Albourne and AIFMD
Albourne has considered the implications for its business of the 'marketing' definition in AIFMD (as implemented across the EEA). The purpose of this note is to give its conclusions to its clients, to the managers of the funds on which it reports and to others with whom it deals.
The 'marketing' definition
"'marketing' means a direct or indirect offering or placement at the initiative of the AIFM or on behalf of the AIFM of units or shares of an AIF it manages to or with investors domiciled or with a registered office in the Union."
By way of a reminder, Albourne Partners Limited and its subsidiaries ("Albourne") carry on business as non-discretionary investment advisers on alternative investment funds to a global clientele consisting exclusively of professional clients in the UK or the equivalent in other jurisdictions. Those clients have investments in around 2,000 funds, and most of them have legacy portfolios.
The alternative investment funds on which it advises may be located anywhere in the world, but many are based in the U.S. Albourne includes a major U.S. subsidiary, Albourne America LLC.
In the course of its business, Albourne:
- conducts investment and operational due diligence on alternative investment funds
- takes the initiative on the MoatSpace/Funds page in its website to invite the managers of such funds to provide to Albourne types of information specified by Albourne about their activities and records, either by registering to upload it through the secure password-protected extranet MoatSpace portal or by email or other means
- at its sole discretion stores all or part of such information in its database and makes it available to Albourne clients, subject to any editorial changes Albourne deems appropriate
- writes reports on and rates those funds, making those reports available to some or all of its clients through a secure password-protected extranet called "the Castle", where clients can search for fund reports and manager-supplied information
- where a client so requests, recommends strategies or funds that it believes best suit that client's requirements
- does not engage in discretionary fund management or hold client moneys or securities
- does not act as the agent of, or at the initiative of, any manager, including specifically in relation to any manager initiative to solicit investment in the manager's funds
- does not have any authority from any manager to offer or place any fund or other investment to or with Albourne clients
- does not act as agent for any of its clients to receive such manager initiatives on its clients' behalf
- holds client events at which fund managers are amongst those invited to attend and speak, individually or on panels, on industry topics
- solely at a client's request, may arrange meetings at such events between that client and managers and may accompany the client at those meetings, and
- may invite managers to be interviewed on Albourne Television, both on industry matters generally and on matters relevant to their own funds, the resulting films being edited by Albourne at its own discretion and placed in the Castle for clients to view.
In carrying out these activities, Albourne:
- does not make any payment to funds or managers for their information
- does not receive any payment or commission from funds or their managers to rate or evaluate the fund or manager or to include their information in the Albourne database
- uses such information (including data supplied in a format complying with the Open Protocol Enabling Risk Aggregation and administrator transparency reports) to analyse competing funds and bring a wide range of potential investments to the attention of its clients
- does not itself benefit from any preferential investment terms received by a client because it is a client of Albourne
- uses its own independent judgment when writing reports for clients based on information obtained from funds and managers (and other sources)
- in providing advice to its clients, acts independently and professionally in their best interests
- does not permit managers to commission Albourne to conduct research on their funds
- at events and conferences, will provide a note for those attending about contacts there between managers and clients, stressing, however, that both managers and clients must take responsibility for the consequences, regulatory or otherwise, of their own interactions
- where a client asks to see a fund prospectus or marketing document, or wishes to obtain a subscription agreement, refers the client to the manager itself, and
- can help clients with investment paperwork, but only after the client has decided to make that investment.
Albourne and AIFMD 'marketing'
The object of Albourne's business model is to ensure that it is, and remains, wholly independent of funds and their managers and that their information and views are supplied at Albourne's initiative and are used in ways controlled by Albourne for the benefit of its clients.
Given its business model, Albourne believes that it does not engage in AIFMD 'marketing' or cause the funds or managers which respond to its invitations to supply information or to attend and address Albourne clients at Albourne events to engage in 'marketing' through Albourne.
London, June 2014
Copies of the note for those attending events are available on request to your normal Albourne contact