In advance of the event, Delano spoke with Catherine Martougin, a partner with Baker & McKenzie in Luxembourg. She speaks on the “It’s all about the investor” panel, Wednesday at 11:35am.
Aaron Grunwald: What do you want the audience to get most from the investor panel?
Catherine Martougin: Our panel will discuss the current investors’ expectations. Legal and regulatory evolutions have an impact on the structuring of funds, which first of all reflects the investors’ desires: for more or less risk in the investment strategy and then higher or lower return expectations, or, for instance, for active or passive role when it comes to the management of the investment vehicle. Dedicated vehicles or the setup of parallel funds are as important as blind pool funds in today’s market.
What regulation is most under-appreciated by fund managers?
The most recent one in most cases. Reforms are typically not appreciated at the time of their implementation, as adaptation comes with a cost. However, after the initial phase, regulatory requirements generally match investors’ demand for transparency and professionalism and end up being accepted. The main issue is the accumulation of regulations which are to cope with, notably to determine whether the fund manager is actually falling within its scope and to which extent it has to become compliant. Mastering fragmented regulation is the highest challenge.
What is a question that investors in real estate or private equity funds should be asking portfolio managers, but aren’t?
In the private equity and real estate fund industry, most investors are institutional or professional investors. They conduct due diligence on funds and their managers and are offered opportunities to raise many questions during that process. They will typically request amendments to the fund documentation or the entering into side letters to ensure that their understanding of their rights shall be implemented in the fund documentation in an accurate manner. Even if capital raisings for alternative investment strategies have now become easier, investors retain their strong bargaining power.
Aside from your own talk at the ALFI event, which speech or panel are you most looking forward to hearing, and why?
The recent finalisation of the deal on Brexit announced [last] week is certainly a hot topic for the Luxembourg fund industry. It would be interesting to discuss with the conference participants about how fund managers are coping with the situation, bearing in mind that the deal still needs to be signed off by parliaments and there are still implementation details to be analysed.