Marc Saluzzi Chairman ALFI

AIFMD Opportunities and Challenges - Raising Capital from European Investors - Setting up an Alternative Investment Fund manager in Europe Moderator: Michael Ferguson, Partner, Asset Management Leader, Ernst & Young Panelists: Valérie Tixier, Partner, PwC Luxembourg Kamran Anwar, EMEA Head of Private Equity Services, Citigroup, London Gilles Dusemon, Partner, Arendt & Medernach Jacques Elvinger, Partner, Elvinger Hoss & Prussen

Agenda What is the AIFM Directive? Why should I be concerned by the AIFMD? Choosing the domicile of your AIFM and AIFs A potential target operating model Q&A

1. What is the AIFM Directive? Better manage systemic risks related to alternative funds Increase transparency towards regulators and investors Enhance investor protection Key objectives Direct regulation of Alternative Investment Funds Managers (AIFM) Indirect regulation of : Alternative Investment Funds (AIF) Service providers to AIF Investors in AIF What does the AIFM Directive regulate? European “AIF Brand” Passport for marketing AIF in EU Passport for managing AIF in EU Opportunities

1. What is the AIFM Directive? Timeline Source: Ernst & Young

? ? ? 1. What is the AIFM Directive? The 3 Key Questions Do we have an AIF? Who is the AIFM? ? ? What is marketing? ?

1. What is the AIFM Directive? Key provisions at a glance Source: Ernst & Young

2. Why should I be concerned by the AIFMD 2. Why should I be concerned by the AIFMD? Case study 1: US investment advisor with non-EU AIF marketed to EU investors US investment advisor Cayman fund Key considerations: AIFMD applicable: Yes Marketing in EU: PPRs, with cooperation agreements 3rd countries: transparency and cooperation agreements EU investors 10

2. Why should I be concerned by the AIFMD. Case study 2: 2. Why should I be concerned by the AIFMD? Case study 2: US investment advisor with EU AIF marketed to EU investors US investment advisor Luxembourg fund Key considerations: AIFMD applicable: Yes, Marketing in EU: PPRs, with Cooperation Agreements 3rd countries: transparency , AML and cooperation agreements EU investors

2. Why should I be concerned by the AIFMD. Case study 3: 2. Why should I be concerned by the AIFMD? Case study 3: US investment advisor with EU manager and non-EU AIF marketed to EU investors Luxembourg management company Cayman fund Key considerations: AIFMD applicable: Yes, except full depositary provision in 3rd country Marketing in EU: PPRs, with cooperation agreements 3rd countries: AML and cooperation agreements Delegates portfolio management US investment advisor EU investors

2. Why should I be concerned by the AIFMD. Case study 4: 2. Why should I be concerned by the AIFMD? Case study 4: US investment advisor with EU manager and EU AIF marketed to EU investors Luxembourg management company Luxembourg fund Key considerations: AIFMD applicable: Yes Marketing in EU: Passport Delegates portfolio management US investment advisor EU investors

3. Choosing the domicile of your AIFM and AIFs The Critical Success Factors Reputation Structuring flexibility Regulatory environment Stability: Political, economic and social environment Legal environment and taxation regime Ability to achieve tax neutrality Operational factors: Infrastructure Workforce Service provider expertise Location

3. Choosing the domicile of your AIFM and AIFs The Critical Success Factors and the Luxembourg Offering Luxembourg No. 1 brand in the investment fund industry Attractive range of investment fund solutions Accessible, knowledgeable and responsive the regulator Stable: Political, economic and social environment Legal environment and taxation regime Ability to achieve tax neutrality for products by considering direct and indirect taxation implications at fund and investor levels Possibilities to minimize relocation costs Good local infrastructure Qualified and knowledgeable multicultural, multilingual international workforce Service provider expertise and ability to meet specific local distribution market requirements from Luxembourg Central location at the heart of Europe with easy access to other financial centers

Portfolio management/ investment advice 4. A potential target operating model US investment advisor with EU manager and EU AIF Sweden: 71% Portfolio management/ investment advice Germany: 67% Switzerland: 70% France: 70% South Korea: 100% Japan: 61% Taiwan: 75% Bahrain: 76% Hong Kong: 73% Singapore: 71% Peru: 64% Chile: 73% Source: Global Fund Distribution analysis December 31, 2011 and Ernst & Young

5. Q&A ?

Thank you for attending!