A pair of Malta-licensed firms have teamed up to help alternative fund managers, facing the new AIFMD regulatory regime of the European Union, to cope when they pass over a key asset threshold.

Altarius Asset Management and Portcullis Asset Management, both licensed in Malta, have teamed up to offer a range of services to alternative investment funds coping with European regulations.

The alliance allows early-stage managers, the firms said, to comply with the Alternative Investment Fund Manager (AIFM) model from a “de-minimis” starting point before moving up the scale in size towards “full-scope” status.

The firms said many investment houses that have seen assets under management expand faster than expected have found the step of moving from a de-minimis status to a full-blown AIFM position to be disruptive, suffering loss of business.

Altarius and Portcullis say they will give early-stage managers continuity in moving to full status, manage changes to mid-office operations smoothly and reduce transition costs.

The firms said their alliance is the first of its kind in the European Union, also bolstering Malta’s status as a domicile for alternative investment funds as defined by EU regulations.

According to the Alternative Investment Fund Managers Directive – designed to reduce risks of such funds and protect investors – certain funds can follow a “lighter” set of rules if their aggregate assets under management stay under a €100 million level. One difference between this de-minimis status and the full-scope ranking is the absence of an obligation on a fund, which is managed by a de-minimis AIFM, to appoint a depository. 

Additionally, service provider’s fees (including minimum fixed fees) are much lower due to lighter reporting constraints and obligations. Prohibitive early-stage set-up and running costs lead many portfolio managers to opt for a de-minimis AIFM solution as they build track record when starting with modest AuM, the firms said.