Eight out of 10 (80%) institutional investors expect strong growth in non-UK fund managers seeking to list funds overseas on the London Stock Exchange (LSE) over the next 18 months, according to new research* from diversified financial services group, Ocorian.
The study, by the leading provider of fund administration services, found that institutional investors predict most of this growth in funds listing will come from Europe, closely followed by North America. The Middle East, Asia and Africa were ranked in third, fourth and fifth place, respectively.
London Stock Exchange figures** show more than 450 investment funds that total over $320bn in market capitalisation and invest in more than 70 subsectors, providing access to a range of asset classes and geographies, are currently listed. They include funds in traditional sectors, such as equities, and in alternative asset classes, including royalties, renewable infrastructure, property, and private equity.
According to the research with US and UK institutional investors, the top reason behind this expected growth in listed funds is overseas fund managers’ wish to diversify their investor base. The research shows fund managers are also increasingly attracted by the growing size of the market and the fact it is becoming easier to list funds.
However, the results of the study among investors focusing on real estate, private debt and infrastructure reveal overseas fund managers are likely to face challenges along the way. Institutional investors predict incorporating ESG principles into their operations and investment decisions will be the most difficult challenge facing overseas fund managers launching on the LSE. This is very closely followed by the costs involved in listing, followed by compliance with regulatory and jurisdictional frameworks which was predicted as the third most difficult challenge to overcome.
|RANK||REGION WITH HIGHEST EXPECTED GROWTH IN LISTINGS||REASON TO LIST||MOST DIFFICULT CHALLENGE|
|1||Europe||Diversify investor base||Incorporating ESG principles into their operations and investment decisions|
|2||North America||Growing size of market||Costs|
|3||Middle East||Becoming easier to list funds||Compliance with regulatory/jurisdictional framework|
|4||Asia||Reputation||Unfamiliarity of jurisdiction|
|5||Africa||Stable regulatory environment||Volatility|
Gerry Warwick, Director of Fund Services in UK and Ireland at Ocorian said: “There is a considerable amount of pent-up demand in the market with companies waiting to list until conditions stabilise. There is increasing awareness of the benefits of listing funds in the UK worldwide but, fund managers wishing to successfully list must be aware of the challenges they could encounter and plan ahead to put in place strategies to address these.”
Download report 'The outlook for alternative asset fund listings in 2022-23'
*Ocorian commissioned independent research company PureProfile to interview 102 senior executives and fund managers at financial institutions focused on investing in private debt, private equity, real estate and infrastructure in the US and the UK during June 2022