AMF, the French financial services regulator, has begun to approve the first wave of onshore alternative investment funds using a prime broker.
One of the first ARIA EL (Agréé à Règles d'Investissement Allégées, à Effet de Levier) French alternative investment funds using a prime broker has just been approved by the AMF.
This approval represents a significant step forward in the French alternative investment industry as this new type of fund is now authorised for public distribution to both institutional and retail investors meeting the required qualifications. Such investors gain access to more sophisticated products in the asset management market while benefiting from a regulated framework.
The newly approved ARIA EL fund launched by ADI Alternative Investments features Crédit Suisse First Boston (CSFB) as the Prime Broker while Crédit Agricole Investor Services (CA-IS) plays the roles of the depositary bank and of the fund administrator.
This approval is the result of several months of intense work among the various players - ADI Alternative Investments, CSFB and CA-IS - to set up the legal and operational structure linking the funds, the depositary bank/fund administrator and the prime broker.
ADI Alternative Investments obtained from the AMF one of the first ARIA EL agreements, demonstrating their pioneering role in the alternative investment industry in France. Based on its onshore and offshore expertise in alternative investment strategies, ADI Alternative Investments played a key role in the coordination of the project and the resolution of the legal, operational and regulatory issues.
CSFB, a long-term business partner with ADI, has become the first prime broker to a leveraged French onshore hedge fund, demonstrating CSFB's strategic commitment to the French hedge funds market.
CSFB will provide leverage, securities lending, portfolio swaps and reporting within the new regulatory framework to the French onshore hedge fund market. CSFB will also assist new funds in their business development, capital raising activities and risk management.
Muriel Danis, Vice-President in Prime Services at Credit Suisse First Boston, said:
"CSFB is delighted to be the pioneer in prime brokerage to the new French onshore market. It is the result of a great deal of work, innovation and perseverance among the three project partners, ADI, CA-IS and CSFB, in liaison with the AMF. This puts us in a truly unique position and we look forward to working in close partnership with future onshore hedge funds."
CA-IS is a major player in the European Securities Services business, with more than EUR 470 billion of assets under administration and EUR 61 billion of assets in alternative investment and structured products. CA-IS leveraged its expertise on servicing hedge funds in Luxembourg and Dublin, both key in creating a new offering specific to the French market.
Amina Oulmi, project manager at CA-IS, said: "To succeed in this initiative, we extended our automated processes to CSFB. Automated processes were already in place linking the management company, the fund administrator CA-IS Fastnet and the depositary bank CA-IS Bank, ensuring a smooth and secure environment. Our team is now ready to develop this market, for which we foresee rapid growth in the coming months."
The three parties said they welcomed the AMF's pragmatic approach "that has resulted in a flexible alternative investment product within the new regulatory framework".
Alain Reinhold, Managing Director of ADI Alternative Investments, said: "The set up of this new regulatory body should favour the development of the alternative investment market to a new type of clientele not just in France, but also abroad."
Background Notes: Created in 1998, ADI is an independent management society approved by the AMF and dedicated entirely to alternative investment. Since its creation, ADI has established itself as a player specialising in alternative investment, seeking absolute returns through complex investment strategies. ADI Alternative Investments has developed know-how in the management of alternative investment strategies and has marketed itself on a client basis rather than on a solely performance-based basis.
Crédit Agricole Investor Services (CA-IS) is the securities services business line of the Crédit Agricole group dedicated to institutional investors and corporate clients. CA-IS offers depositary bank and custody services, fund administration, support to pan-European distribution and services to issuers. CA-IS is present in France, Luxembourg and Dublin and is the operator of the Fastnet fund administration network, present in these three countries but also in Belgium and in the Netherlands. The Fastnet network is a partnership with the Fortis group.
Credit Suisse First Boston's Prime Services business has recently been recognized by two leading benchmark surveys in the industry. CSFB's businesses include securities underwriting, sales and trading, investment banking, private equity, financial advisory services, investment research, venture capital, correspondent brokerage services and asset management.