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North American fund managers to focus on passporting for European fund raising, study finds

  • June 06 2024
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North American fund managers to focus on passporting for European fund raising, study finds

By Newsdesk
June 06 2024

North American fund managers plan to create European funds and use passporting to raise funds in Europe, ahead of reverse solicitation and National Private Placement Regimes (NPPR), according to a new study by Ocorian, a global leader in fund administration, capital markets, corporate and fiduciary services.

The research, which surveyed private equity, private debt, real estate, venture capital and infrastructure fund management executives in the US and Canada responsible for $1.591 trillion in assets under management, found that 41% selected passporting as their preferred method for fund raising in Europe going forward, compared to 25% for both NPPR and reverse solicitation.

Over the next 18 months, 61% of respondents said they will use placement agents to raise capital in Europe, with nearly half (49%) also using direct sales teams and 47% relying on third party distributors. Around 28% will use private banks.

The study found that 63% have used reverse solicitation in the past to raise funds in Europe, while 40% have looked to passporting and 36% to NPPR, with one in eight (12%) using all three methods.

When asked about the attractiveness of passporting, 56% of respondents chose market perception and the ability to reach more investors in more countries among their top three reasons, while 44% ranked efficiency as a key attribute.

For NPPR, 70% cited cost effectiveness and 64% flexibility as being among the top two reasons for using it, while 69% said the amount of capital they have raised from European investors through reverse solicitation has increased in the past two years.

The research also found that 82% of North American fund managers are likely to increase pre-marketing activity in Europe over the next two years, with 73% saying it is more attractive to pre-market in Europe due to the lower initial investment before fully setting up.

However, the study found varying levels of understanding of pre-marketing changes made in Europe in June 2021, which included specific changes to the cross-border distribution of collective investment funds under AIFMD and UCITS Directives in the EU. Just 38% said they understood the changes very well, while 58% said they understood them quite well.

Paul Spendiff, Head of Business Development - Fund Services at Ocorian, said: "There is a strong appetite among North American fund managers to raise capital in Europe and a growing debate about the best methods for doing so."

He added that Ocorian has supported a number of managers looking to test the European appetite for their strategy and proposed product via pre-marketing, which he described as a cost-effective way of deciding whether to launch an EU authorised AIF and use its passport to undertake distribution activities across the region.

North American fund managers to focus on passporting for European fund raising, study finds

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  • June 06 2024
  • Share

North American fund managers plan to create European funds and use passporting to raise funds in Europe, ahead of reverse solicitation and National Private Placement Regimes (NPPR), according to a new study by Ocorian, a global leader in fund administration, capital markets, corporate and fiduciary services.

The research, which surveyed private equity, private debt, real estate, venture capital and infrastructure fund management executives in the US and Canada responsible for $1.591 trillion in assets under management, found that 41% selected passporting as their preferred method for fund raising in Europe going forward, compared to 25% for both NPPR and reverse solicitation.

Over the next 18 months, 61% of respondents said they will use placement agents to raise capital in Europe, with nearly half (49%) also using direct sales teams and 47% relying on third party distributors. Around 28% will use private banks.

The study found that 63% have used reverse solicitation in the past to raise funds in Europe, while 40% have looked to passporting and 36% to NPPR, with one in eight (12%) using all three methods.

When asked about the attractiveness of passporting, 56% of respondents chose market perception and the ability to reach more investors in more countries among their top three reasons, while 44% ranked efficiency as a key attribute.

For NPPR, 70% cited cost effectiveness and 64% flexibility as being among the top two reasons for using it, while 69% said the amount of capital they have raised from European investors through reverse solicitation has increased in the past two years.

The research also found that 82% of North American fund managers are likely to increase pre-marketing activity in Europe over the next two years, with 73% saying it is more attractive to pre-market in Europe due to the lower initial investment before fully setting up.

However, the study found varying levels of understanding of pre-marketing changes made in Europe in June 2021, which included specific changes to the cross-border distribution of collective investment funds under AIFMD and UCITS Directives in the EU. Just 38% said they understood the changes very well, while 58% said they understood them quite well.

Paul Spendiff, Head of Business Development - Fund Services at Ocorian, said: "There is a strong appetite among North American fund managers to raise capital in Europe and a growing debate about the best methods for doing so."

He added that Ocorian has supported a number of managers looking to test the European appetite for their strategy and proposed product via pre-marketing, which he described as a cost-effective way of deciding whether to launch an EU authorised AIF and use its passport to undertake distribution activities across the region.

North American fund managers to focus on passporting for European fund raising, study finds

North American fund managers plan to create European funds and use passporting to raise funds in Europe, ahead of reverse solicitation and National Private Placement Regimes (NPPR), according to a new study by Ocorian, a global leader in fund administration, capital markets, corporate and fiduciary services.

The research, which surveyed private equity, private debt, real estate, venture capital and infrastructure fund management executives in the US and Canada responsible for $1.591 trillion in assets under management, found that 41% selected passporting as their preferred method for fund raising in Europe going forward, compared to 25% for both NPPR and reverse solicitation.

Over the next 18 months, 61% of respondents said they will use placement agents to raise capital in Europe, with nearly half (49%) also using direct sales teams and 47% relying on third party distributors. Around 28% will use private banks.

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The study found that 63% have used reverse solicitation in the past to raise funds in Europe, while 40% have looked to passporting and 36% to NPPR, with one in eight (12%) using all three methods.

North American fund managers to focus on passporting for European fund raising, study finds

When asked about the attractiveness of passporting, 56% of respondents chose market perception and the ability to reach more investors in more countries among their top three reasons, while 44% ranked efficiency as a key attribute.

For NPPR, 70% cited cost effectiveness and 64% flexibility as being among the top two reasons for using it, while 69% said the amount of capital they have raised from European investors through reverse solicitation has increased in the past two years.

The research also found that 82% of North American fund managers are likely to increase pre-marketing activity in Europe over the next two years, with 73% saying it is more attractive to pre-market in Europe due to the lower initial investment before fully setting up.

However, the study found varying levels of understanding of pre-marketing changes made in Europe in June 2021, which included specific changes to the cross-border distribution of collective investment funds under AIFMD and UCITS Directives in the EU. Just 38% said they understood the changes very well, while 58% said they understood them quite well.

Paul Spendiff, Head of Business Development - Fund Services at Ocorian, said: "There is a strong appetite among North American fund managers to raise capital in Europe and a growing debate about the best methods for doing so."

He added that Ocorian has supported a number of managers looking to test the European appetite for their strategy and proposed product via pre-marketing, which he described as a cost-effective way of deciding whether to launch an EU authorised AIF and use its passport to undertake distribution activities across the region.

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