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Attracting PE and RE managers to innovative AIFM platform

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In May 2014, MS Management Services SA, a Luxembourg-based subsidiary of the Maitland group, a leading global fund administrator, received authorisation from the CSSF to act as a third-party AIFM to alternative investment funds. At the same time, it established its own umbrella fund platform, MS SICAV SIF, to support managers wishing to fast track the process of launching a readily passportable EU product. 

Kavitha Ramachandran (pictured), Director of MS Management Services, notes that managers in Europe are increasingly aware that the AIFMD brand is becoming popular with investors. "Initially, people were trying to look for ways to avoid it or circumvent it but they increasingly see the benefits of being regulated under AIFMD. It gives them a marketing edge, especially in the eyes of institutional investors. 

"As a result, we are getting a steady stream of enquiries. We see particular interest among fund managers operating in the private equity (PE) and real estate (RE) space," confirms Ramachandran. 

Indeed, to capitalise on this trend, the firm has applied to the CSSF to extend its AIFM license to support PERE managers. 

"We see this as a real growth area," adds Ramachandran. "It is going to be an integral part of the expansion plan for our AIFM solution. We'll follow a similar strategy to the existing one for hedge fund managers; that is, to have a platform product that will cater for these more illiquid asset classes, as well as offer outsourced AIFM services to managers running their own AIFs."

Ramachandran confirms that the firm has been speaking to managers wishing to set up structures in Europe. 

"We've had conversations with US fund managers about mirroring their offshore fund strategies and establishing an EU AIF to avail of the AIFMD marketing passport. An EU feeder into a non-EU Master fund does not avail of the AIFMD passport, At the end of the day, if you're interested in raising capital in Europe, you need to have a solution in place."

That solution could be to join an umbrella fund structure such as MS SICAV SIF, where the investment manager creates a sub-fund and avails of Maitland's AIFM license to passport the fund in Europe. In such an arrangement, Maitland delegates the portfolio management back to the investment manager.

"We are talking about managers and countries, such as the US, where the passport is not going to be made available by the European Securities and Markets Authority (ESMA) on a Third Country basis for some time yet. What we are able to offer with our AIFM is a simplified solution for non-EU managers, so long as they feel they haven't lost too much control with a third party looking over what they are doing and providing full oversight," explains Ramachandran. 

A strong pipeline means that the number of sub-funds is likely to grow over the coming months. In addition, Maitland is setting up individual client-owned entities, which then appoint Maitland as the delegated AIFM. This is typically done by EU managers setting up their own AIF, yet do not want the day-to-day burden of being their own AIFM. 

"We see a combination of EU and non-EU managers wanting this solution. If you are a boutique manager, you really don't want the hassle of setting up your own management company, dealing with the local regulator and using up valuable resources. We can help overcome this," concludes Ramachandran.

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