As the private markets continue to mature as an asset class and represent a higher proportion of allocation models, there has been additional regulatory scrutiny on the private markets. The European Commission has deliberated changes for a post-Brexit Alternative Investment Fund Managers Directive (AIFMD) since 2021 and “aims to boost the EU economy by promoting investment across a range of assets.
Chronograph Co-Founder & CEO Charlie Tafoya commented to Funds Europe about what these potential changes mean for private market investors.
According to Charlie Tafoya, co-founder & CEO of Chronograph, which provides private equity analysis tools, the post-Brexit AIFMD rules further affirm private markets and alternative investments as a “connected and critical element” of the global economy.
This move comes when sovereign wealth funds, pension schemes, family offices and other limited partners increasingly direct more investments towards private markets, Tafoya highlights. “European funds can remain competitive globally, and European asset managers can seamlessly engage in diverse private markets, thanks to the AIFMD’s provisions.”
But while institutional investors – the ‘limited partners’ in a private markets fund – continue to demand higher quality, more granular information, the fund managers – or ‘general partners’ – sometimes struggle to meet these demands.
“Additional compliance burdens will force many funds and managers to revaluate their operating models, technology and business organisations,” says Tafoya.
Additionally, the AIFMD’s transparency and reporting requirements will result in further expectations of data granularity and transparency within Europe. Tafoya says: “This regulation makes it more critical for fund managers to have the right technology throughout the investment lifecycle.”
Read the full article on Funds Europe.
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