities for depositaries
	The Luxembourg Specialized Investment Fund - March 2012		The perceived impact of the AIFM Directive on private equity in Europe
	European venture capital and social entrepreneurship funds proposed		Your bridge between Europe and China: Luxembourg
	AIFM Directive Q&A - Marketing investment funds by non-European managers to European investors
	Alternative investment funds: Challenging months ahead		Luxembourg proposes one-stop shop for alternatives
	The super AIFM		Service Organization Controls (SOC) reporting in the alternative investments industry
	AIFMD Quickscan tool		Risk and liquidity management

---