by Paul Bannier | Mar 29, 2018 | News
The Guernsey Financial Services Commission has recently updated the Private Investment Fund regime to improve its attractiveness to new fund promoters. Until recently the fund’s manager had to provide the Commission with a certification to the effect that investors in the fund were able to sustain losses that they may incur in the fund at the time of making their investment. The revised guidance and application form now only requires the manager to provide a declaration that as far as the manager can reasonably ascertain, the investors are able to sustain a loss. Whilst, the manager will still be expected to make careful and appropriate enquiries prior to making the declaration, it is anticipated that this subtle relaxation of the application requirements will attract more promoters to the Island. With the regulatory process taking a single business day and no requirement for scheme particulars, the Private Investment Fund regime allows fund promoters to launch new funds investing in a wide range of asset classes extremely quickly and in a cost effective manner. Since its introduction in late 2016, the Island has already seen a number of promoters including leading private equity firm GMT Partners and boutique asset manager Pearl Diver Capital choose to launch funds under the regime. When comparing the regime to those available in other jurisdictions, it is worth noting that there is no limit on the number of potential investors to whom the fund can be marketed, although the total number of investors which can be admitted to the fund is capped at 50. Additionally, there is no minimum subscription amount prescribed in the Rules, a...
by Paul Bannier | Aug 2, 2017 | News
It is that time of year when many in the alternatives investment industry in Europe head off on vacation for a couple of weeks rest and relaxation. Whether chilling out by a pool or enjoying some fresh mountain air, this is often an opportunity to grab some time for strategic thinking – which in many cases involves planning the next career step. For some, that next step may be a move within an existing organisation or to a competitor. For others, thoughts may turn towards setting up in business on one’s own. If you fall into the latter group, establishing your own fund management operation or investment fund may be your goal. Whilst the tropical climes of the Caribbean hold a certain attraction as a domicile for new ventures such as these, there are credible alternatives far more convenient for those living in or near the mainstream European financial centres – and which also provide beautiful sunsets without the need for long-haul travel! One such location is the Channel Island of Guernsey. The Island has long been regarded as an attractive domicile for alternative investment vehicles. Open ended funds, including hedge funds and other “liquid alternatives” were the foundation upon which the fund servicing industry originally developed, and still make up a substantial proportion of the assets under management and administration. In recent years, the private equity, venture capital and real estate sectors have flourished – recent figures released by the GFSC note 1 show that the value of funds under management and administration on the Island grew for the seventh consecutive quarter and now stand at GBP 266...
by Paul Bannier | Mar 9, 2017 | News
Whilst in London recently I attended an event focused on start-up hedge fund managers. Although the number of launches in 2016 was down on recent years, those at the cutting edge in London at least, are reporting an uptick in the number of funds launched towards the end of the year or which are otherwise in the pipeline. Opening discussions on the prospects for sector growth quickly turned to discussions on the cause of the lower numbers and the challenges facing new start-ups. Prospective hedge fund managers face a myriad of choices when establishing a new hedge fund operation. This article highlights some of the key areas for consideration. Internal operations A good starting point is to consider the expectations of the target investor base. Is it necessary to build an institutional grade infrastructure with significant numbers of permanent staff, dedicated IT systems, prestigious office premises and the like or is a more modest operation sufficient? Whilst the days of a laptop, access to a trading system and a few spreadsheets are long gone, it is worth considering whether the core investment and risk management teams can be supported by individuals with specialist knowledge in the areas of accounting, finance, regulatory compliance and IT security on a part time or contract basis. There are clearly pros and cons of each approach, but if tight control of costs in the early years is an absolute priority – which in many cases it is likely to be – it is perhaps worth building a lower cost but scalable operation which can be expanded as AUM grows. Stand-alone fund versus platform It...
by Paul Bannier | Jan 20, 2017 | News
Whilst UK-based fund promoters and distributors have perhaps had the odd sleepless night given the uncertainty created by the British public’s vote to leave the EU, that may not have been the case amongst Guernsey’s service providers. Figures released today by the Guernsey Financial Services Commission for the third quarter of 2016 show that the industry has recorded it fifth successive quarter of growth. The increase in NAV was most noticeable in the open ended sector which recorded a 10.4% increase during the 3rd quarter. In sterling terms that equates to £4.3 billion. Whilst there was a slight decrease in the NAV of closed ended funds during the quarter, the number of funds actually increased and on a year-on- year basis, the closed ended sector saw growth of £14 billion. I was a little surprised to see a reduction in the number of Non Guernsey Schemes serviced on the Island as I understand from discussions with several service providers that at least some are seeing significant interest in this area. Overall, the growth is perhaps not unexpected given the Island’s long-held reputation as a stable jurisdiction. Such “safe haven” status may well prove attractive to promoters looking to restructure fund platforms or even their internal operations. For those interested in or potentially impacted by Brexit, Guernsey Finance is hosting a Funds Masterclass in London on 8th February where fund raising in a post-Brexit world will be discussed. Please contact Icorserv if you would like to attend or require further details on this...
by Paul Bannier | Nov 16, 2016 | News
The Guernsey regulator has today announced the introduction of a Private Investment Fund regime. This new regime follows closely on the heels of the launch of the “Manager Led Product” in May this year which itself was designed to offer an attractive alternative to Luxembourg’s Reserved Alternative Fund or “RAIF”. The Private Investment Fund offers promoters a highly flexible form of collective investment scheme which takes only one business day to register with the Guernsey Financial Services Commission. As the new fund will have a cap of 50 legal or natural persons holding an ultimate economic interest, it is expected to appeal to family offices and similar wealth managers who enjoy a close relationship with a limited number of investors. Other key features of these private funds include: Absence of a requirement for an offering document or information particulars to be produced, No cap on the size (NAV) of the fund, No minimum subscription or holding for investors, No limit on the number of potential investors to whom the fund can be marketed, Available in both open and closed ended form, Ability to structure the fund as either a company, limited partnership or unit trust, Considerable flexibility in the investment objective of the fund. The applicable rules do not prescribed any investment restrictions, A licensed manager is necessary and will be required to provide the regulator with certain warranties on the ability of the investors to assume loss, A Designated Administrator in Guernsey must be appointed although the Designated Administrator has power to delegate any function, No requirement for a custodian in the case of a closed ended fund....
by Paul Bannier | Oct 3, 2016 | News
Having recently returned from a couple of days at the SuperReturn Infrastructure conference in London, I thought I would take a few moments to reflect on certain topical aspects of infrastructure investment – at least as far as it impacts on fund centres such as Guernsey. A copy of the article I wrote recently appeared on the website We Are Guernsey and can be downloaded by clicking here. The full text is also set out below: With the recent news that Macquarie has successfully closed its latest Euro 4 billion European infrastructure fund with the assistance of two Guernsey firms, Paul Bannier, Director at Icorserv, reflects on certain topical aspects of infrastructure investment – at least as far as it impacts on fund centres such as Guernsey. Growth in demand When measured on a global basis, a huge demand exists for infrastructure investment. Statistics published by the United Nations project that the world population will increase by approximately 83 million people per year during the next two decades with much of the growth taking place in Africa and Asia. Aside from the obvious need for food, water, basic healthcare and housing, population growth triggers demand for energy, transport links and modern telecommunications networks to name but a few. At the other end of the spectrum in developed nations, life expectancy continues to increase with for example, additional demands placed on the healthcare and welfare systems. Governments in developed countries have generally under – invested in infrastructure projects and even where investment may be regarded as “adequate”, many governments are seeking to shift funding from public finances to privately financed...
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