Preqin, London, New York and Singapore
The first draft of the AIFM Directive was presented by the European Commission in April 2009. Its purpose is to
subject private equity and hedge funds to greater scrutiny and to protect investors in these funds. The Directive
will form a regulatory framework for collective investment undertakings, other than those covered by UCITS,
and will apply to fund managers residing within the EU along with funds domiciled or marketed in the area.
The Commission estimates that 30% of hedge fund managers, managing almost 90% of the assets of EUdomiciled
hedge funds, and almost half of the managers of other non-UCITS funds will be affected by the
Directive. The legislation will also impact some alternative investment fund managers managing infrastructure,
real estate, commodity, investment trusts and non-UCITS retail funds.
Industry professionals had three main concerns when the first draft was presented. Firstly, the Directive stated
that portfolio companies would have to disclose commercially-sensitive information; secondly, it set high capital
adequacy requirements; and thirdly, the measure that caused the most anxiety, non-EU fund managers would
have to register with each individual European member state if they were to market to investors in the country.
Some issues proved to be less potentially harmful than initially anticipated. For example, portfolio companies
are not required to disclose more information than is already necessary in the majority of member states.
However, concern remained over fears that a European lock-in/lock-out would be created.