CP12/32: Implementation of the Alternative ... - BVCA admin

Annex 1
November 2012
CP12/32
Implementation of the Alternative Investment Fund Managers Directive
as the risks addressed are the same. As UCITS firms are currently subject under UPRU to
a similar requirement to deduct illiquid assets (which we propose to remove as part of this
consultation), we expect that this requirement will not result in significant additional costs
to firms.
Valuation requirements
40. AIFMD and the proposed implementing measures introduce requirements relating to the
valuation of AIF assets and the calculation of net asset value (NAV) per unit or share of an
AIF. 12 In addition, the legislation details a number of requirements relating to the
appointment of an external valuer. 13
41. Some AIFMs or AIFs may incur costs from these requirements, particularly associated
with the requirement to appoint an external valuer (where appropriate) and ensure that it
continues to meet the Directive requirements, including obtaining a written statement of the
professional guarantees where valuation is performed. 14
42. Approximately 55% of respondents to our survey said they are likely to incur more than
minimal costs. This is consistent with the fact that the majority of respondents to the Deloitte
survey indicated that the current valuation arrangements in their firms are satisfactory. Firms,
however, noted that there is still uncertainty about the definition of an external valuer, so it is
difficult to estimate the costs. One firm even estimated valuation fees around £20,000-£30,000
per asset. Table 6 summarises the results.
Table 6: Incremental costs to firms from valuation requirements
Requirement
Incremental costs
One-off Ongoing (annual)
External valuer £0 – £26,000 £0 – £156,000
43. Firms also mentioned significant uncertainty on how the valuation of complex and illiquid
assets would work in practice, particularly for private equity and real estate firms that may
not currently rely on external valuations.
12 Article 19 (1) AIFMD and Sections IV and VIII of the ESMA advice.
13 The Treasury Regulations will transpose those rules relating to external valuers.
14 Article 19 (5) and (6) AIFMD.
Financial Services Authority A1:11