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Marketing: the three EU marketing channels explained

Marketing: the three EU marketing channels explained

03 June, 2024
Global Funds Fund Administration Fund Accounting AIFM

Pre-marketing happens before the fund is launched. When it’s up and running, managers enter the full marketing phase. There are three potential marketing channels in the EU.

 

Private placement (NPPR)

The National Private Placement Regime (NPPR) allows AIFs and managers based outside the EU to market to individual member states separately. Each state has its own private placement rules, and these range in complexity. Some are relatively simple, while others are prohibitively burdensome. A few states don’t allow private placement at all. Nevertheless, it’s the only path available for managers who don’t want to create a European entity and/or employ an EU-based AIFM, and is often the strategy of choice for US managers who are limiting capital raising to a few light touch jurisdictions.

 

Reverse solicitation

Reverse solicitation is when an investor approaches a fund. When this happens, other rules around marketing don’t apply. However, funds have to be able to show that the reverse solicitation is genuine, and not the direct result of (pre-)marketing or advertising. This is difficult to do, and as a general rule fund managers should not rely on reverse solicitation as a marketing strategy.

 

AIFMD passport

Funds with access to an AIFM’s marketing passport are registered in their home EU jurisdiction and are then free to market across the EU and European Economic Area (EEA) without worrying about local private placement schemes. This makes marketing straightforward, but only funds that fully meet AIFMD requirements can access the scheme. To obtain access to such marketing passport, a fund manager must have a European-domiciled AIF and a European-domiciled AIFM.

 

Private placement pre-marketing and marketing rules in five key jurisdictions

 

Why do so many US managers choose NPPR?

The most popular marketing path for US managers is currently NPPR, the private placement scheme. This makes sense. In a typical scenario, a manager might receive a reverse solicitation request from a European LP, suggesting an appetite from European investors for their investment strategy.

At this point, they don’t want to go to the trouble and expense of obtaining a full AIFMD passport because they’re not sure how big that appetite is. Instead, they market a fund in two or three countries with light touch private placement regimes and promising investor bases. They only move onto full AIFMD accreditation (and EU passporting) as their European interests mature, and European investors become integral to future plans.  

 

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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.