Richard James has been appointed as Head of UK, bringing over 20 years’ experience in investment management to Langham Hall.

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Previously Richard was Global CFO for Savills Investment Management, a global fund manager investing in Real Assets and Credit. Here he was responsible for both fund and corporate finance, tax, treasury and operations across the business. During his tenure, he was part of the leadership team that drove AUM growth from £3bn to over £20bn. Before Savills Investment Management, Richard worked at Internos, AEW, and Ares. He began his career at EY, where he also obtained his professional qualification. Richard’s invaluable client-side experience and proven leadership make him a significant asset to Langham Hall.

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Richard James, Head of UK said: “I am very excited to be joining such a highly respected business which is becoming increasingly unique in this market”

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Rob Short, Managing Partner said: “I am delighted that Richard has joined us to continue to deliver best-in-class professional services to our clients”

Following a prolonged period of difficult fundraising conditions, many GPs we speak to are planning to be back in the market during Q4 2024 / Q1 2025. As we have observed over recent years, Europe will be increasingly important for many. Some are familiar with AIFMD and how to navigate the requirements which govern marketing to institutional investors in Europe; others are considering Europe for the first time. We have set out below a brief summary of the key questions and considerations.

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1. Isn’t fundraising in Europe difficult?

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AIFMD, the regulation which governs marketing in Europe, has now been in place for over a decade. Whilst not without some complexity, the reality is that marketing private funds in Europe is more straightforward than many first fear. Regulatory fund counsel take care of all the registrations, and service providers pick up most of the operational lift. The ability to pre-market also makes marketing efforts more focussed than in the past.

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2. What are the options?

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There are two – marketing a non-EU fund, i.e. Delaware LP, via the National Private Placement Regime (NPPR), or marketing an EU fund, i.e. Luxembourg LP.

• NPPR means targeting a selection of countries. It is operationally easier, but you cannot access all of Europe. This is still Route 1 for the majority of North American GPs looking for European LPs. We have many clients successfully raising capital in this way.
• A Lux fund gives you access to the European marketing passport. It is operationally heavier and more costly, but potentially gives you access to more capital. Larger GPs and those with European presence might find this a better fit.

3. What are my peers doing?

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The majority of North American GPs raising capital in Europe do so via NPPR. Many have done so for multiple vintages of multiple strategies. Lux is of great interest to many, but most can raise enough via NPPR to not require a separate European structure. We have observed this changing over time and see more Lux funds each year.

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4. How do I choose which option is best?

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To best map out the market and assess LP demand, we would recommend using our Hosted Pre-marketing service. This allows you to “pre-market” your product to European LPs, ahead of establishing any potential European substance. If demand doesn’t warrant a full Lux fund, you can decide instead to market via NPPR.

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5. How long does this all take?

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Pre-marketing can be up and running within 2-4 weeks, most will use it for 3-4 months (or longer). NPPR applications can take between a few days to 6 weeks in most countries that allow it, but Denmark may take longer to be proved, depending on the jurisdiction. A Lux fund can be established and up and running in three months.

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6. NPPR sounds good, what do I need for that?

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Once you have decided which countries to market in, your regulatory funds counsel will assist with the marketing applications. There will be ongoing reporting requirements in each country also. These are known as “annex IV” reports, and are similar to Form PF. Langham Hall will take care of these. If Germany and Denmark are on the list you’ll need to name a depositary-lite provider in your marketing applications. Langham Hall can also assist with that.

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7. I like the idea of Lux vehicle, what does that entail though?

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For a Lux fund you will need a host-AIFM, fund admin and depositary. Langham Hall can provide all of this from our 250 person office in Luxembourg.

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8. What about the cost?

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Pre-marketing is very cost effective. NPPR is also relatively inexpensive. A Lux fund should be targeting €200m minimum to be cost effective.

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9. How do I find out more?

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If you’d like to hear more, drop us a line and we’d love to speak further. You’ll only speak to partners and practitioners, no sales people, so we know what we are talking about and can help you work out what the best approach would be for you.

The Jersey Private Fund (‘JPF’) regime has been a huge success since its inception in 2017 with over 700 authorised to date, offering sponsors a fast-track (48 hour) regulatory approval process for a flexible and cost-effective fund with access to EU and non-EU private markets.

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On 2 July 2024, the Jersey Financial Services Commission (‘JFSC’) issued updates to the Jersey Private Fund Guide (‘JPF Guide’) following consultation and feedback from industry members, and as a whole, has sought to refine and improve the existing regime.

