MultiConcept Fund Management SA ("MultiConcept") is an AIFM and UCITS IV fund Management Company. Established in Luxembourg in 2004, MultiConcept has approximately CHF10.7 billion in assets under administration. It currently has 20 umbrella structures with 89 sub-funds.
With the AIFM Directive now in full swing, the demand for management company services as well as the ability to get to market quickly with a new fund offering is growing exponentially among alternative fund managers of all shapes and sizes. Cindyrella Amistadi is the CEO of MultiConcept. In her view, the potential growth is particularly strong in the more illiquid market (i.e. private equity and real estate) as these managers seek to establish pan-European regulated funds.
"There were lots of concerns over regulatory changes in light of the introduction of AIFMD. We seized upon this as an opportunity and we have invested heavily to support fund managers to stay in line with AIFMD requirements," says Amistadi. "By obtaining an AIFM license we have strengthened a dedicated risk management team in Luxembourg to allow MultiConcept's clients to focus on running their funds, while we focus on all the necessary regulatory and risk management requirements."
MultiConcept is a fully integrated solution, within Credit Suisse Group. Each clients' situation is assessed from a global perspective. "Investment managers can come to us if they are looking to develop a fund in Europe and need the support of a management company, respectively an AIFM. Moreover we can also support them from a global perspective with the full scope of services one would expect from a global banking group," explains Amistadi.
MultiConcept addresses three key areas: risk management; set up of the fund structure; and registration and marketing.
The day-to-day demands of remaining compliant as an AIFM are enough to put off most managers. Even those with a well-established presence in Europe are turning to outsourced ManCo/ AIFM solutions but one of the key considerations when assessing an AIFM is the quality of its risk management framework. AIFMD has a significant focus on this aspect and requires AIFMs to have a comprehensive view of a fund's risk exposure, not to mention operational risks, conflicts of interest, asset valuation and provisions pertaining to remuneration.
Amistadi says that prior to AIFMD, there was a feeling in Luxembourg that "Luxembourg had lost substance because a couple of operational functions were being outsourced to low cost centres. By developing the role of the management companies, new functions were reinforced. MultiConcept used this as an opportunity to demonstrate to managers not only substance requirement but also our knowledge and expertise; especially with respect to risk management."
This is particularly important for non-European managers who might be looking at Luxembourg for the first time to market a fund yet lack knowledge of the risk management requirements under the Directive. MultiConcept can provide that expertise and allow managers to establish and market their funds relying on MultiConcept to ensure compliance with the AIFM regulations.
"Within the Luxembourg ManCo we have two people who are dedicated to risk management, one of whom specialises in illiquid assets. We are also supported by risk managers out of Credit Suisse Zurich. Moreover, we have recently also expanded the team with an additional specialist who deals with illiquid AIF funds. In total, the overall fund risk management team comprises 11 people," confirms Amistadi.
MultiConcept's team takes care of all the necessary risk assessments and risk reports pertaining to an AIF. The most critical of these is the Annex IV report, which the majority of AIFMs must file on an annual basis; this increases to semi-annually for managers with over EUR500 million in AUM and quarterly for those with assets north of EUR1 billion.
"We generate all the information and support the client from the beginning when they submit their prospectus with the CSSF, all the way through to filing the Annex IV," adds Amistadi.
Set up of the fund structure
Aside from the AIFM support role, a second key area where MultiConcept is able to support investment managers is with respect to offering a white label SICAV fund platform, registered with the CSSF. By acting as the AIFM, MultiConcept is able to help managers establish sub-funds on the platform and raise assets to test the market. The portfolio management function remains with the respective portfolio manager – be they in London, New York or Hong Kong. Alternatively, a manager is free to launch their own AIF and use MultiConcept purely as the AIFM.
"If the client chooses to use our white label SICAV, they will avoid most of the burden of having to comply with the Directive. They will not be under as much pressure to raise assets within a short space of time. They can establish a sub-fund on the platform and test the market without a lot of risk or pressure. And then decide on the future development of the fund. There are fewer risks to launching a standalone fund from a regulatory point of view," comments Amistadi.
As with all things in investment management, the choice a manager makes ultimately comes down to how big they expect the fund to be, what its asset raising potential will be, and how aggressively they wish to market it; will they focus on one core market or a cluster?
"There is another option available for established European fund managers," adds Amistadi. "We already have clients with an existing Management Company in Luxembourg who decided to appoint us for the AIFM function. What that means, by extension, is that if a client has their own management company, but perhaps does not have enough resources to cope with AIFMD, they can simply choose to appoint us as the third party AIFM to their standalone fund.
"We are able to offer this flexible fund structuring solution as part of MultiConcept to make life as easy as possible for our clients. We want to help them and take the pressure off of complying with AIFMD."
Marketing and registration
The third area of added value with MultiConcept centres on helping clients to develop their marketing strategy and cross-border fund registration.
MultiConcept is supported by a dedicated team that is able to help clients make the link to a marketing channel across Europe and also to help with the fund registration process, both of which can be difficult undertakings. Clients are guided through every aspect of the registration process.
"The team will explain what the different requirements are in different European countries, as well as help clients to collect all the necessary information to ensure that registration goes as smoothly as possible," says Amistadi.
What makes Europe particularly challenging to non-EU managers is that they are often not used to market their funds in a regulated environment. An AIFM benefits from a passport enabling it to market the AIF it manages to professional investors in EU/EEA Member States. A notification procedure must be followed to market each AIF in each Member State. Therefore MultiConcept proposes to support their clients in this area. Some countries may have a specific or additional local marketing requirements in place. From a timing perspective, it can be difficult getting a fund quickly to market when managers take on the fund formation role themselves.
"Now," says Amistadi, "we are deliberating to develop marketing models to offer more targeted marketing support within Europe. Marketing support is one of the key areas of focus. We already have a marketing support solution that sits between the client and the global marketing but we still need to increase the support for our clients with respect to cross-border marketing."
With solutions like MultiConcept, managers have a way of finding the best route to market in Europe.