In this horizon scan for private investment funds, which is aimed at managers based in Europe, we have set out the some of the principal legal and regulatory-focused developments to look out for in the coming months.
We’d highlight three topics: sustainability re-evaluation – in the EU and the UK; UK proposals to reform of the AIFM regime; and increased investor access and ‘retailisation’ of private funds - where recent political momentum is likely to create opportunities for UK and non-UK managers to access pension capital in the UK. Some other specific topics that may also be of interest are: on the US side, the helpful update on 506(c) offerings and on EDGAR Next; in the UK, on the establishment of PISCES and the ECCTA transparency reforms; and in the EU, on crypto regulation and DORA implementation.
The horizon scan table is accompanied by an audio where two of our partners, Andrew Henderson and Glynn Barwick, discuss some points of interest around the three main topics.
An agenda of growth and competitiveness is central to both the UK’s and the EU’s financial regulators as they seek to foster regulatory frameworks that provide attractive and competitive jurisdictions for asset management. In this vein, below we have highlighted three topics that are covered in our horizon scan in more detail. These developments, amongst others, require regulatory focus that balances risk mitigation and firms’ long-term objectives alongside an approach that is resilient to political change, market pressures, and emerging risks.
- Sustainability re-evaluation: In the face of political and market pressures, we are seeing the EU shift its sustainability agenda to both consolidate rules and better promote competitiveness. The UK, facing similar headwinds, is delaying implementation in some areas whilst adopting a more pragmatic approach that supports sustainable investment on a flexible and proportionate basis. Whilst the overarching goals are aligned, a divergence in regulatory approach — along with prolonged uncertainty — is likely to continue.
- Reform of the UK Alternative Investment Fund Managers (AIFM) regime: The FCA request for input and HM Treasury consultation seek to streamline, simplify, and enhance proportionality of the regulatory regime for UK AIFMs. A key threshold change would be introducing new sizing tiers whereby only the largest AIFMs (proposed to be amended from the assets under management (AuM) thresholds of ≥€500m for unleveraged funds (≥€100m for leveraged funds) in the current regime, to >£5bn net asset value (NAV)) would be subject to the main rules for the sector. In the FCA’s view, this would reduce the number of AIFMs subject to the full rules from 699 to 64 (representing a reduction in terms of overall NAV caught from 98.2% to 74%) . In our view, there are three main issues of key importance in how the UK implements any reform: first, to ensure that the reforms do not impinge and allow integration of EU/UK cross-border access and the EU/third country delegation model; second, that the light-touch small firm regime is as close as possible and no more onerous than the EU equivalents; and third, that, if possible, the UK government considers opportunities for facilitating greater access to the EU market.
- Increased investor access and ‘retailisation’: This is a particular focus for many private fund managers as they aim to get a broader and more diverse group of capital into their products. Several large managers have raised funds from “retail” investors. This relates to offering private funds to private wealth and non-professional investors, such as sophisticated and high net worth investors, defined contribution (DC) pension schemes and local government pension schemes (LGPS) not to mass market or ‘pure’ retail. In the UK, the Pensions Investment Review Final Report published on 29 May 2025 sets out a series of measures to ensure that DC pension schemes and the LGPS take advantage of consolidation and scale and invest in a fuller range of asset classes, with detail to follow when the Pension Schemes Bill is published (including on a reserve power for the UK government to mandate pension funds on their investment strategy). These commitments and reforms come shortly after the 13 May 2025 launch of the Mansion House Accord, through which 17 pension providers have pledged to allocate 10% of their workplace portfolios to private assets (such as infrastructure, property and private equity) by 2030; with at least 5% ringfenced for the UK – expected to represent £50 billion in investable assets allocated to the sector (half of which will be in UK projects) by 2030. This political momentum is likely to create opportunities for UK and non-UK managers to access pension capital in the UK. See our client alert here which examines practical questions for those looking to access the UK private wealth market. We have also seen a number of high-profile initiatives announced or launched in recent months in the United States.
Download our comprehensive analysis, Horizon Scan for Private Investment Funds (June 2025), here.
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