The results are in!
Yesterday, the first UK December general election since 1923 saw a landslide win for the Conservatives with 364 seats and a 43.6% share of the votes. The Prime Minister, Boris Johnson, has made no secret about the fact he intends to “get Brexit done” and yesterday in his victory speech reiterated the force of that intention “we will get Brexit done on time by the 31st of January, no ifs, no buts, no maybes.”
So, who will benefit from Brexit? In the investment management space, it is irrefutably the ManCo – a vehicle that has been quietly establishing itself as a valuable vehicle for fund managers, and now gains further significance as mangers look to maintain their ability to market across the European Union.
First thing’s first. What is a ManCo?
ManCo is short for Management Company. We can confidently link their origins to UCITS, their move to the mainstream to AIFMD, and their subsequent rise to the top to the ever-changing competitive fund landscape. It is generally a European concept as a result but due to the cross-jurisdictional nature of the asset management space, their relevance and value is now expanding.
Since the 2008 financial crisis, governance has been at the forefront of everyone’s minds in the asset management area. ManCos were first required as part of UCITS, where they were used to monitor and manage the fund but often delegated operational activities such as fund administration, custody and distribution to other specialist providers while maintaining oversight. As more and more regulation began filtering in to Europe, ManCos were required to shift toward taking more of an operational focus and acting as more than just an oversight function.
AIFMD took it a step further requiring the ManCo to do more and take on more operational responsibility, which started to enhance their value for fund managers. ManCos have become a tool for governance and deliver an additional layer of oversight that provides regulators and allocators alike with greater comfort.
Fast forward to today.
The asset management space continues to evolve and cross-border marketing remains key to being competitive – this is where the ManCo finds its edge. Through simplifying operations and reducing running costs for cross-border distribution, ManCos provide a hub through which fund managers can passport into other regulated jurisdictions, broadening their investor base and enhancing opportunity to expand.
Once the ManCo found its competitive home, naturally demand for more followed – and so the Super ManCo was born. Expanding the remit of the traditional ManCo, a Super ManCo is a dual-authorised vehicle able to deliver management services for both a UCITS or AIF under a single umbrella. Streamlining the process makes the Super-Manco an attractive option for investors to not only enhance their governance but reduce the need for multiple vendors simplifying the ongoing supervision, management and governance functions across both types of regulated fund. This is where ManCos are finding opportunity in Brexit, through offering the ability to manage European funds post-Brexit, regardless of the outcome.
Utilising a Super Manco is not only one of the simplest ways to gain access to the European market and remain compliant with the AIFMD regulation, but also an opportunity for managers to access experts capable of advising them on in-depth opportunities, risk requirements for designing, setting-up and managing a unique tailored alternative investment fund.
Brexit is changing the landscape
It is no secret that a looming Brexit, which we now know is irrefutable, has propelled both Luxembourg and Ireland into the spotlight as alternative European financial centres. A new wave of ManCos is drawing interest from asset managers around the world and enhancing the appeal of these jurisdictions. An important factor post-Brexit is speed to market – managers need to be able to gain access to platforms quickly and without the need for a physical presence to manage a fund.
The estimated cost of setting up and running a ManCo is between €2m and €4m, with the majority of the cost going toward obtaining the right skilled resource. Regulators expect ManCos to invest in highly-skilled personnel with strong risk, compliance and investment experience which can be difficult to source, especially in the light of growing demands.
Looking to trusted third party-ManCo to take on this role can help alleviate the pressure of finding the in-house resource and the subsequent costs associated. As funds continue to look for ways to streamline their operations and vendor relationships, finding a partner that can deliver not one, but all of your requirements makes all the difference.
As a steward of the financial services ecosystem, Apex Group acts as a single-source provider for all your needs. From fund administration, to ManCo services, bank account opening, custody, depositary, corporate solutions and ESG reporting – you can access all of your solutions in one place. For more information on our Super-ManCo capabilities through Apex subsidiary LRI Invest, or any of our other financial services.
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