EU directive to cost over €3bn

The proposed Alternative Investment Fund Managers (AIFM) may force private equity firms and hedge funds to pay more than €3bn in charges according to the latest report from the Financial Services Authority (FSA).

An analysis on the impact of the proposed directive commissioned by the FSA and carried out by Charles River Associates found that investors could see private equity fund sizes shrink by 35%.

As part of the EU’s plan, fund managers will have to register, submit data and limit leverage.

Although private equity firms will be hit with costs of up to €756m, hedge funds will shoulder most of the costs, estimated at €1.4bn in additional fees to comply with the directive.