INDOS Financial, the only independent AIFMD depositary that has applied to the FCA for authorization, has announced provisional contracts with its first clients. On the basis of its formal FCA authorization now anticipated to take effect in early December, INDOS has already submitted proposals to over 40 alternative investment managers representing some 70 funds with in excess of $15bn of assets. A number of these proposals are starting to bear fruit.
“Managers are now focussed on AIFMD.” says Bill Prew, INDOS Financial CEO. “The FCA’s 22nd January deadline for applications, now only two months’ away, is concentrating their minds on the steps they need to take to be authorized under the AIFMD – particularly action required in order to continue to market their offshore funds to EU investors. Managers and investors alike see the benefits of a flexible, independent depositary-lite solution.”
While the majority of managers of non-EU funds intend to take full advantage of the transitional period to 22nd July 2014, by far the majority of UK managers are expected to submit their applications for authorization to the FCA by 22nd January. Other regulators such as in Luxembourg and Ireland have followed the FCA’s lead and imposed Q1 deadlines for submission of applications.
Most managers are expected to seek to comply with the depositary-lite requirements of the Directive (which apply where managers want to market non-EU funds to EU investors through private placement) but depositaries are, in many cases, not operationally ready to take on business and proposed operating models and contractual terms remain vague.
“Despite the impending deadlines, some aspects of the implementation of the AIFMD remain unclear,” continues Prew. “In particular, many managers are concerned about how the Directive’s marketing rules will play out in practice and whether reverse solicitation is a viable business strategy. As a result, managers are looking for credible depositary-lite solutions but many are frustrated with a lack of preparedness on the part of firms to provide such a solution”.
INDOS has also received enquiries from a number of US managers seeking to market their funds into Germany and Denmark. These countries, amongst others, have imposed a depositary-lite requirement in addition to Article 42 of the AIFMD.