NORWAY Law and Practice Contributed by: Daniel Nygaard Nyberg, Karoline Ulleland Hoel, Ole Andenæs and Jens Fredrik Bøen, Wikborg Rein Advokatfirma AS
ment systematic measures to ensure proper training of their personnel. 3.11 Anticipated Changes for Fund Managers Most of the upcoming legislation described in 2.10 Anticipated Changes for Funds will also affect AIFMs. 4. Investors 4.1 Types of Investors in Alternative Funds The Norwegian asset management market continues to demonstrate growth each year, as substantiated by the FSAN’s 2024 annual report. Last year, the total assets under management reached NOK381.7 billion, marking an approximately 22.5% uptick from the pre - vious year. AIFs Managed by Fully Licensed AIFMs In Norway, AIFs managed by licensed AIFMs primarily attract professional investors. The FSAN’s 2024 report highlights that all categories of AIFs comprise over 90% professional investors. The high proportion of professional investors has remained relatively stable since 2019, underscoring the market’s resilience and the strong appetite for alternative investments among this group. The fund of funds category, together with hedge funds and funds classified as “other”, stands out for having the highest proportion of non-professional investors, both among fully licensed and sub-threshold AIFMs. The high proportion in such funds could potentially result from fund of funds implementing feeder fund structures that allow non-professionals to invest “sec - ond hand” in PE funds (among others) through the feeder fund. Various Norwegian investment firms, such as Formue and Cubera, offer non-professionals such investment services. AIFs Managed by Sub-Threshold AIFMs AIFs managed by sub-threshold AIFMs cannot be marketed to non-professional investors. Nonetheless, some funds include non-professional investors who have either joined through reverse solicitation or who were long-standing investors prior to the AIFM Act coming into force in 2014.
According to the FSAN’s 2024 report, as of the end of 2024, 71 out of 303 funds managed by sub-threshold AIFMs had 6% of their invested capital sourced from non-professional investors, a figure roughly the same level as at the end of 2023. In Summary While retailisation of alternative investments is increas - ing, barriers to marketing towards this segment mean that the institutional market still sees higher activity. 4.2 Side Letters In the Norwegian regulatory framework for AIFs, no rules expressly restrict the use of side letters. These are generally permitted, although the permissible scope can vary depending on the individual fund and its legal structure. Still, according to the AIFM Act, managers are mandated to ensure the fair treatment of all investors. In line with market practice, investors often expect a “most favoured nation” (MFN) clause covering side letters. In recent years, side-letter management has become a major compliance task for managers, driven by grow - ing complexity and discretionary provisions, such as ESG reporting. The future landscape is shifting: cost pressures and compliance demands may accelerate standardisation and reduce flexibility in side-letter agreements. We already see a move towards embed - ding previously bespoke provisions directly into the limited partnership agreement (LPA). 4.3 Marketing of Alternative Funds to Investors The marketing of an alternative fund depends on whether the AIFM is licensed, as well as the chosen fund structure, as further described in 2.2 Regula- tory Regime for Funds . Sub-threshold managers and non-EEA managers may only market funds to “profes - sional investors” (as defined in MiFID II). These types of investors include: • authorised and/or regulated financial institutions; • certain government entities, supranational and international institutions; • large corporates; and
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