Managing Director (AIFM), Fund Administration AT/DE
Managing Director and AIFM specialist focused on venture capital fund administration. Bocconi-educated with deep knowledge of Austrian and German fund structures.
Austrian law mandates a depositary for licensed AIFMs, and even registered managers face pressure to appoint one. Here is how the depositary requirement works, what it costs, and how to structure it.
Every fund manager setting up in Austria eventually asks about the depositary requirement. The answer depends on whether you are a fully licensed AIFM or a registered sub-threshold manager, but in practice, nearly every fund ends up with some form of depositary arrangement. The FMA treats the depositary as part of the "investment triangle" (the fund, the management company, and the custodian bank), and that structure is embedded in Austrian fund law [8].
I have worked with managers who underestimated this cost and this complexity. Getting the depositary relationship right goes beyond regulatory compliance. It affects your fund's operational efficiency, your investor onboarding timeline, and your ability to scale to Fund II. Here is how to think about it.
The legal framework
Austrian fund law draws from multiple statutes, and the depositary requirement is spread across them:
AIFMG (Alternative Investment Fund Managers Act). Fully licensed AIFMs must appoint a depositary for each AIF they manage. The depositary is responsible for safekeeping fund assets, monitoring cash flows, and providing oversight of the manager's compliance with fund rules [3].
InvFG 2011 (Investment Fund Act 2011). For UCITS and retail investment funds, the custodian bank (Depotbank) requirement is absolute and more prescriptive. The InvFG specifies the types of institutions that can serve as custodian banks and the functions they must perform [11].
ImmoInvFG (Real Estate Investment Fund Act). Real estate funds have additional requirements. Only specialized investment fund management companies with restricted banking licenses under Article 1 paragraph 1 number 13a of the Banking Act (BWG) can manage these funds [3].
BWG (Banking Act). The Banking Act defines which institutions are eligible to serve as depositaries and custodians, establishing the prudential requirements they must meet [3].
The core principle across all these statutes: fund assets must be held separately from the manager's assets, and an independent entity must verify that the manager is acting in accordance with the fund documents and applicable law.
Depositary vs. fund administrator: the distinction matters
A common point of confusion, especially for managers coming from US or UK backgrounds where the lines are different. In Austria, the depositary and the fund administrator are distinct roles with distinct responsibilities [18]:
The depositary holds assets (or verifies ownership for non-custodial assets like real estate or private equity stakes), monitors cash flows, reconciles transactions, and provides independent oversight of the manager. The depositary has a fiduciary duty to the fund's investors, not to the manager.
The fund administrator maintains books and records, processes capital activity (calls, distributions, transfers), calculates NAV, prepares financial statements, handles investor communications, and manages regulatory reporting. The administrator works for the manager.
In some jurisdictions, a prime broker or a custodian can wear both hats. In Austria, the separation is more formal. You will typically have a depositary agreement with a bank and a separate administration agreement with your fund administrator. The costs stack, and you need to budget for both.
Who can serve as a depositary in Austria
The pool of eligible institutions is limited. The AIFMG and InvFG restrict depositary eligibility to:
Credit institutions authorized under the BWG or CRR (Capital Requirements Regulation) with sufficient organizational capacity.
Investment firms meeting specific capital and operational requirements (for certain AIF types).
In practice, the Austrian depositary market is concentrated. Bank Austria (UniCredit) is the dominant provider, offering services including fund bookkeeping, settlement, reporting, and control functions [47]. Raiffeisen Bank International, Erste Group, and a handful of smaller Austrian banks also provide depositary services, though their capacity for alternative fund structures varies.
If you are launching a venture capital or private equity fund, you need a depositary that understands illiquid assets. Not all Austrian banks have experience with non-custodial asset classes where ownership verification replaces physical custody. Ask specifically about their process for verifying ownership of private company shares, LP interests, and convertible instruments.
Most Austrian depositaries built their muscle on UCITS. The first time a VC manager hands them a convertible note with anti-dilution language and a SAFE side letter, they need to read it three times. Pick a depositary that has done VC before, or budget for the education curve.
What the depositary actually does
The depositary's duties under the AIFMG fall into three categories:
Safekeeping. Financial instruments that can be held in custody (listed securities, bonds, etc.) are physically held by the depositary. For assets that cannot be held in custody (which is most of what a VC or PE fund owns), the depositary maintains a register and verifies ownership through documentation review [3].
