What is a ‘reserved investor fund’? and could it actually stimulate investment into the UK?
posted on: 2nd May 2023 / category: Uncategorised / posted by: UKDC
To truly achieve levelling up, right across the uk, it is imperative that further investment is secured into large scale opportunities, particularly around infrastructure and real estate. There is in excess of £3trn of UK funds alone, the challenge is often deploying these into suitable well managed projects which make good fiscal sense. Unfortunately the UK systems, often mean that for UK based businesses, it can actually prove to be more expensive to deploy funds in UK based projects than it is for overseas opportunities.
UK government is therefore in the process of consulting with the Real Estate Investment sector on creating a reserved investor fund (RIF). A RIF is a proposed closed-ended vehicle for non-retail investors which we believe could be attractive to UK-based financial institutions when thinking about real estate investment.
The period of consultation appears to respond to calls from sector leaders to close the gap in the UK’s existing funds range whilst providing an alternative to the offshore structures often used by real estate fund managers.
Last year, as part of a planned change to UK funds regime, the government said it would explore options to introduce internationally attractive onshore professional investor regimes of unauthorised fund structures.
The government is looking to see if it should introduce the RIF, along with several questions including those relating to tax, eligibility and notification criteria, and branding.
It is expected to be aimed at professionals, including high-net-worth retail, and institutional investors, and could see the creation of new vehicles next year.
The model is to be based broadly on Luxembourg’s Reserved Alternative Investment Fund (RAIF), which is an investment fund that can invest in all types of assets. It qualifies as alternative investment fund (AIF) and is not itself subject to CSSF product approval. RAIFs must appoint an authorised external Alternative Investment Fund Manager.
We therefore believe that A whole spectrum of UK fund managers from SMEs to larger firms will be entitled to benefit from the efficiencies of the RIF. Managers will avoid having to go offshore with all the challenges, inefficiencies and costs of dealing with multiple legal, tax and regulatory regimes.
The RIF can be a platform to help level the nation up, driving institutional capital back into the UK. An example of this could be into affordable housing and city-centre regeneration projects, as well as accelerating our nation’s infrastructure and green industrial revolutions.