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The material updates are as follows:

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1. Investor eligibility:

• Clarification that investor eligibility is determined and satisfied upon admission into the JPF, and such eligibility may be relied upon despite a status change for the investor (for example a departing employee director, partner, or expert consultant etc).
• Updating the definition of ‘eligible’ in relation to employees of investment businesses or other service providers, by removing the ‘senior’ employee definition and replacing with ‘financial sophisticated’.
• Clarification regarding transfers of interest, whereby there is no requirement for the transferee to qualify as a ‘professional investor’ on the same criteria as the transferor, provided the transferee meets the definition of professional or eligible under the JPF Guide.

2. Governing body:

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Clarified the JFSC’s expectation that there should be at least one or more Jersey resident director appointed to the JPF board/governing body.

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3. Carry and co-investment vehicles:

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It is now recognised that a co-investment scheme may form part of the JPF’s carry and/or incentive arrangement and provides greater flexibility as the vehicles can be admitted into the JPF without counting towards the ’50 or fewer’ investors test (provided they meet the criteria of the JPF Guide).

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4. Arrangements that fall outside of the JPF regime:

• The JPF Guide has been revised in respect to schemes that would be ‘exempt’ and therefore not treated as a JPF (under Annex B of the JPF Guide), where there are employee or family connections between investors in the vehicle. The definitions around employee or family connections (including ‘relative’) have been widened and now include trusts established for a person satisfying the new definition of ‘family connection’.
• Where a JPF is established outside of Jersey, it is expected that the management and control be in Jersey. That being said, it is possible for both to be outside of Jersey subject to the provision of information to the JFSC to establish the ‘indirect but relevant nexus to Jersey’.

The collaborative approach by the JFSC with industry participants and the subsequent amendments brought forward are only believed to make the regime even more attractive to global fund managers, providing further flexibility to a reliable, well-regulated and cost-efficient jurisdiction, strengthening Jersey’s position as one of the leading domiciles of choice for private alternative investment funds.

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Our team has a vast range of experience establishing and operating JPFs since the regime was introduced, supporting sponsors throughout the life of their fund product from setup and marketing to compliance and administration.

We are delighted to announce our new office in Tokyo, Japan, which will be led by Shinobu Miyata, our Head of Japan.

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Prior to Langham Hall, Mr. Miyata spent 7 years as COO of a secondary strategy GP, leading fund formation and management in both Cayman Islands and Japan, as well as secondary transactions including several GP-Led secondaries. Mr. Miyata also established the Japan office of a global fund administrator in 2007 and led the business successfully for 7 years.

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Welcome to Langham Hall, Miyata-san!

We are delighted to announce that Langham Hall has won the “Best Fund Administrator – $50-500bn (total AUA)” category at The Drawdown Awards 2024. This category recognises best in class administrators working with top tier clients across Europe.

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Commenting on the win Rob Short, Managing Partner said: “We are delighted to have been recognised with this award. Our partner-led, client centric approach makes us increasingly unique in this market as we continue to support both emerging and established managers across Europe.”

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The Drawdown Awards celebrates excellence and innovation within private fund operations. The judging process is based on the views of a panel of leading private capital fund COOs, CFOs, CCOs, GCs and CTOs.

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Find out more about The Drawdown Award here.

In August, the Securities and Exchange Commission (‘SEC’) issued the new Private Fund Adviser Rules which required fund managers to issue quarterly performance, detailed fee reports, granular performance metrics and perform annual audits amongst other new requirements with the aim of increasing transparency in the industry.

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The additional requirements applied to private equity and venture capital funds as well as managers of funds for institutional investors such as pension funds and endowments.

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These were burdensome requirements that would have led to significantly more detailed reporting being delivered to investors in tighter timeframes, as well as an increased burden on fund managers to disclose what was previously considered to be confidential information.

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Last week a US court overturned the SEC requirements which has been positioned as a win for the industry. This means that fund managers will not be required to meet the new requirements, as of now. It is anticipated that the SEC may petition for this ruling to be re-considered, Langham Hall will continue to monitor any developments.

The final text of the amendments to the Alternative Investment Fund Managers Directive, known as ‘AIFMD II’, were published in the Official Journal of the EU on 26 March 2024, coming into force on 15 April 2024. EU Members have 2 years from this date to ensure the new rules are written into national law.

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Although AIFMD II is not an entire change of the current legislation and less impactful than initially expected, it includes material amendments targeting provisions of the previous directive that fund managers need to be aware of and assess the result on their private funds business or operation.

