Asia alts managers voice regulatory concerns

Asian Investor | 21 February 2013
By Georgina Lee
Thomas Hugger
COO & CFO of Leopard Capital

A private equity COO fears rule tightening is too broad-brush and will inflate costs, while a fund-of-hedge-fund COO says clarity is needed over new reporting requirements.

Private equity and fund-of-hedge-fund managers in Asia point to growing fundraising difficulties outside the region amid a regulatory clampdown.

The alternative investment fund managers directive (AIFMD) comes into force in Europe as early as this June – reform that will reshape the way alt funds are marketed in the EU. No matter where they are domiciled, all non-Ucits funds are covered under the directive.

Thomas Hugger, COO for $57 million PE manager Leopard Capital, says having the same, broad-brushed regulatory principles governing private equity funds and hedge funds fails to take into account the customised nature of how PE sponsors put their money to work.

He notes that using a depository is a challenge for PE managers. Unlike hedge funds, PE sponsors do not always invest in a company’s equity. Instead, they may invest by providing mezzanine capital, convertibles, loans or other structured products and derivatives.