EU rules could cost private equity almost €2bn

Compliance with the proposed alternative investment fund directive could cost hedge and private equity funds between €1.3bn and €1.9bn in the first year, dropping down to annual recurring costs of between €689m and €985m.

According to a study by think tank Open Europe, European investors would find their pool of funds cut by up to 80% as the draft regulation wants to stop non-EU fund managers from selling their products in the region unless the host countries have similar rules.

The report also surveyed European investors of alternative investment fund managers, and found that just 2% are in favour of the proposed rules, with 46% viewing it unfavourably, and the same amount viewed it neither favourably nor unfavourably, and 6% didn’t know.

According to Open Europe, private equity contributes €4.9bn to tax revenues in Europe, whilst directly employing 27,000 people in the EU and indirectly employing an estimated one million.