Amid growing demand for lawyers who can help stateside clients make investments and launch funds in the U.K. and in Europe, Schulte Roth & Zabel has added partner Emily Brown to its London office.
Brown, who previously practiced law at Macfarlanes, advises clients in the private equity and venture capital space on capital raising, fund formation, co-investments, anchor fund commitments and regulatory issues. Her expertise extends not just to the U.K. funds market but also to the U.S., the Channel Islands and Luxembourg. Expertise in the E.U. funds market is of particular importance as fund managers face new restrictions on marketing funds into Europe following Brexit.
Josh Dambacher, co-head of Schulte’s London office, which opened its doors in 2002, noted that Brown’s client base is global. “She represents the largest investors in the U.K. and in the world as they make investments in the U.S. and around Europe, and also represents many U.K.-based fund managers,” he said.
Brown described her move as occurring at a juncture marked by a growing tendency of fund managers to use both open-ended and closed-ended fund structures and to seek out the “gray areas” in between, which offer hybrid products uniting elements of both fund types.
“I act for a number of large investors who look quite often for managed accounts alongside large funds. It is increasingly common to see structures that are closed-ended to some degree but are specifically tailored to their requirements,” Brown said.
Brown also makes her move at a time when fund managers and investors anxiously follow the finalization of the terms of Brexit and strive to gain a clear sense of what the post-Brexit funds market will look like.
A critical issue at this time is whether and on what terms non-E.U. fund managers will be able to market their funds into Europe. Although there is widespread uncertainty, the re-domiciliation of funds to jurisdictions such as Luxembourg has been going on for some time now and is not purely a function of Brexit, Brown noted.
“This was happening long before the Brexit. I think the key thing here is that each fund operates in its own environment, depending partly on where the personnel are based and where the investors are. It’s wrong to assume that all parts are going in one direction,” Brown said.
Dambacher predicted that once the dust has settled and the uncertainty surrounding Brexit is gone, some funds may even carry out contingency plans and reverse the change of domicile.
“It is still unclear what the final deal will look like. As a result, it’s hard to tell how many funds will need to redomicile or whether there is a strong preference for redomiciling,” Dambacher said. ”Scenarios could play out where it’s beneficial for funds to keep their funds in the E.U. or keep them there, but it’s still uncertain what will come of final Brexit deals, especially regarding the marketing of funds by non-E.U. managers.”
At present, a U.S.-based fund manager trying to market into Europe is officially considered a non-E.U. fund manager, and that is precisely the status that U.K. fund managers will have after Brexit unless parties reach a deal to assure the U.K. managers a certain status, Dambacher said.