Fundraising in Europe
Establishing compliant operations
Written in collaboration with:
The complexities U.S. fund managers face in Europe often mean that outsourcing to specialized partners is the best solution for successful fundraising.
Partners with experience in Europe can provide the expertise needed to ensure regulatory compliance and efficiently navigate Europe’s diverse and often complex operating environment. It is estimated that upward of 86% of U.S. fund managers raising capital in Europe outsource at least some of their operations to external providers.
Watch Marc Schubert, Partner at Weil, Gotshal & Manges LLP introduce guidance on setting up compliant operations in Europe.
To recap, there are two primary ways in which U.S. fund managers can fundraise in Europe:
Primary option 1
Compliance with AIFMD and requires appointing a third-party AIFM or establishing an in-house AIFM in Europe, to obtain a marketing passport to market across the manager’s target European jurisdictions.
Primary option 2
Partial compliance with AIFMD, whereby no third-party or in-house AIFM is established but rather requires individual applications to be made to the regulators in the manager’s target jurisdictions under the relevant NPPR, provided the NPPR regime is available in the targeted jurisdictions.
Common third-party specialists who collaborate with U.S. fund managers:
The need
Guidance on fund establishment
Third-party partners
Fund formation lawyer
How they add value
Advice on the formation of funds’ legal structure, ensuring that it’s attractive for both U.S. and European investors and compliant with regulations. They add value by setting up the fund efficiently from a tax and operational standpoint, and drafting clear, compliant fund offering and constitutional documents.
The need
Guidance on fund compliance
Third-party partners
Regulatory lawyer
How they add value
Advice on ongoing compliance with specific regulatory frameworks (AIFMD, MiFID II, PRIIPs, SFDR, etc.) and managing cross-border marketing and reporting obligations. They add additional value by protecting the fund from regulatory risks, advising on how to legally market and operate in Europe, and ensuring alignment with local and international laws.
The need
Establishing an AIFM
Third-party partners
AIFM service provider
How they add value
If opting for full compliance with AIFMD, appointing an AIFM enables U.S. fund managers to benefit from a marketing passport across Europe, satisfy the requirements of AIFMD, manage risk, and streamline reporting, without the need to set up and invest in their own in-house AIFM. Some specialist fund administrators, such as Aztec, have their own AIFM license.
The need
Appointing a depositary
Third-party partners
Depositary service provider
How they add value
A depositary must be appointed if marketing in full compliance with AIFMD (and if opting for the NPPR route, only if marketing to investors in Denmark and Germany). The role of this entity is to monitor cashflow and eligibility of institutions where cash accounts are opened, verify ownership of the fund’s assets and maintain independent books and records to oversee the activity of the fund’s main stakeholders. In the EU, the depositary must be authorized by the local supervisory entity. This role can be performed by banks, investment firms and specialized service providers, like Aztec.
The need
Navigating NPPR requirements
Third-party partners
Regulatory lawyer
How they add value
Advice on partial compliance with AIFMD via NPPR requirements and assistance with local regulations and marketing registrations.
The need
Executing a marketing and distribution strategy
Third-party partners
Placement agent
How they add value
Connects U.S. fund managers with suitable investors and ensures their marketing and distribution strategy complies with local regulations, helping to raise capital in target markets.
The need
Managing day-to-day operations
Third-party partners
Fund administrator
How they add value
Manages the fund manager’s day-to-day administration, reporting, accounting, investor servicing, compliance, and wider operating compliance, all in line with the fund manager’s regulatory obligations.
Up to 86% of U.S. fund managers raising capital in Europe outsource at least some of their operations to external providers.
Aztec Group is authorized to provide financial services in the jurisdictions in which it operates.
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