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Third-party AIFMs: Indispensable partners

15 April 2024

Agnes Mazurek, Global Head of Product – Private debt
Timo Hirte, Director of Business Development
Robert Burchett-Coates, Head of Real Assets Sales, Europe

Infrastructure has reached the status of a mature asset class from an institutional investment perspective. The key benefits of infrastructure investment: stable, long-dated, and predictable cash flows, as well as proven resilience in economic downturns, attracting an increased number of investors during times of low inflation and low interest rates. With the changes in macro conditions, a large portion of infrastructure assets, notably in the transportation, social and renewable energy assets, now offer the added benefits of inflation-linked revenues, providing a natural hedge.

However, the landscape is not without its challenges. An inflationary environment puts pressure on the construction and operating costs of infrastructure assets, impacting general partners (“GPs”).  A difficult fundraising environment and a slowdown in transaction activities have prompted GPs to reassess their operating models. In this shifting terrain, the role of third-party alternative investment fund managers (“AIFMs”) has become increasingly prominent. These service providers offer not only the necessary knowledge but also the regulatory compliance required to operate in these sectors. 

Selecting the right partner 

When selecting a third-party AIFM, experience and track record are paramount. Asset managers must look beyond mere regulatory compliance and seek partners with proven success in infrastructure and renewable energy funds. By leveraging the expertise of established third-party AIFMs, asset managers can mitigate risks and leverage returns in these complex markets. 

Evolving risk appetite 

Furthermore, the risk appetite of asset managers is evolving in response to changing market dynamics. In an environment suffused with uncertainty and volatility, the ability to adapt and diversify is essential. Third-party AIFMs offer asset managers the flexibility to explore new opportunities while maintaining a prudent approach to risk management. 

Advantages of partnering with third-party AIFMs 

One of the key advantages of partnering with a third-party AIFM is the cost efficiency it affords. By outsourcing fund management functions, asset managers can avoid the need to hire staff with specific capabilities and invest in costly infrastructure. Moreover, the use of established third-party AIFMs accelerates time-to-market, as these service providers have already developed and tested processes in place. 

In addition to fund management, third-party AIFMs can also play a crucial role in fund distribution. Services such as FundRock Distribution Services offer asset managers access to a wide network of investors through established distribution platforms. By leveraging the distribution capabilities of third-party AIFMs, asset managers can efficiently reach their target investor base and expedite the fundraising process. 

The emergence of infrastructure and renewable energy as asset classes presents both opportunities and challenges for real estate asset managers. In navigating this shifting landscape, the role of third-party AIFMs has become indispensable. By partnering with experienced and reputable service providers, asset managers can overcome operational hurdles, mitigate risks, and leverage the growth potential of these dynamic markets. 

How can we help? 

Streamline your operations cost-effectively with our third-party management company ("ManCo") services, complemented by fund administration, middle office, banking, depositary, and custody services all under one roof. 

We provide ManCo services through FundRock, our fully accredited Super ManCo with a local presence in all major markets. FundRock enables over 1,200 funds with a total of €221 billion in assets under management across 14 countries. 

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