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Changes affecting the marketing rules and reporting for non-EU AIFs/AIFMs:

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Non-EU managers marketing into Europe via the National Private Placement Regime (‘NPPR’) will be caught by the enhanced reporting obligations and requirements (specifically asset and market related data) under Annex IV reporting – the regulatory requirement triggered by formally marketing a non-EU fund in most European states.

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Changes affecting EU AIFs/AIFMs:

1. Loan origination: New requirements on EU AIFs that carry out ‘loan origination’ (defined as providing a loan either directly, or indirectly through special-purpose vehicles), as AIFMD II targets the compliance and governance associated, including but not limited to, policies and procedures of the AIFM, risk retention, diversification, conflicts of interest and the leverage limits of the AIFs involved.
2. Liquidity management: Conditions on liquidity management for open-ended AIFs, whereby the managing AIFMs must use at a minimum two liquidity management tools from an explicit list. Practically speaking this is already prevalent, however the update now requires that the liquidity management tools be selected from a specific list and be appropriate in relation to the investment strategy, fund profile and redemption policy of the AIF.
3. Depositary: AIFMD II provides flexibility for a depositary to be domiciled in a different EU state than the appointing AIF, subject to certain conditions and approval from the AIF’s regulator. For example, it is appreciated that some markets have a lack of competitive supply of depositary services, leading to increased costs and inability to effectively meet the needs of the AIF in regard to its investment strategy. Nevertheless, this is not automatically permitted even if conditions are met and would only be considered by authorities after a case-by-case assessment. To be clear, AIFMD II does not permit depositary passporting, contrary to the expectations of the amendments.
4. Annex IV reporting: Enhanced reporting obligations and requirements, as mentioned above.

Non-EU GPs

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Even though we are seeing an increasing number of non-EU fund managers set up parallel funds in Luxembourg, marketing via NPPR is still the preferred route to raise capital in Europe for most non-EU managers, which allows targeted county by country marketing. Even under the NPPR route, there are certain continuing regulatory requirements including Annex IV reporting. Although many North American and UK GPs may feel that AIFMD (and any amendments) would not apply directly to them, it is important to understand the impact to their cross-border business model, especially those who have (or intend to) market their products in Europe. AIFMD II will implement enhanced scope under Annex IV reporting, a service we provide to many non-EU managers, specifically around the delegation of portfolio or risk management, markets, instruments, exposures and assets of AIFs managed.

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It remains possible under AIFMD II for an EU AIFM (or ‘host AIFM’) to delegate portfolio management of an EU AIF to a non-EU fund manager, however the amendments impose closer scrutiny of the delegation arrangement and as such, non-EU fund managers involved in this model should expect to be subject to increased supervision and enhanced monitoring by the EU AIFM.

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Although ‘depositary passporting’ in Europe is still not permitted under the new rules for an EU domiciled fund under AIFMD, depositary-lite services to a non-EU fund (for the purposes of registering for NPPR in Germany and/or Denmark) remains possible from a non-EU state (for example from our London office).

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EU AIFs/AIFMs

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Many of the amendments targeted at loan origination in fact mirror legislation already prevalent across EU states, so although on the surface the amendments do not appear to be too onerous or practically challenging, it achieves the objective to ‘level the playing field’ across Europe and is considered particularly significant as we see an increased number of credit funds launched in recent years.

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Material impacts to EU AIFs involved in loan origination, how these are managed and related exemptions:

1. Policies and Procedures: AIFMs managing debt funds must ensure effective and frequently reviewed policies and procedures are in place for the granting of loans, however, this does not apply to shareholder loans where the value of the loans is below 150% of the fund’s capital.
2. Diversification: Restricts lending to a single borrower if they are a financial institution, whereby the loan may not exceed 20% (directly or indirectly) of the fund’s capital – this is intended to limit relationship in the lending business with financial companies.
3. Conflicts: Forbids lending to the fund’s governing bodies and/or related parties (i.e., fund manager, depositary, employees) – exemptions are permitted for lending to entities under the consolidated group of the fund, if such entity is a financial undertaking which only finances borrowers that are not one of the above.
4. Risk retention: Ensures that the loan originating AIF retains 5% of the value of its granted loans and does not pass them on, for instance on secondary markets or further syndication. Exemptions apply if the fund is being wound down and assets liquidated to enable investor redemptions.
5. Leverage limits: Differentiates limits of open-ended and closed-ended funds regarding ratios for value of the loan and total fund value.

