Policy, Regulation and Private Equity: A Rich Research Agenda? (Book Chapter)

Abstract

Effective from 2013, the Alternative Investment Fund Managers Directive (or AIFMD) fundamentally altered the regulatory environment for European private equity funds, establishing – for the first time – a set of pan-EU rules for private equity and venture capital funds with assets under management that exceeded certain thresholds. For many fund managers this has entailed considerable change that has permeated most aspects of their business, including additional capital requirements, stricter conduct of business rules, enhanced disclosures to regulators, investors and the outside world and, for some, has even required amendments to remuneration policies. It is not easy to discern a clear policy objective for many of these changes, and it is therefore hard to assess whether they achieved their aims. Certainly, in relation to many of the new rules, there is scant evidence that investors wanted them, nor that they will benefit from them; it is also unclear how the rules will alleviate systemic risk, particularly insofar as they apply to private equity funds. This Chapter reviews the rules that were included in AIFMD, seeks to identify their policy objectives, and suggests a research agenda that could assist policy-makers in future reviews of the Directive and further regulatory interventions in the sector.