Private equity funds in the UK are moving offshore ahead of Europe-wide regulation that will come into force in 2013.
??We are seeing more private equity funds either moving offshore or building in the possibility to do so to avoid any aspects of bad regulation that may come out of the AIFMD [Alternative Investment Fund Managers Directive],? said Gregg Beechey, a partner in the financial markets group at SJ Berwin, the European law firm.
The directive ??will impose a raft of additional regulation on EU alternative investment fund managers, such as the requirement for a depositary to act as custodian of the funds?? assets and to monitor various activities of the manager,? he said.
Mr Beechey said the first requirement was ??essentially meaningless in the context of private equity? and the second would involve a duplication of existing rules.
Around half of private equity funds run by UK managers are already offshore, typically in the Channel Islands, according to research by Charles River Associates, carried out in 2009 for the Financial Services Authority to assess the impact of the AIFMD.
The European Securities and Markets Authority is currently combing through recent consultations on the directive and is expected to give feedback to the European Commission next month.