Taking everything into account, the impact of AIFMD II is arguably limited aside from the most significant of amendments targeted particularly at debt fund managers and funds involved in loan origination, enforcing regulation where there previously may have been a lack of consistency across Europe. That being said, whether or not managers are targeting European capital with an EU AIF under a European marketing passport, or registering a non-EU AIF through NPPR, compliance of AIFMD and any amendments should be of utmost importance.

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To lighten the regulatory burden and offer efficiencies, we offer host AIFM and depositary services to support managers achieve their marketing strategies in the EU for their funds. Increasingly, we are also seeing non-EU fund managers opt for our hosted premarketing service to assist navigating the decision between NPPR or a Lux parallel route. Langham Hall specialise in providing host AIFM services for investments in illiquid assets for European and non-European managers without regulatory permissions, working closely with GPs to navigate the changing regulatory environment and challenges associated with fundraising in Europe and the ongoing operation, reporting and compliance of EU and non-EU alternative investment funds.

As Private Equity and Alternative Markets continue to scale and attract sophisticated capital, fund managers and their investor bases will need to leverage their service providers to comply with evolving Private Fund regulations and increasing demand to deliver complex reporting in an expeditious manner. Excessive time spent with your Fund Administrator can prove both frustrating and costly, diverting attention from your core focus and the fiduciary obligation of generating returns for your Limited Partners. These are just a few factors that underscore why fund managers are reconsidering their options and evaluating new fund service partnerships now more than ever.

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The burden and complexity of data migration can often leave fund managers and CFOs feeling captive with their existing provider. This sense of being trapped, coupled with the perceived risks associated with transitioning, often leads fund managers languishing in poor-quality service and compounding errors at the detriment of the General and Limited Partners. However, transitioning between service providers does not have to be as daunting as it may seem or as complicated as you recall from prior experiences. Langham Hall’s Partner-led methodology employs a comprehensive approach towards conversions, enabling fund managers to migrate efficiently while preserving data integrity and minimizing disruptions to your internal team.

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At Langham Hall, we believe the role of the Fund Administrator is to alleviate your workload by engaging with the spirit of being a true extension of your team. Our systematic transition plan is built through the lens of our clients, incorporating a thorough risk assessment at the onset of engagement. Langham Halls’ due diligence on your fund documentation, legal, compliance, and electronic data requirements, allows for a realistic transfer timeline that ensures data accuracy and a seamless transition. Our team members work in lockstep with your CFO and back office to drive the transition process, as opposed to being reactive and waiting on requests to trickle through.

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Our Partner-led model fosters an analytical culture, providing valuable insights and often uncovering critical errors that may have been overlooked from a previous engagement. Langham Hall has a proven track record of rectifying historical errors in sensitive areas related to fund management and reporting. Our rigorous approach includes rebuilding complex waterfall models, management fees, and equalization calculations during client migrations. At Langham Hall, our foundation is built upon an apprenticeship model where young, talented individuals are trained by professionals with profound expertise in fund reporting and complex structures. Our proven model is further enriched by our Wolfram Computable Data Strategy, an innovative approach that propels us far beyond outdated of legacy systems using advanced data processing. In this way, our customizable reporting templates mitigate risks associated with data transition and ensures seamless continuity in LP reporting.

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Langham Hall has undertaken multiple fund transitions. Our migration process is built around four main pillars:

• Data Collection – Our onboarding team gathers all available fund documentation, historical general ledgers, trial balances, financial statements, as well as any capital activity notices from your previous service provider.
• Data Analysis – We conduct a comprehensive review of the data available; rebuilding models exact to fund documentation to ensure accuracy and smoothing out historical data to align with our proprietary Wolfram Transaction Capture.
• Upload and Processing – Once the fund and Limited Partner data is processed through our system, the historical financials and partner capital statements can be generated in a matter of minutes. This streamlines the process significantly. Fund data sets are highly customizable through our Wolfram reporting tool.
• Reconciliation and Assurance – The clients receive reconciliations between the onboarded data comparing to the historic data, giving fund managers the assurance, the migration was completed successfully.

Langham Hall stands as one of the few remaining privately owned Fund Administrators. Over the past few years, we have witnessed a significant influx of new clients come to us due to feeling marginalized by the impacts and fallout that M&A has had on their current arrangements. They are drawn to the fact we structure our business as a partnership with partners directly involved in driving the engagement and overseeing the delivery of client work.

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Transitioning service providers does not have to be as daunting or as arduous as commonly perceived. Tolerating subpar service from your current provider not only puts your firm and capital at risk, but also distracts you from your core focus and fiduciary obligation to your Limited Partners. This underscores the critical need for fund managers to reassess their options and carefully consider new fund service partnerships.

