Knight Frank/Drooms Poll: 63% of Real Estate Investors Believe That the AIFM Directive Will Result in Fewer Fund Managers

01. July 2013

A poll conducted at a breakfast briefing hosted by Knight Frank, Berwin Leighton Paisner, and Drooms revealed that there is a lack of preparedness in the investment management industry ahead of the impending 22 July 2013 AIFMD implementation deadline. In addition, some fund management consolidation may be anticipated as a result of the Alternative Investment Fund Managers Directive (AIFMD).

The event at Knight Frank's headquarters on Baker Street in London was attended by over 50 property fund managers, private wealth managers, depositary banks, and private equity firms. Topics focused on the implications of the Directive on businesses and the course of action that should be taken in the coming months.

An audience poll conducted at the end of the event showed that:

  • 63 percent of attendees believe that there will be fewer fund managers as a result of the AIFMD
  • 17 percent of attendees have not yet taken any action preparing themselves for the AIFMD changes
  • 28 percent of attendees believe that the AIFMD is inadvertently encouraging the growth of an off-shore fund management industry
  • 49 percent of attendees believe that documentation, transparency, and reporting were of greatest concern ahead of July’s deadline

Nick Powlesland, head of European valuations at Knight Frank, said, "This Directive should lead to more investor confidence and better pan-European marketing and cross-border sales opportunities, but funds haven’t got long. The scope of the Directive is very wide ranging, applying not just to fund managers but many types of collective investment vehicles. There is a major focus on valuation policies and procedures and professional guarantees required from the valuer which clients need to address. They need to take heed and speak to well-informed advisors as quickly as possible.“

Howard Revens, UK managing director at Drooms, commented that the “22 July deadline is fast approaching, so there is no time to lose in preparing for AIFMD. Transparency and disclosure provisions will be coming into force at that point and so AIFM’s need to organise immediately. Our advice is to begin talking to administrators, depositories, investors, and auditors now to plan data collection. With our partners, Drooms® is ready to advise and help with the logistics, which will be important when combined with an efficient approach to the gathering, storage, preparation, and presentation of information in a controlled, secure, and accessible way. The penalties for non-compliance should focus minds.”

Poll results

Which of the areas discussed today do you feel is the most pressing?

Identifying the manager – 23.3%
Understanding the structure – 18.6%
Valuation of funds – 9.3%
Documentation, transparency and reporting – 48.89%

How prepared is your company for the AIFMD?

We’ve thought about it but taken no action – 17.1%
We are aware of which funds will fall under the AIFMD and who our AIFMs will be – 36.6%
We have allocated resource across a range of aspects – 46.39%

Is the EU inadvertently encouraging the growth of an off-shore fund management industry as a result of the AIFMD?

Yes – 27.9%
Possibly – 39.59%
No – 23.3%
I don’t know – 9.3%

Are you aware of the personal implications for you, as an individual, relating to responsibility, remuneration, and liability under the AIFMD?

Yes – 52.49%
No – 47.6%

How much is the AIFMD going to affect the investment management industry?

Greater number of fund managers – 16.3%
Fewer fund managers – 62.89%
No change at all – 11.6%
I don’t know – 9.3%