Fund managers based in the US and Canada are looking to raise more funds within Europe, according to research by Ocorian.
The fiduciary services firm said its study of private equity, private debt, real estate, venture capital and infrastructure fund management executives responsible for $1.59tn (€1.47tn) of assets under management found four-fifths (83%) already raise capital in Europe. More than a third (33%) who do not already do so, however, plan to within the next two years.
Some three-fifths (61%) of those canvassed said the growing recognition among North American fund managers of the benefits of broadening their investor base was among the top reasons for increased capital raising in Europe over the next two years, while 53% noted the high level of investment opportunities in North America was attracting European investors.
The research suggested just under half (49%) thought there was a preference for US managed products compared with European ones, while 43% pointed to the growing levels of ‘dry powder’ at European institutional investors as among their top reasons likely to boost capital raising in Europe.
“Many alternative fund managers from North America have been active in Europe for some time but the research shows now they are increasingly looking to expand their capital raising and broaden their investor base in the region,” said Paul Spendiff, head of business development, fund services at Ocorian.
“There is also a strong belief among 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.”
Cost of entry
Ocorian’s study canvassed the views of fund managers on what would prevent increased capital raising in Europe and found almost two-thirds (62%) highlighting the cost of entry against market upside as a key factor that could hit capital raising, while half (49%) pointed to worries around recruiting people to lead capital raising in Europe. Other concerns identified included the attractiveness of their strategy to European investors (46%), difficulties distributing cross-border (42%) and challenges with choosing the right jurisdiction (40%).
The research also found one in five (19%) fund managers questioned had been raising capital in Europe for five years or more while just under a third (31%) had started doing so within the last two to three years.
Some two-thirds (65%) of investors said up to 25% of their capital raising was from Europe and a quarter (26%) say 25% or more of their capital raising came from European investors. In two years’ time 63% estimated up to 25% of their capital raising would come from Europe and a third (33%) expected 25% or more of their capital raising would be from European investors.
