Europe’s growing role for US managers
For many US fund managers, Europe is shifting from a secondary consideration to a strategic priority. Strong institutional demand, a stable regulatory environment and a track record of significant commitments make the region an increasingly important source of capital.
At Langham Hall, we have seen this first-hand. The number of non-EU funds we service raising capital under National Private Placement Regimes (NPPR), one of the key routes into Europe, has risen by 250% since 2020, with total AUM increasing from €123 billion to €499 billion*. For scaled, well-positioned managers, expansion into Europe is becoming a logical next step: opportunity-driven, not defensive, and a way to diversify LP bases and deepen institutional access.
To explore what it takes to succeed, we spoke with Alexandra Cromer, Partner at Atlantic-Pacific Capital (APC), who shares her perspective on European investor expectations, regulatory pathways and the practical steps US sponsors can take to build a strong market presence.
Q: Firstly, can you tell us a little more about your experience raising capital in Europe?
Alexandra Cromer (AC): As a global organisation with thirty years of capital raising experience, Atlantic-Pacific Capital considers Europe a key fundraising market for our clients. The US remains the largest market for us; however, with established distribution capabilities on the ground in Europe, we raise meaningful capital each year from EU investors (around a third), with commitments also secured from LPs in the Middle East and Asia.
Part of our role as an advisor is to assist GPs with building a diversified investor base that can be supportive across multiple funds. Part of this process involves educating clients on how to access European capital. Engaging with an agent who understands the nuances of marketing in Europe and has deep relationships with institutional investors across the various countries is vital.
We take a very customised approach to each fundraise, spending time with our GPs before formally launching to develop the right “go-to-market” strategy. Our objective is to ensure our capital raises are efficient and tailored to the ambitions of the client; this requires preparation.
For US managers, whether first-time or established, seeking to raise capital in Europe, determining where we believe there will be interest is the first step in the process. This helps refine our approach. Given there are significant costs associated with marketing in Europe, for many (first-time funds or even a later fund), availing the National Private Placement Regime (NPPR) makes sense especially if it is a more targeted outreach campaign. In addition to the costs being less onerous than the full AIFMD marketing passport, we have been successful raising capital from LPs in the Nordics, UK, or Switzerland – locations with less complex regulatory requirements – as these investors are often more receptive to earlier funds, especially high-pedigree spin-outs with track record attribution. For more established managers who may have spent some time building brand awareness in Europe, we may collectively decide AIFMD is the better route to maximise capital raising opportunities. A considered hosted premarketing campaign (especially for funds raising >$1bil) can assist with the decision between NPPR and Lux fund under AIFMD.
Q: How attractive do you really think the opportunity in Europe is for North American fund managers? In other words, is the juice really worth the squeeze?
AC: There are several reasons US GPs consider Europe when looking at other geographies to raise capital from – investor diversification is often a key objective. Embarking on the international fundraising campaign can offer a path to increasing their fund size. Others consider European investor support as validation of their firm or fund strategy. There are also GPs with a niche strategy that is well suited to the European market (e.g., energy transition, Article 8 / Article 9 funds).
Ticket sizes can vary in Europe, not just across geographies and types, but also for strategies. There are large institutions seeking to be meaningful partners writing EUR 75m+, supported by a significant constituent of LPs committing € 20-60m tickets which can materially impact fundraising momentum. There is less of a herd mentality in Europe than say Asia, although of course it is certainly helpful if there is European support for a manager, especially if they are like-minded investors, and/or are considered by the market to be a tier one LP.
There is generally strong appetite for high-quality US opportunities from European LPs. This is a sentiment we often see when speaking with top-tier lower- and mid-market PE GPs who consistently attract domestic US support. However, there is a plethora of service providers, such as Langham Hall, that can support managers with the on-going reporting obligations and administrative challenges. The regulatory landscape should not be the reason that US managers shy away from Europe. Working with an agent that can identify early on key European investors and provide the manager with a dedicated road map is essential, this makes the process more efficient, and ultimately fruitful.
It continues to be difficult to displace an incumbent manager if they have delivered, and allocations for new and existing relationships across both Europe and the US remains tight given the lack of distributions over the last few years. Securing capital is highly competitive, especially for new GPs, and we recommend remaining open to exploring options.
Q: What is the biggest difference that you see between North American and European LPs?
AC: Europe has long been leading the way in support for sustainable strategies and initiatives so expect to see highly established and rigorous Due Diligence processes from European investors, especially when it comes to ESG/sustainability credentials. This is much more than a simple tick-the-box exercise; full integration into the fund’s processes from origination through to exit is a must, and not just for infrastructure opportunities.
Traditionally, institutional investors in parts of Europe have been more conservative, with VC and growth generally a smaller allocation of portfolios versus US LPs. Some consider European LPs to have lower risk appetites with a focus on capital preservation, especially given their exposure to infrastructure; however, with recent changes to interest rates, this is shifting. With fixed income or debt offering a similar level of return to say core infrastructure with less perceived risk, there has been some movement up the risk spectrum. This, of course, comes with additional risk requiring investors to rethink how they evaluate managers and opportunities.
The US offers a depth of market and performance that has been superior to Europe. The US also offers investors a route to specialisation with far greater options available for backing a sector-specific fund, which has become increasingly of interest as a complement to diversified offerings. We continue to believe, despite some of the current uncertainty, the US will feature in LPs’ portfolios in a meaningful way. Some LPs have noted a material increase in the proportion invested in the US, up from 50% to 75/80%, some as high as 100% demonstrating how attractive they see the opportunity there. At the core, European investors are like all LPs, seeking top-tier managers with a compelling strategy and consistently strong track record.
Q: How should North American sponsors prepare for marketing in Europe for the first time?
AC: Marketing in Europe is not something US sponsors should approach lightly. Preparation is key. This includes finalising all aspects of the offering and developing the full suite of marketing materials. In a crowded marketplace, the ability to be proactive and responsive helps to keep the investors’ attention.
We always advise starting the process early and encourage GPs to utilise pre-marketing. It is helpful to commence conversations with European LPs before fundraising as it can take time to build relationships and get onto LPs’ radar - it is easier to build a relationship when not asking for capital! It is also worthwhile making a trip or two to Europe during the off-season. When part of a well-choreographed marketing campaign, conferences can be additive, helping to increase market awareness, especially for less established GPs with more focussed strategies.
It is also important to ensure that anything relating to ESG/SFDR has been properly considered and there is a clear plan for implementation; it cannot be viewed by LPs as an afterthought for the GP.
Ultimately, it is a competitive market and LPs, by and large, hold all the cards; it is important to know your peers and be able to articulate succinctly your key points of differentiation.
Q: Finally, what is the one piece of advice you would give to a sponsor that is looking to market in the EU for the first time?
AC: Be prepared, be realistic and be memorable (for the right reasons!).
Supporting your European fundraising journey
At Langham Hall, we have guided more than 200 non-EU managers across private equity, credit and infrastructure through their European fundraising journeys. From navigating NPPR to setting up AIFMD structures, our team helps managers make informed decisions and move forward with confidence.
Learn more about raising capital in Europe and the different paths available from NPPR to AIFMD.
*According to Langham Hall’s own regulatory filing data (annex IV): 2019-2024.
