Finance: UK money managers are keen to learn about Luxembourg’s alternative investment fund structures, writes Jim Kent.
Wednesday saw records broken at the 10th London ALFI roadshow. Hosted by Tom Seale, CEO of European Fund Administration, the event commenced with him observing that the first roadshow 10 years ago had 100 attendees, and has now grown to 650, which is a new record for an international ALFI event.
The relationship between London in its capacity as world leader of asset management and Luxembourg as leader of fund distribution is developing despite the challenging economic conditions in Europe over the last few years.
The economic outlook in Europe is improving and specifically within Luxembourg where GDP grew 2% last year and is predicted to grow by a further 3% this year.
Luxembourg’s finance minister, Pierre Gramegna, announced that he had received a green light for the budget in 2014 from Brussels, which will sustain Luxembourg’s triple A outlook. He also announced at the conference that Europe is back on the radar for both American and Asian investors.
It could be suggested that the increase in the number of attendees is simply reflective of Luxembourg service providers sending more people especially from the 195 UCITS management companies (“mancos”), many of which are in the midst of applying for AIFM status. However, upon a show of hands at the event the vast majority of attendees were from London for whom getting the latest updates on the AIFMD was their priority.
Winners and losers
Some within the industry have posed the question, “who will be the real winners and losers from this wave of regulations?”
Marc Saluzzi, the chairman of ALFI, responded by commenting: “It’s far too early to say. Revolutions within the industry will not happen within one year. The measure of our success is twofold. All UCITS mancos in Luxembourg are asking for the AIFM licence, indicating that they are happy to increase the size of their business in Luxembourg. We are also attracting new players, who were not already regulated.”
Asset managers continue to choose between a third party manco or creating their own. Some had suggested that on a purely economic basis funds would need to have in excess of €2bn assets under management to justify the cost of creating their own.
Saluzzi disagreed: “It’s not a question of number but ambition. If you believe your market is Europe and you want to sell on a cross border basis, you will want to create your own. The tipping point [in terms of the size of assets under management] is influenced by the different asset classes and different managers have different goals. If they [the fund managers] are ambitious even if they do not have €2bn they will still create their own manco.”
Jim Kent is head of Luxembourg-based business development and communications consultancy The Insiders. His firm did not represent any clients during the ALFI London event.
