AIFM 2: VC fund managers discover the real scope

Directive (EU) 2024/927, known as AIFM 2, deeply amends the 2011 AIFM directive. Adopted in March 2024, it enters into national application on 16 April 2026 (transposition under way in France). It targets AIFs (Alternative Investment Funds) and their management companies. For French private-investment players — VC, growth equity, private equity, family offices structured as management companies — the impact is broader than expected.

The four AIFM 2 work-streams

Delegation and substance

AIFM 2 strengthens substance requirements: a management company cannot delegate management to such an extent that it would become a "letter-box". The text requires at least two persons based in the member state, full-time, qualified. French management companies that subcontract portfolio management to a Luxembourg or Swiss advisor (a common practice for cross-border funds) will need to document why substance remains in France.

Liquidity management tools

AIFM 2 requires every open-ended fund to have at least two liquidity management tools (LMTs) from a list: suspensions, gates, redemption fees, swing pricing, side pockets. Venture capital funds are closed-ended by construction (no redemption before fund end-of-life), so direct impact is limited, but recent evergreen or semi-liquid funds (ELTIF 2.0) are concerned.

Loan origination

AIFM 2 frames, for the first time, loan origination by AIFs (loan-originating funds, LoF). For private debt funds, it is a normalization: leverage cap, risk management, minimum diversification. For growth-equity funds occasionally doing venture-debt or bridge-financing transactions, application is less obvious — they need to document why the activity remains ancillary and does not turn the fund into a loan-originating fund.

Enhanced reporting

AIFM 1 already imposed quarterly reporting to the regulator (AIFMD form). AIFM 2 considerably enriches the data: leverage per fund, exposures by instrument, stress tests, ESG data (consistent with SFDR). The format moves to a harmonized European schema (XBRL) — no more in-house Excel exports.

The hidden topic: parallel funds and dedicated vehicles

French private-equity management companies have structured their funds with parallel vehicles to accommodate US LPs, UAE LPs, institutional LPs that have their own tax constraints. These parallel vehicles now fall within AIFM 2 scope even when they are not marketed in the EU, as long as the manager is in the EU and the master fund is too.

Concretely: a master fund in France with a parallel fund in Luxembourg for US LPs will have to produce a coherent AIFM 2 report on both vehicles, and the management company will have to demonstrate an allocation policy between funds that avoids conflicts of interest. For many mid-cap PEs, this work has never been formally done.

Three practices that structure the best teams

Structured investment data room

Beyond AMF reporting, AIFM 2 demands fine traceability of investment decisions: who decided, when, on what basis. Forward-looking management companies have a data room per investment, with versioned IC (Investment Committee) notes, pricing, valuation model. In case of an AMF control or LP litigation, this data room is what protects you.

Documented independent valuation

AIFM 2 strengthens requirements on valuation of unlisted assets. For a VC, the NAV (Net Asset Value) is derived from holdings valuations, which are by construction subjective. The directive requires either valuation by an independent third party or internal valuation under strict governance (separation between investment team and valuation team). For boutiques with under 30 people, this separation is an operational challenge.

Automated LP reporting in parallel with AMF reporting

Institutional LPs have their own reporting requirements (ILPA template, SFDR format for ESG, sometimes proprietary consolidated reporting). Management companies that automated LP reporting in parallel with AMF reporting save precious time and reduce inconsistency risks between the two. It is also a commercial argument for fundraises — an LP immediately sees the quality of the infrastructure.

The 2027-2028 scenario

Three evolutions to anticipate. First, convergence with SFDR Article 8/9 for funds positioning as ESG: unified reporting, principal adverse impacts (PAI) integrated into AMF reporting. Second, the likely extension of AIFM to funds from third countries marketed in the EU (tier-3 passport), a topic postponed but that will return. Third, LP pressure on fees and hidden fees, pushing for near-real-time operational transparency on the fund value chain.