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North American fund managers looking to Europe to broaden investor base

North American fund managers are increasingly looking to raise funds in Europe as they seek to broaden their investor base, according to new research from Ocorian, a specialist in fund administration, capital markets, corporate, private client and regulatory services.

Ocorian surveyed private equity, private debt, real estate, venture capital and infrastructure fund management executives in the US and Canada responsible for $1.591tn AUM. The survey found that 83% already raise capital in Europe, while more than a third (35%) of those who do not are planning to start within the next 12 to 24 months.

Around 61% say the growing recognition among North American fund managers of the benefits of broadening their investor base is among the top three reasons for increased capital raising in Europe over the next two years, while more than half (53%) say the high level of investment opportunities in North America are attracting European investors.

Around half questioned (48%) say there is a preference for US managed products compared with European, while 43% say the growing levels of dry powder at European institutional investors is among the top three reasons likely to boost capital raising in Europe.

Ocorian’s research questioned fund managers on what would prevent increased capital raising in Europe and found 62% as seeing the cost of entry against market upside as one of the top three reasons that could hit capital raising, while 49% cited problems recruiting people to lead capital raising in Europe in their top three reasons.

Other issues identified include the attractiveness of their strategy to European investors, cited by 46%, with 42% citing difficulties distributing cross-border, and 40% challenges with choosing the right jurisdiction.

Ocorian’s study found one in five (19%) fund managers questioned have been raising capital in Europe for five years or more while 31% have started doing so within the last two to three years.

Currently 65% of investors say up to 25% of their capital raising is from Europe and around a quarter (26%) say 25% or more of their capital raising is from European investors. In two years’ time 63% estimate around up to 25% of their capital raising will be from Europe and a third (33%) say 25% or more of their capital raising will be from European investors.

Fund managers questioned picked renewable energy and real estate the most among the top five asset classes they expect to see the biggest increase in European fundraising over the next 12 months.

Paul Spendiff, Head of Business Development – Fund Services, at Ocorian, said: “Many alternative fund managers from North America have been active in Europe for some time but the research shows that now they are increasingly looking to expand their capital raising and broaden their investor base in the region.

“There is also a strong belief amongst managers based there that European investors are looking to North America for more attractive investment opportunities than are available domestically and that they have substantial levels of dry powder to invest.”

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