While much has been written about the European Commission’s Alternative Investment Fund Managers Directive (AIFMD) since the final text emerged from the European Parliament on 11 November 2010, little has appeared about its possible impact on private equity remuneration.
Most private equity firms fall outside the scope of the Financial Services Authority’s (FSA’s) earlier remuneration code. The industry is also generally well positioned in relation to the requirements of AIFMD. However, unlike the code, AIFMD has far broader application to buyout houses and their financial alignment to investments and incentive structures. While we await regulations to implement it in the UK (not due to come into effect until mid-2013), private equity houses would be well advised to begin planning their compliance strategy and tactics.
