North American Alternative Fund Managers Eye Europe to Expand Investor Base

North American alternative fund managers are increasingly seeking to raise funds in Europe as part of their efforts to expand their investor base. Research from fund administration firm Ocorian revealed that more than a third (35%) of private equity, private debt, real estate, venture capital, and infrastructure fund management executives in the US and Canada, responsible for $1.591 trillion in assets under management, who do not currently raise capital in Europe plan to start doing so within the next 12 to 24 months.

Among those surveyed, 61% cited the growing recognition among North American fund managers of the benefits of broadening their investor base as one of the top three reasons for increased capital raising in Europe over the next two years.

Additionally, more than half (53%) noted that the high level of investment opportunities in North America is attracting European investors.

However, there are challenges. Sixty-two percent mentioned the cost of entry versus market upside as one of the top three reasons that could prevent increased capital raising in Europe. Additionally, 49% identified problems in recruiting personnel to lead capital raising efforts in Europe as a significant barrier.

Other concerns included the attractiveness of their strategy to European investors, noted by 46%, difficulties in distributing cross-border, mentioned by 42%, and challenges in choosing the right jurisdiction, highlighted by 40%.

Fund managers surveyed pointed to renewable energy and real estate as the asset classes they expect to see the most significant increase in European fundraising over the next 12 months.

Paul Spendiff, head of business development at Ocorian, commented, “Many alternative fund managers from North America have been active in Europe for some time, but the research shows that now they are increasingly looking to expand their capital raising and broaden their investor base in the region. There is also a strong belief amongst managers based there that European investors are looking to North America for more attractive investment opportunities than are available domestically and that they have substantial levels of dry powder to invest."

Spendiff also noted the obstacles, saying, “There are, however, stumbling blocks for North American fund managers raising capital in Europe with concerns about the cost of entry and putting boots on the ground. Fund managers clearly need the right support from local strategic partners before raising money in Europe to ensure they meet local regulatory requirements and investor needs.”

By fLEXI tEAM