The UK government is moving ahead with plans to create a new closed-ended fund structure for professional investors, which could encourage institutional fund managers to move away from the use of offshore vehicles.
Amendments to the Financial Services and Markets Bill, published Thursday, include a new clause on “unauthorised co-ownership” alternative investment funds (AIFs).
The introduction of such vehicles could lead to future closed-ended real estate and infrastructure funds being structured in the UK, rather than offshore jurisdictions like Jersey, Guernsey and Luxembourg.
The government has previously said it would “conduct further work to explore options” to introduce “internationally attractive onshore professional investor regime of unauthorised fund structures”.
Melville Rodrigues, head of real estate advisory at Apex Group, has long been advocating for the creation of a professional investor fund (PIF) in the UK and today said it would “plug a gap in the UK fund offering”.
Rodrigues said the new amendments would enable the creation of PIFs that could operate as umbrella funds and would provide investors with limited liability.
“The legislation will hopefully enable managers, focused on real estate and other sectors, to progress with new fund launches, and avoid having to go offshore and experience the challenges of – and incurring costs associated with – multiple legal, tax and regulatory regimes,” he said.
Rodrigues said he looked forward to “continuing constructive government and industry dialogue to address other legislative provisions so UK fund managers can then operate PIFs”.
The Association of Real Estate Funds (AREF) welcomed the news and said it had been “happy to provide support over a period of years” to Rodrigues.
Paul Richards, managing director of AREF, said: “These are very welcome developments. We have a world-class real estate funds industry in the UK and giving fund managers more flexibility in the way they serve clients can only be a positive for the UK.”
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