The proposals, contained in Benjumea’s report on the European Commission’s review (72 page / 316KB PDF) of the AIFMD, include expanding the current definition of ‘professional investor’ to include those who commit a minimum of €100,000 and certify that they are aware of the risks of investing in an alternative investment fund (AIF).
Investment funds expert Claire Winrow of Pinsent Masons said the amendment, if passed, would enable AIFMs to market alternative investment funds to high-net worth investors on a cross-border basis. These individuals do not currently fall within the definition of professional investor.
“This would be hugely significant for AIFMs who have not been able to market AIFs on a cross-border basis under the AIFMD marketing passport or via the National Private Placement Regime (NPPR) to these investors to date,” she said.
“While certain jurisdictions, including Ireland, permit AIFs to be marketed to certain high net worth investors in their home jurisdiction, it has not been possible to market to these investors on a cross border basis by way of the AIFMD passport or NPPR. The widening of the definition of professional investors to include high-net worth investors would allow AIFMs to access large pools of capital which have been unavailable to them,” Winrow said.
The European Commission published its review of the AIFMD in late 2021, focusing on areas including loan origination, delegation and liquidity management and are designed to improve the functioning of the alternative investment funds market.
In her report, Benjumea welcomed the review, but made a number of proposals intended to enhance the cross-border functioning of the AIFM market, with improvements to cooperation between authorities while not increasing the burden on managers.
Members of the European Parliament sitting on the ECON committee will discuss Benjumea’s report in early June, and can table amendments to the proposal by 27 June. The final ECON vote on the changes is expected to take place in late September ahead of a full Parliament vote in October, opening the way for trilogue negotiations between the European Parliament, Commission and Council.