3. Marc Saluzzi Chairman ALFI

4. 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

5. 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

6. 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

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

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

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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 5. Q&A ?

19. Thank you for attending!