The $2 trillion capital under management in Europe is predicted to double by 2027. That capital may be accessible to Asia-Pacific-based GPs right now, given the right strategies. Fundraising is always an important concern for GPs, and it has been a particularly challenging environment over the past two to three years due to COVID-19 restrictions as well as economic, social and political concerns. The Asia-Pacific region faced more restrictive pandemic measures than other regions, and many managers are looking outside of the region to expand their fundraising activities.
Europe can be an intimidating place to start fundraising, given all of the regulatory requirements. Many Asian managers find themselves unprepared for the legal of legal compliance and tax complexity of Europe. What APAC managers may not realize, however, is how similar some European fund structures are to the fund structures those managers already use. Luxembourg in particular is a popular structure for institutional investors in Europe, and it is similar in many ways to a Delaware or Cayman structure. Ireland and the UK have also introduced new structures intended to attract more GPs.
In theory, choosing a European fund structure that complies with AIFMD should mean that the fund would be compliant in every jurisdiction. In reality, some countries have different eligibility requirements for sub-professional investors. This might include retail investors and sophisticated investors who don’t qualify as professional investors. Private credit managers should consider that as they balance the time and cost requirements for their fund structure of choice.