'Passport' regime looms for EU marketing

Non-EU managers aiming to raise capital from European investors may need to re-domicile their funds in a European country, according to law firm Allen & Overy.

One of the biggest talking points around the EU's incoming Alternative Investment Fund Managers (AIFM) directive has been the so-called 'passport' that third-country fund managers must obtain to market their funds across the EU. 

For non-EU managers, such as those located in Asia, one road to compliance is to re-domicile the fund in a European country of choice, according to Nicolas Papavoine, head of Allen & Overy's Luxembourg/Asia-Pacific desk.

He stressed it was too early to say exactly how the AIFM would impact private equity funds in Asia, but felt that funds with substantial European institutional investors would choose to re-domicile while fund managers whose LP bases were largely Asian would not be compelled to do so.

“A lot of these funds may have one or two European investors, and the question will be whether they want to get more,” Papavoine said.

Passport-less funds can still opt to market to individual countries within the EU. However, Germany has indicated that marketing funds within its borders will require the pan-European passport, said Papavoine.