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Regulation is biggest challenge to capital raising, say alternative fund managers

Regulation is biggest challenge to capital raising, say alternative fund managers

13 July, 2023
Funds AIFM

Regulatory environment biggest challenge to fund raising

The current regulatory environment is the biggest challenge facing successful fund raising for alternative asset class funds, according to new research* from Ocorian, a specialist provider of alternative fund services and global leader in entity administration, fiduciary and compliance solutions.

Its study with alternative fund managers across the UK, US and Europe found that issues around reporting was ranked as the second biggest challenge to successful fund raising. These findings come as the industry faces global regulatory burdens and impending regulatory changes, as well as increased scrutiny from regulators over sustainability practices and reporting.

Alternative fund managers’ liquidity profile and the availability of assets were listed third and fourth ranked challenges respectively, followed by challenges facing alternative asset managers posed by the current economic environment.

Fund managers most likely to use private placement for capital fund raising over the next 18 months 

The research from Ocorian, which manages over 15,000 structures on behalf of 6,000+ clients globally, shows that despite these challenges, alternative fund managers have preferred methods of raising capital. Amongst those who are planning to raise capital for funds, private placement is ranked overall as the most important method and more than eight in ten (83%) are planning to use it in the next 18 months.

Alternative investment fund (AIF) marketing is ranked as the second most important method of raising capital for funds and almost half (47%) will use in the next 18 months. However, while using a broker is listed as the third most important method, just over a third (35%) of alternative asset managers state they will enlist the expertise of a broker to raise capital for funds in the next 18 months.

Most important method to raise capital for funds listed by alternative fund managers planning to raise capital for funds (listed in order of importance)

Percentage of alternative fund managers who will use these methods to raise capital for funds in the next 18 months

1. Private placement

Private placement (83%)

2. AIF marketing

AIF marketing (47%)

3. Broker

Agent driven (46%)

4. Agent driven

Platform driven (38%)

5. Platform driven

Brokers (35%)

6. Seed investment / cornerstone driven

Seed investment / cornerstone driven (4%)

Paul Spendiff, Head of Business Development, Global Funds at Ocorian, said: “Despite the ongoing tumultuous economic conditions and market volatility, our research shows that the biggest challenges facing alternative fund managers when it comes to fund raising is actually the regulatory environment and issues around reporting. The impact of global reporting burdens, coupled with an evolving regulatory environment, means that alternative fund managers are now facing unprecedented challenges and it’s never been more important to partner with firms that can provide the right assistance and expertise to assist managers to navigate these.”

About Ocorian Fund Services

Ocorian’s fund services team delivers operational excellence across fund administration, AIFM, depositary and accounting services to the world’s largest financial institutions along with dynamic start-up fund managers and boutique houses. It’s team of over 300 funds specialists work across all major asset classes of alternative investment funds such as private equity, real estate, infrastructure, debt and venture capital, whilst its specialist Islamic Finance team is a leading provider of Sharia-compliant investment structures.

*Ocorian commissioned independent research company PureProfile to interview 100 alternative fund managers across real estate, private debt, private equity and infrastructure, residing across the UK, US, France, Germany, Netherlands, Sweden, Switzerland, Finland and Norway during April 2023.

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