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    Nov. 27, 2025

Five Essential Articles for Global Private Fund Managers From the PELR in 2025

In light of the Thanksgiving holiday in the U.S., this issue of the Private Equity Law Report features five articles addressing legal issues relevant to global private fund managers. The week starting December 8, 2025, the Private Equity Law Report will resume regular publication of new content focused on regulatory and related considerations applicable to private fund managers in the U.S., the U.K. and other jurisdictions.

U.K. Regulators Propose Changes to AIFM Rules to Ease Compliance Burden on Fund Managers

The U.K.’s Financial Conduct Authority (FCA) and His Majesty’s Treasury (HMT) have undertaken far-reaching and overlapping initiatives with a view to improving the U.K.’s private funds regime while simultaneously reforming or abolishing vestiges of the E.U.’s Alternative Investment Fund Managers Directive following Brexit. On April 8, 2025, HMT issued its “Regulations for Alternative Investment Fund Managers” (Consultation), and the FCA simultaneously released its “Call for Input: Future regulation of alternative fund managers” (Call for Input). The Consultation focuses on the framework of revising regulations and the relative merits of simplifying the current regulatory framework for alternative investment fund managers (AIFMs) and depositaries, while the Call for Input sets out the FCA’s proposed approach to regulating AIFMs within the revised framework. The comment period for both proposals ended on June 9, 2025. Some of the proposed changes would be highly welcome by many regulated entities, including reforms to the U.K.’s outdated classification system that assigns funds to regulatory tiers based on their assets under management. Conversely, some legal experts fault the initiatives for failing to incorporate meaningful provisions to address, for example, a liquidity test more in line with E.U. regulatory priorities than U.K. market realities. The article summarizes aspects of the proposed regulatory initiatives most relevant for PE sponsors and presents commentary from lawyers interviewed by the Private Equity Law Report. See “U.K. FCA Emerging Managers Survey Urges Broad Changes to Curb Retail Market Abuses” (Jul. 24, 2025).

Gauging European Investors’ Appetite for U.S. Funds and Considerations in Marketing to Them

Nearly half of European investments are going into U.S. markets, noted Simon Osborn, CEO of IFI Global, at an IFI Global program. To give U.S. managers a sense of the challenges and opportunities of marketing funds in Europe, Osborn and Lawin Chandra, CEO of PropTechAM.ai Limited, discussed the diverse European funds market; the current economic climate; key considerations for managers seeking European investment capital; investors’ allocation preferences; and choice of European fund managers, service providers, domiciles and directors. The article synthesizes their observations. See “A U.S. Fund Sponsor’s Perspective on AIFMD 2.0” (Sep. 4, 2025).

FCA Proposes Far‑Reaching Changes to U.K. Managers’ Valuation Policies and Practices

The U.K.’s Financial Conduct Authority (FCA) released a report, entitled “Private Market Valuation Practices” (Report), that offers remedies for perceived shortcomings in the accuracy and fairness of asset valuations. The Report presents data from a two-phase study of investment advisers operating under the FCA’s purview, including U.K.‑based fund managers and U.K. entities subject to the Markets in Financial Instruments Directive. In the FCA’s view, many investment advisers have a long way to go when it comes to keeping valuations independent of investment management, properly adjusting valuations when appropriate, making necessary disclosures, and adhering to standards of transparency and fairness in valuations. Not all of the Report’s findings are negative, however. The Report also affirms the soundness of some valuation practices and the integrity of many of the entities surveyed. The article summarizes key takeaways from the Report for closed-end fund managers, including concrete proposals offered by the FCA to boost the transparency and reliability of valuation policies and practices. The article also offers commentary on the Report’s findings from interviews conducted with U.K. regulatory experts. See “SBAI Introduces New Standards and Accompanying Guidance on Valuing Illiquid Assets” (Apr. 3, 2025).

Global Trends and Developments in ESG Regulations

Although environmental, social and governance (ESG) investing is happening on a global scale, it would be a mistake to assume that it is being approached the same around the world. The U.S. is embroiled in a politically charged pro- and anti‑ESG debate, while the U.K. and E.U. put forth increasingly sophisticated and rigid regulations to monitor ESG’s growing popularity. Alternatively, the Middle East’s favorable attitude toward ESG – as it dovetails with Shari’a-compliant investing – contrasts sharply with the comparatively nascent, and uncertain, stances toward ESG investing in Africa and Asia. Those differing approaches to ESG regulations around the globe were addressed in a webinar hosted by Morgan Lewis that was moderated by Carl A. Valenstein and featured his colleagues from the firm’s different global offices. The first article in a two-part series details the status of the SEC’s recent rulemaking efforts, the Commission’s enforcement practices targeting ESG issues and the latest on the state-level anti-ESG movement, along with updates on sustainability-related rulemaking and enforcement actions in the U.K. The second article summarizes the attitudes toward ESG and recent relevant initiatives in the E.U., Asia, Africa and the Middle East. See “SFDR Impact Analysis Finds Sustained Growth in E.U. Sustainability‑Focused Funds, Despite U.S. Headwinds” (Jun. 12, 2025); and “ESMA’s Final Greenwashing Report Aims to Enhance Supervision” (Dec. 12, 2024).

Strategies U.K. Fund Managers Can Take to Prepare for an FCA Investigation

To deal with increasing compliance demands in the U.K., firms must be able to demonstrate robust compliance frameworks, address potential gaps and respond effectively to regulatory scrutiny. An ACA Group (ACA) program, entitled “Facing the FCA: Managing Scrutiny and Strengthening Compliance With Health Checks and Mock Reviews,” discussed practical strategies firms can implement to enhance their compliance programs and prepare for investigations by the U.K. Financial Conduct Authority. The panel was moderated by ACA director Ruth Avenell and featured ACA senior principal consultant Alex Bostantzoglou; Travers Smith partner Phil Bartram; and Lenka Vackova, CCO at Deltroit Asset Management. The article summarizes the key insights and takeaways from the program. For additional insights from ACA, see “2024 Survey Reveals Top Compliance Concerns and Common Industry Practices” (Sep. 19, 2024); and “Compliance Program Implementation: Compliance Calendars and Testing” (Sep. 5, 2024).

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