Regulering af kapitalfonde

Camilla Funch Hussmann & Mads Nylander

Student thesis: Master thesis


In recent years there has been an increased attention and debate on regulation of private equity funds (PE) in the EU. Spawned from this attention along with the impact of the financial crisis of 2007, the Parliament and Council came to an agreement after heated debate, and adopted the Alternative Investment Fund Managers directive (AIFM-Directive) November 11th 2010. We examine current Danish law in regards of private equity funds, and what impact the AIFMDirective will have on existing Danish regulation. We find that there is practically no existing Danish regulation directed towards private equity funds, although there is a limited impact through existing regulation in regards of taxation and corporate structure. Furthermore, we find the existence of soft law as being the only existing attempt of bringing transparency into the market, although its effect is limited by the comply-explain principle. Hence, we find that the AIFMDirective will change the legal environment significantly, mainly through its many transparency regulations but also through the introduction of an Alternative Investment Fund Managers authorisation system. We then examine if the value created by private equity funds in their portfolio companies exceed that of the general Danish market, and how value in portfolio companies are created by the private equity funds. To do this, we perform a benchmark analysis comprised of 38 selected portfolio companies and a peer group representing an average Danish company. We find no empirical evidence, that portfolio companies exceed the performance of an average Danish company, although there is a big variation in our results that could indicate differences in each fund’s performance. In addition, we develop three hypotheses to test, how private equity funds create value in their portfolio companies. We find that private equity funds attempt to create value through an alignment of interests, active ownership and an increased risk profile. Furthermore, we analyze if the AIFM-Directive will change private equity funds incentive to create value in their portfolio companies, in order to assess the AIFM-Directive’s overall efficiency. We find that the AIFM-Directive will decrease the private equity funds incentive to create value, through an increase in the management costs. Thus, there will be a decrease in private equity funds investments due to the increased attractiveness of alternative investments opportunities. Consequently, the AIFM-Directive may end up hindering the market it wishes to regulate. As an answer to this problem, we propose a solution consisting of soft law with a revised comply-explain principle combined with regulation of the bank sector.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2011
Number of pages160