Luxembourg Funds Intelligence Briefing (22/02/2021)

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CSSF’s Marx calls for new effort to extend AIFMD passport to third-country managers, and other business-critical fund industry news.

Luxembourg Funds Intelligence Briefing
22nd February 2021

CSSF CEO Claude Marx has reopened the debate on the once-planned extension of the Alternative Investment Fund Managers Directive passport to asset managers outside the EU, saying the expansion of the regime should go ahead, but a less complex rulebook for authorisation of third-country managers and funds is needed. Until a decision is reached, he says, there should be no move to call time on national private placement regimes. The extension of AIFMD passporting to non-EU managers and funds was envisaged under the original directive, and ESMA recommended that it should begin with managers and funds from Canada, Guernsey, Japan, Jersey and Switzerland, along with funds only from Hong Kong and Singapore. However, discussions were shelved after the UK, home to one of the world’s largest alternative fund management sectors, voted to leave the EU in June 2016.

— Simon Gray, Editor in Chief

Asset Management
Asset managers should be wary of illiquid assets despite pressure on returns: Union Investment

The low-interest-rate environment should not push asset managers to invest in illiquid assets, argues Christian Kopf, head of fixed income and currency at Germany’s Union Investment. Noting that higher yield also implies higher risk, Kopf says it is often possible to achieve the same yield by investing in liquid assets. He argues that client needs should be the main priority in any consideration of illiquid assets, as managers have a duty to maintain genuine liquidity as well as expected returns, but expects illiquid assets to be an even greater investment focus this year as pressure for returns grows.

Best source: Citywire

Fund Services
Apex Group completes acquisition of FundRock Management Company

International fund service provider Apex Group has completed the acquisition of FundRock Management Company and FundRock Partners, after receiving regulatory approval. Apex says the acquisition strengthens its management company offering and expands its overall range of services, follows the group’s acquisition of another Luxembourg-based ManCo, LRI, and that it will keep the FundRock brand. The group now has a total of $1trn in assets to which it provides administration, custody, depositary and management company services.

Best source: Delano

Luxempart takes stake in investment platform iM Global Partner

Luxempart and IK Investment Partner have acquired a 20% stake in iM Global Partner, a France-based network connecting asset managers, financial institutions, advisers and investors, from Eurazeo for €70m. Luxempart and IK Investment Partners will join Eurazeo and Amundi in actively supporting iM Global Partner, which has 11 locations in Europe and the US and $19bn of assets under management at the end of last year.

Best source: Luxembourg Times (subscription required)
See also: RiskAssur (subscription required, in French)
See also: Citywire

CSSF’s Claude Marx calls for new initiative to extend AIFMD passport to non-EU managers and funds

CSSF CEO Claude Marx has called for a rethink of financial sector regulation to reduce unnecessary complexity and administrative burdens. He says there is no evidence of a need to change the Alternative Investment Fund Managers Directive rules on cross-border delegation of asset management functions and substance, which could affect the provision of asset management from the UK, but says the EU should devise a less complex formula for extending the AIFMD passport to non-EU alternative managers and funds. Marx also sees scope to reduce reporting requirements that bring little value for supervisors, and calls for greater adoption of risk-based regulation, as well as efforts to find less burdensome ways of accessing key information.

Best source: Paperjam

UK regulator says Woodford will need authorisation to resume investment management business

The UK’s Financial Conduct Authority says Neil Woodford will need the regulator’s authorisation before returning to investment management as the regulator continues to investigate the collapse of his Woodford Equity Income Fund in 2019. FCA director of enforcement Mark Steward says Woodford, who has announced a new venture based in Jersey, would need permission to engage in a regulated activity in the UK. The FCA, which is in contact with the Jersey Financial Services Commission, would have to assess the firm’s business model and the fitness of its management, Steward says.

Best source: The Guardian

Facts and Figures
Specialised PSFs see profit fall by more than two-thirds in 2020: CSSF

The aggregate net profit of specialised financial sector professional entities fell to €95.7m in 2020, down from €290.1m the previous year despite turnover remaining stable, according to the CSSF. Specialised PSFs, which cover 10 business lines including family offices, domiciliation agents, management companies and depositaries, reported revenues of €5.779bn last year, down slightly from €5.863bn in 2019, while the number of employees in the sector increased from 5,183 to 5,476.

Best source: Paperjam (in French)

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