The call for tighter regulation of the private equity markets, is likely to "hit London far more than anywhere else" says Clare Grayston, partner at law firm Nabarro

While previously the industry has been focused on self regulation, the draft AIFM Directive would require most fund managers to adhere to more extensive disclosure obligations. Grayston believes this will particularly affect smaller firms, especially with respect to the added cost burden.

Grayton does not, however, believe this will lead to a mass exodus of fund managers from London. "It would take a lot for people to relocate," she notes.