Cash flow monitoring. The depositary monitors all cash flows of the fund, including capital calls from investors, investment proceeds, management fee payments, and distributions. Any material discrepancy triggers an investigation and potentially a report to the FMA [8].
Oversight. The depositary verifies that the fund's NAV is calculated in accordance with applicable rules, that units or shares are issued and redeemed correctly, that the manager complies with investment restrictions, and that income is distributed properly. This is active oversight, not passive record-keeping.
What it costs
Depositary fees in Austria typically have three components:
Annual base fee: EUR 10,000-30,000 depending on the bank and the complexity of the fund structure.
Transaction fees: Per-transaction charges for processing investments, divestments, and cash movements. For a VC fund making 15-20 investments over a five-year period, this is manageable.
AUM-based fee: A basis-point charge on fund NAV, typically 2-5 bps for alternative funds. At EUR 30 million NAV, that is EUR 6,000-15,000 annually.
Total depositary costs for a first-time fund of EUR 20-50 million typically run EUR 20,000-50,000 per year. That is a meaningful line item on a fund with EUR 400,000-1,000,000 in annual management fee income. Budget for it explicitly in your fund economics model.
Do registered AIFMs need a depositary?
Technically, no. Registered (sub-threshold) AIFMs under the AIFMG are not required to appoint a depositary [1]. This is one of the main cost advantages of registration over full licensing.
In practice, it is not that simple. Institutional investors, particularly German and Scandinavian LPs, often expect a depositary regardless of regulatory requirements. If you are raising capital from investors subject to their own regulatory regimes (insurance companies, pension funds, Versorgungswerke), the absence of a depositary can be a deal-breaker in due diligence.
Managers targeting German and Danish investors face additional depositary expectations even under National Private Placement Regimes [40]. Germany's BaFin, for example, requires that AIFs marketed under NPPR have a depositary-like entity performing cash monitoring and asset verification functions.
My advice: even if the AIFMG does not require it, include depositary appointment in your Fund I plan if you expect to raise from institutional investors outside Austria. The cost is real, but losing an LP because you cannot satisfy their operational due diligence requirements is more expensive.
Registered managers love the cost savings until a German Versorgungswerk asks who is verifying the cash movements. At that point, EUR 25,000 a year for a depositary stops looking expensive. I have watched fundraises stall over this exact question. Have an answer ready before you sit down with institutional LPs.
Selecting and onboarding a depositary
Start early. Depositary onboarding in Austria takes four to eight weeks from signed agreement to operational readiness. The bank needs to review your fund documents, set up accounts, integrate reporting systems, and run their own internal KYC on the manager and key personnel.
When evaluating depositaries, ask about:
Experience with your asset class. A depositary experienced with UCITS listed equity funds may struggle with private equity ownership verification. Ask for references from other PE or VC fund clients.
Reporting integration. How will the depositary share data with your fund administrator? Manual reconciliation between depositary and administrator systems is a source of errors and delays. Look for automated data feeds or shared platforms.
Responsiveness. Emerging managers do not get the same service priority as a EUR 500 million institutional fund. Ask about dedicated contact persons and service level agreements for response times on transaction processing and queries.
Scalability. If your fund grows or you add co-investment vehicles, can the depositary accommodate additional structures without a full re-onboarding process?
Special cases: real estate and loan-originating funds
Real estate funds under the ImmoInvFG have additional depositary requirements. The management company must hold a restricted banking licence, and the depositary must be able to verify ownership of real property, which involves land registry checks and notarial documentation [3]. This is a specialized capability that not all Austrian banks offer.
With the AIFMD II implementation introducing a formal loan origination framework in April 2026 [20], depositaries for loan-originating funds will need to verify loan documentation, monitor concentration limits, and track risk retention requirements. If you are launching a credit fund or a VC fund with a material lending component, confirm that your depositary can handle these functions.
How Infra One works with Austrian depositaries
We do not provide depositary services ourselves; that would compromise the independence the law requires. What we do is handle the fund administration side and ensure clean integration with your depositary. Our fund administration platform produces the NAV calculations, capital activity records, and cash flow reports that depositaries need for their oversight functions. We have established working relationships with the major Austrian depositary banks, and we can help you select the right one based on your fund's structure and asset class.
For managers who are registered AIFMs and do not appoint a depositary, we provide enhanced cash monitoring and ownership verification processes that give your investors comfort even without a formal depositary appointment. If you need help structuring the depositary relationship for your Austrian fund, get in touch.
