Approximately two-thirds of alternative fund managers in Germany have filed for a KVG licence – a requirement for managers of Spezialfonds under the country’s new AIMFD rules.

A survey of 100 managers and service providers by PwC and German lobby organisations ZIA and BSI found that half of those are still waiting for German regulator Bafin to approve their applications.

Those who have not filed for a license will “most likely switch to a different field of business or cooperate with a Service KVG”, the authors of the report said.

The majority of respondents (60%) expect consolidation among fund managers, with some pointing to greater requirements from the new regulations.

“Not all will be able to fit the high costs into the products they are currently offering,” said Susanne Eickermann-Riepe, partner at PwC Germany, presenting the study at the Expo Real in Munich.

Interest in real estate, infrastructure, private equity and renewable energy funds will increase, the survey found.

“The industry is changing,” Eickermann-Riepe said, adding that, for the first time, all managers were covered by a single regulatory framework.

Risk and liquidity management, and the separation of conflicts of interests presented new challenges to a closed-ended funds industry that traditionally had been lightly regulated.

According to Eickermann-Riepe, risk management had often been one-dimensional, but now it had to take into account “multivariable risks”, such as interest rates and tenant changes.

Fund managers cited the main challenges as reporting (25%), new products (12%) and higher costs (10%).

“Overall we are seeing that the players have accepted the regulation and that it costs money, but it is also seen as a business opportunity,” Eickermann-Riepe noted.