FAQs on pre-marketing funds in Europe

The path you choose to raising capital in Europe has a major impact on your pre-marketing and marketing activities. In this article, we’ll answer some frequently asked questions about pre-marketing funds in Europe. 

What is pre-marketing?

Pre-marketing is the period before a fund is officially launched, when GPs test the waters and gauge investor appetite for the proposed strategy. The fund is yet to be incorporated, and agreements on domiciliation and administration have not been signed. Investors can’t commit capital at this point, and funds can’t ask them to. It’s important to distinguish between pre-marketing and marketing in the EU, as they are governed by different rules.

What can pre-marketing involve (and what is forbidden)?

Cross-border fund distribution directive (CBFD) rules determine which pre-marketing activities are and are not allowed. Pre-marketing activities can include the provision of teasers, presentations and pitch books. According to CBFD, pre-marketing activities must not include the provision of any of the following to investors:

• Sufficient information to allow investors to subscribe
• Subscription forms or similar documents, whether in draft or final form
• Constitutional or offering documents in final form in relation to an AIF that has not yet been established

In addition, ESMA guidelines must be followed when creating pre-marketing materials.  ESMA creates expectations around the clarity, fairness and accuracy of content. 

Are pre-marketing rules consistent across the EU?

Unfortunately not. In some jurisdictions, pre-marketing activities may be restricted to qualified investors or professional clients, and certain disclosures may need to be made to ensure that potential investors understand the risks associated with the fund.

What’s the difference between pre-marketing and brand building?

You can brand build at any time, regardless of your regulatory status. That can mean discussing the quality of your team, the performance of previous funds and the success of your business generally. It cannot include the details of the fund that you intend to launch.

In pre-marketing, you can discuss those details, subject to the restrictions listed above. But once the data room is open, you will need to file a pre-marketing notification in the jurisdictions you intend to target. Your third-party AIFM can do this for you. Once filed, you can officially gauge appetite before moving into full marketing mode.

Can you pre-market without an AIFM?

That depends on your regulatory status or whether you employ another adequately regulated service provider, such as a MiFID-regulated placement agent. 

Therefore, as with all EU alternative fund laws, working without an AIFM is likely to make things trickier. CBFD rules only officially apply to EU AIFMs. Non-EU managers will need to understand and apply pre-marketing rules on a country-by-country basis under the private placement scheme (see table 1 below). 

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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 service offering from fund set up and administration through 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.