France has awarded 25 licences under the Alternative Investment Fund Managers Directive (AIFMD), more approvals than the UK, Luxembourg and Ireland combined, and is signalling its ambition to compete with more established countries for cross-border funds business.
According to October numbers from the Paris Fund Industry, a business forum, Luxembourg and Ireland had each issued licences to three alternative investment fund managers, and the UK to 11.
Luxembourg and Ireland are the main centres for fund managers who want international, rather than just domestic, distribution for their traditional funds governed by the older Ucits regulations. The AIFMD, which was implemented in July, applies to funds with alternative investment strategies.
Paul-Henri de La Porte du Theil, chairman of the Association Française de la Gestion Financière (AFG), a trade body and founding member of the Paris Fund Industry, says France is ready to compete internationally for AIFMD business.
Although France is currently leading the way in terms of issuing licenses under the AIFMD, there has been a broader trend of funds redomiciling from France to Luxembourg and Dublin.
Many foreign investors think “France is France, the UK is the UK, and Luxembourg is Europe”, de La Porte du Theil says.
Luxembourg has managed to create an impression that “when you buy a Luxembourg fund, you buy European Ucits”, he adds.
“In France, asset managers try to explain to their clients that their product is the same [as a Luxembourg Ucits fund] but that takes ten minutes at the beginning of a meeting and those are ten lost minutes.”
The AFG chairman says another 25 licenses are being processed and predicts a total of 200 asset managers will be licenced in France by the end of next year.
He says many asset managers in France were already prepared for the AIFMD because existing French regulations are very similar.
Although France is currently leading the way in terms of AIFMD approvals, there has been a broader trend for funds from outside of Europe to re-domicile in Luxembourg or Dublin in order to benefit from the AIFMD “brand”.
The Association of the Luxembourg Fund Industry could not be reached for comment, but it is understood that Luxembourg’s latest figure for AIFMD approvals is eight, with 68 applications received.
On November 11, the Irish Funds Industry Association said four managers had received authorisation in Ireland and that 100 application were pending.
The 25 firms approved in France are not named, but in September, Seven Capital Management announced it had received AIFMD approval from Paris.
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