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Langham Hall is an award-winning global provider of fund administration and AIFMD services to top tier fund managers. Our aim is to establish ourselves as the foremost global provider of administration and AIFMD services to top tier private equity, real estate, debt, and infrastructure clients. We aspire to be respected for our sound judgment and unwavering integrity, and to attract and cultivate the most talented individuals through active apprenticeship.

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To hear more about how we can help, please get in touch with a member of our team.

You have successfully navigated the Graduate Programme application and have secured yourself a role to become a Trainee Fund Accountant, but what is next?

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We spoke with two of our September 2023 Graduate Trainee cohort, Pádraig Casey and Deborah Omoshola, who have shared their experiences of their first six months of employment.

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Deborah studied Accounting and Finance and Pádraig studied International Business.

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Q: What kind of tasks have you completed / do you complete on a daily basis?

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DO: Since joining Langham Hall, I have been involved in a variety of initiatives to help simplify the current fund accounting processes. I undertake a range of daily tasks including bookkeeping, addressing client queries, helping during the audit of financial statements, preparing VAT returns and distribution notices.

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I’ve also been responsible for handling HMRC inquiries regarding VAT matters which has meant, I have played a key role in preparing both management accounts and financial statements, contributing to the overall efficiency and accuracy of our day-to-day operations. Over the last six months, I have been able to continuously learn and develop through Langham Hall’s various internal training programmes.

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PC: Working in a client-focused environment, daily tasks vary and encompass a large variety of recurring activities such as general bookkeeping, periodic reporting and ensuring individual client-specific requirements are met. Since starting the Trainee Fund Accountant role, it has become evident how key financial deadlines bring specific demands to the role. For example, as our client has just closed their financial reporting year, our team is currently focused on preparing financial statements and participating in the preparation of the client’s audit. Before you begin the working day, you may have planned what you are going to try complete but as the day unfolds, new tasks and challenges arise.

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Q: What did you find the most challenging in your first few weeks/months? How did you overcome it?

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DO: During my first few weeks as a Trainee Fund Accountant I found navigating the systems and procedures challenging as they were completely new to me. However, I have an extremely supportive line manager and team who made sure I was comfortable enough to approach them with any questions I had regardless of how many times I asked. In addition, in the first few weeks the Learning & Development team ensured that I was trained on everything that I’d be working on which helped me immensely as it allowed me to further understand the role I would be doing.

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PC: Like starting any job, there is always going to be an adaption phase, where you begin to settle into your role. New challenges and difficulties arise, such as facing a period where you feel lost or ill-prepared for the role or being unfamiliar with certain policies and practices carried out within the company. However, this is where the support from your team really comes into play. Knowing that I joined a team that is full of people willing to help answer any queries that I may have has really helped me during this settling in period. As well as this, as I joined in a large graduate intake, knowing most of my new-found colleagues and friends were also feeling the same way meant that we could rely on each other for support when needed.

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Q: Are you involved in any extracurricular activities at Langham Hall? Or are there any you would like to join?

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DO: I am looking to get more involved in the extracurricular activities which are on offer at Langham Hall. One which I am keen to join is the Diversity and Inclusion Committee who have organised a variety of initiatives including the International Women’s Day celebrations.

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PC: There are a wide range of extra-curricular activities offered to employees at Langham Hall. The most anticipated event of every quarter is the team socialising event. The events vary from team dinners, drinks or a fun activity in the city. Not only is this a great way to bond with your team, but it also allows you to meet newer members of the wider teams as well.

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Q: What are your tips/recommendations for anyone starting a Graduate Programme?

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DO: A Graduate Programme is an exciting opportunity! I advise that you set clear goals to stay focused and motivated. Juggling studying and working can be challenging so by working towards set goals it has helped me stay on track.

One of my top tips is to embrace learning, be teachable and committed to ongoing professional development. Take full advantage of the opportunities which are offered to you.

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PC: My main recommendation to anyone starting the Graduate Programme is to ask as many questions as possible. Although you may think it is annoying team members, they want you to succeed, become more knowledgeable and more efficient in your role. The only way you can do this is to ask questions, to try to understand the reasoning behind practices and processes. At the end of the day, the Graduate Programme is all about learning and the best way to learn in this environment is to rely on your peers for support.

Our trainee programmes are aimed at kickstarting your career in the funds sector, covering illiquid asset classes such as private equity and real estate, developing your skills and knowledge to allow you to make an impact in our business and industry.

If you are interested in joining Langham Hall, check out our latest vacancies.