The German financial regulator (BaFin) has recently adopted a reciprocal private placement policy the effect of which is that where German funds not within scope of AIFMD are allowed to be privately placed into other EU member states, corresponding funds from such EU member states may be privately placed into Germany on an expedited basis.
Hassans has taken a leading role in the drafting of a new private placement regime for Gibraltar, in part to satisfy BaFin's requirements to gain reciprocal rights, and has acted for the first Gibraltar fund to gain approval from BaFin to privately place into Germany on a reciprocal rights basis.
Gibraltar now has a private placement regime which meets BaFin's requirements for reciprocal rights treatment. As German funds can be readily marketed into Gibraltar on a private placement basis, so Gibraltar funds can be privately placed into Germany under this preferential procedure. This applies to Gibraltar funds that are not within scope of AIFMD (passporting rights are available for funds in-scope of AIFMD), i.e. Gibraltar self-managed funds and Gibraltar fund managers with assets under management less than €100million (or €500million if the fund(s) is closed ended and unleveraged).
The effect is dramatic for funds seeking to privately place into Germany. The usual private placement route into German is a somewhat complex and time consuming process. The reciprocal rights process is an entirely separate process which allows greater private placement access under a fast approval process.
It is unlikely that many jurisdictions will gain this approved status, as to qualify such jurisdiction must have a sufficiently open private placement regime to satisfy BaFin. The majority of EU member states have restricted private placement regimes, if they have them at all, which would not satisfy the requirements. No jurisdiction outside the EU may use the new process, so European funds in approved jurisdictions will have an advantage over funds established in offshore jurisdictions, such as the Cayman Islands or the Channel Islands.
As far as we are aware, only one other jurisdiction has been approved by BaFin as having a private placement regime that will allow reciprocal private placement into Germany.
It is clear that Gibraltar as a fund jurisdiction has a competitive advantage as a place to set up a fund where access to the German market is important. The Gibraltar route into Germany is now a tried and tested one. For fund managers for whom Germany is an important market, Gibraltar is likely to be the best place to set up their fund.
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