Brexit fund migration ‘accepted’ as managers remain in London

A number of UK private equity firms have moved their funds and not their management teams to other European countries in order to mitigate the impact of a hard Brexit, according to a fund lawyer.

There have been “some fund migrations” and the strategy is now considered “tested and accepted” by the market, Alexandrine Cerfontaine-Armstrong, partner at Goodwin, told pfm.

“There are different legal techniques to do this, and it can be pre-agreed as an option in the limited partnership agreement under the alternative investment fund manager’s control.”

Fund migration does not have the same substance requirements as relocation of a management team, which includes having a set number of senior managers working in an office on the ground. Nor does the manager have to assess the tax and legal implications of operating in a new jurisdiction on the fund.

In the aftermath of the Brexit vote, there were predictions that many UK managers would move their operations to the continent, but a mass exodus is yet to materialize.

Some of Cerfontaine-Armstrong’s clients have made their final decision on their Brexit plans, but are holding off implementing them, while others are yet to decide.

“I wouldn’t say clients have made any concrete decisions on Brexit. However, there are some who have a plan that is ready to be implemented, but they’re not pushing the button yet, so to speak,” she said.