Five things to remember about raising capital in Europe

In a competitive market, many alternative fund managers in the US and elsewhere are looking to Europe to raise capital. There are very good reasons to do so. Most importantly, European investors have large amounts of capital to deploy.

However, marketing alternative investment funds in Europe is not straightforward. It requires knowledge, support and a well-considered strategy. In this guide, we’ve tried to cut through the complexity and focus on the most important factors for overseas managers to be aware of. Here are five key takeaways.

1. There’s no one-size-fits-all

How you choose to raise capital will depend on your ambitions, prior experience in Europe, proposed investor base and fund strategy, and more. There is no one-size-fits-all approach to Europe.

2. Don’t let the maze of regulations put you off

European fund regulations are complex and continually evolving. Their application can be frustratingly inconsistent across the continent. But with the right help on board, you can confidently navigate the maze. Having a grasp of concepts like AIFMD, NPPR and CBFD is a good start. After that, good third-party providers can help you navigate a lot of the more esoteric rules and conventions.

3. There are strict rules surrounding pre-marketing and marketing

European regulators became very protective of investors after the financial crisis in 2008/9. The result is that pre-marketing and marketing activities are more heavily regulated than many overseas managers are used to.

4. European investors are keen on ESG

Even if you’re not marketing your fund as an ESG fund, you still need to be aware of relevant sustainability standards and other ESG considerations. Being transparent around ESG is often a regulatory necessity, and it’s also good practice to attract the deepest pool of European investors.

5. Consider your fund vehicle carefully

Repurposing a Delaware or Cayman fund is the most straightforward option, but it has significant limitations as far as raising capital in Europe is concerned. Offshore feeder funds can simplify tax considerations for European investors, but marketing will have to be carried out on a country-by-country basis. Full AIFMD compliance, through an EU-based AIF and AIFM, gives funds access to the European marketing passport, but adds cost and administrative complexity.

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Ocorian Fund Services

At Ocorian we have extensive experience supporting US fund managers with setting up alternative investment funds in Europe and administering them throughout their lifecycle.

We have teams across seven jurisdictions in Europe that provide a high-touch, technology-first approach combined with local expertise.

We offer a full range of services, from fund set up and administration to fund accounting, AIFM, investor services, and depositary.

• Fast and efficient set up of funds in Europe
• Teams based in the UK, Jersey, Guernsey, Ireland, The Netherlands and Luxembourg
• AIFM in Ireland and Luxembourg
• Expertise in administering vehicles parallel to existing US or Cayman structures
• Jurisdiction agnostic
• Full service provider

Our business development team in the US will be happy to discuss your European requirements and guide you through the process. Contact us for more information.