Nine years since the adoption of the Alternative Investment Fund Managers Directive (the Directive), the European Commission (the Commission) earlier this week published an assessment of the Directive’s impact to date.  

The report does not contain any proposals to amend the Directive. Rather, it summarises feedback on the Directive from various stakeholders and identifies areas for further consideration, some of which are referred to below. Although no amendments are proposed now, it is quite possible that proposals may follow in due course.

• Distribution to retail investors: the report acknowledges that, as the Directive’s marketing passport can only be used by AIFMs to market to professional investors, cross-border distribution to semi-professional and retail investors is heavily restricted; without being explicit, the report hints that ongoing work being undertaken as part of the Commission’s broader focus on a Capital Markets Union could result in an improved ability to distribute AIFs to semi-professional/retail investors in the future.
• National Private Placement Regimes (NPPRs): the NPPR framework – the marketing regime currently used by AIFMs who cannot use the marketing passport – is acknowledged as being important and allowing EU investors to access global private markets. But the report also concludes that NPPRs create an "un-level playing field" between EU and non-EU AIFMs, by allowing non-EU AIFMs to market to EU investors without having to comply with AIFMD in full. Reading between the lines, this suggests a tightening of the NPPR framework may be on the cards – or even (as the Directive originally envisaged) its eventual abolition and replacement with a "third-country" marketing passport.
• Depositaries: the report flags that there is no depositary passport and, in a clear indication of the direction of travel, comments that this is "at odds with the spirit of the single market".
• Loan origination funds: the report notes the increase in non-bank lending, commenting that this "raises financial stability concerns" and mentions that the Commission has been asked by several stakeholders to reassess the case for setting common standards for loan origination funds. This does seem to be a signpost towards a potential increase in the regulation of managers pursuing direct lending and other similar strategies.
• Asset-stripping rules: the report concludes that Directive’s asset-stripping rules – applicable principally to private equity funds – are "not overtly burdensome", but a lack of available data means the Commission is not able to say whether they have actually added any value. Certainly, there is no indication that they will be removed or diluted any time soon.
• Sub-threshold AIFMs: the report acknowledges that sub-threshold AIFMs encounter significant barriers to marketing their funds, as a result of not being able to use the Directive’s marketing passport. Without explicitly endorsing them, the report refers to stakeholder suggestions calling for the removal of unnecessary charges (which, presumably, means NPPR fees charged by regulators) as a means of minimising these barriers and facilitating cross-border marketing. Any development along these lines would certainly be welcome.