Australian property manager brings income fund to Europe
Australian fund manager LM Investment Management has chosen to use a SICAV-SIF structure to bring its income fund investing in Australian property loans to European investors.
The LM Australian Income Fund – Currency Protected Lux acts as a feeder fund for its master fund, the LM Australian Income Fund – Currency Protected.
As a SIF, the fund is limited to institutional investors and individuals qualifying as “well-informed investors”.
It gives those qualifying investors in Europe access to a portfolio of Australian-registered first mortgages, spanning commercial, residential, industrial, retail and vacant land.
The fund will also seek interest-bearing cash investments, providing income for its investors.
Australian manager LM said the launch of the SICAV-SIF, made available through Luxembourg-based service provider KMG, recognised that an EU-regulated structure was needed to market to Europeans.
The result is a fund with the same investment approach, combined assets and management used in Australia, without additional costs imposed on its European investors.
LM is absorbing the feeder fund costs, so investors accessing the fund via Luxembourg receive the same returns as those in Australia.
KMG is meanwhile working to make the feeder fund ready to comply with the Alternative Investment Fund Managers Directive (AIFMD), although it cannot be fully compliant while Level Two of the directive is still being implemented.
In the longer run, to meet the rules of AIFMD when it is fully implemented in 2013, LM could find it needs to hand over management of the European feeder fund to KMG, or set up its own European stand-alone management company.
At the moment, KMG provides the platform which gives the feeder fund its legal, custodial, audit and administrative structure.