Scott Carnachan recently featured in Ignites Asia, a Financial Times publication, discussing opportunities for an alternative funds passport, or AIFMD in Hong Kong.
AIFMD is a European financial directive, first published in 2011, that aims to bring the management, administration and marketing of alternative investment funds (AIFs) - including hedge fund, private equity fund and real estate fund managers – under common oversight across numerous jurisdictions.
In July, the European Securities and Markets Authority (ESMA) released its assessment of extending AIFMD to Hong Kong and Singapore but stopped short of granting a positive recommendation to either jurisdiction, citing concerns related to competition, regulatory issues and a lack of sufficient assessable evidence.
Scott commented that given the Hong Kong government’s public pronouncements on growing the local asset management industry, being recognised for AIFMD purposes would obviously be a plus and is something it will be working towards.
Local regulations are not going to match up directly with those in the EU; they will require work, and discussion will be ongoing at an intergovernmental level, he adds.
However, Hong Kong and Singapore AIFMs are not raising a lot of money in Europe, says Scott. If they are raising money outside of Asia, they are doing so primarily in the U.S. and the U.K. via the private placement regime.
If you were to ask a locally based AIFM if they need Hong Kong to be recognised or if they need to be AIFMD compliant, at the moment they would probably say no, he says. Although that might change as AIFMD expands and develops, he concluded.