On 1 October the UK's Financial Conduct Authority (FCA) clarified its position that US managers with master-feeder structures would not be required to report on positions held in the master if only the feeder was marketed into the UK.
For many firms that have been deliberating over whether to actively market their funds in the UK or simply rely on reverse solicitation for new investors, this new guidance is very significant. In light of this development, ConceptOne believes US managers should revisit their strategy for capital raising as the burden with complying with AIFMD, at least as it relates to marketing in the UK, has been materially reduced.
Since most managers do not hold positions at the feeder level, the data required for Annex IV reporting will be de minimis, thereby making the exercise substantially easier and less costly.
Compliance with the AIFMD, namely, the filing of a simple Article 42 notification, minimal amending of PPM and audited financials and scaled down Annex IV reporting is now relatively inexpensive and can open the door to investor inflows.
As a result, US managers are well advised to consider forgoing reverse solicitation given its inherent risks (investor put rights and barriers to effective capital raising) and consider marketing their funds in the UK.
