After largely escaping controls put in place by Britain’s Financial Services Authority and European regulators on pay, hedge fund and private equity fund managers now face rules on how and when bonuses are paid and more pay disclosure, sister news service Reuters reported, citing a study by PwC that addresses a suite of financial reforms in the European Union known as the Alternative Investment Fund Managers Directive.
An AIFMD paper published last month targets asset managers, extending the reach of regulations made in Europe’s Capital Requirements Directive, which referred only to “financial institutions” and which many managers thought they could avoid, said Tim Wright of PwC. “The rules will mean sweeping changes to the pay policies and practices of many asset management firms,” Wright said.
Under earlier rules from the FSA, many asset managers fell into the most leniently treated group, while most private equity houses were exempt. Most managers will now ultimately face much tougher rules, PwC said. The new measures in the AIFMD require firms to pay at least half of bonuses in stock and defer between 40 and 60 percent of variable pay for around three to five years. Firms will also have to disclose total pay for a financial year and a breakdown for key staff.
The directive, which is targeted at funds both based in and marketed in Europe, could also encourage firms outside the EU to rethink targeting investors in the continent, as Buyouts previously reported. The EU watchdog the European Securities and Markets Authority will implement the rules. Asset managers have until September to respond to the directive, while AIFMD remuneration regulations will come into effect from the summer of 2013.
PE-Backed IPOs Surge In Asia
Private equity- and venture capital-backed initial public offerings in Asia have surged 77 percent this year, to their highest level ever, Reuters reported, citing Thomson Reuters data. Asia has recorded $14 billion from 89 private equity- and venture capital-backed IPO exits in the year as of Aug. 3.
Top markets for private equity and venture capital exits are Shanghai ($3.7 billion), Shenzhen ChiNext ($3.7 billion), and Shenzhen SME ($3 billion), continuing China’s IPO boom that began the spring of 2009. China had the most IPO exits this year, with 80, for a total of $12.8 billion, or 29 percent of global volume.
Asia-Pacific was the top global destination for all IPOs in the first half of 2011, with $49.4 billion in deals, or 46 percent of the total. Hong Kong has seen the most activity in Asia with $13.4 billion worth of IPOs so far this year, more than double the pace a year earlier.