10 HFMWEEK . COM
GUERN S E Y 2 0 1 4
HFMWeek (HFM): What are the main trends you are
currently seeing in the market in Guernsey?
Vignesh Vijayakumar (VV): We generally see a positive
uptrend in the private equity sector, but an interesting
shift of late has been the appetite for separate managed
account structures. Investors who are contemplating establishing
these managed account structures are normally
looking to deploy substantial commitments to asset managers
and accordingly these are highly customised based
on the individual requirements.
While we see that fund raising in general has been quite
challenging, those asset managers with an established
track record are able to successfully launch funds with a
much shorter lead time. Despite this, it is imperative that
the asset managers allow themselves plenty of time, given
that investors are placing a greater emphasis on due diligence
matt ers. Another interesting trend we are seeing at
the moment is funds raised to invest in a specifi c investment,
which could be in both a traditional private equity
strategy as well as in the real estate/infrastructure segment.
HFM: What sort of activity has Guernsey seen recently
in the private equity segment?
VV: We have seen interest returning in all the major private
equity strategies, with appetite slowly returning to the
buy out market. We are also seeing increased interest in
credit funds, and some asset managers have moved from a
blind pool capital approach to operating on a deal-by-deal
basis due to investor preference.
HFM: What makes Guernsey’s private equity market
an att ractive location to asset managers?
VV: Guernsey has a very well-established regulatory
framework which demonstrates a good mix of fl exibility
and pragmatism. It boasts a highly-regarded fi nancial
regime that has att racted asset managers and investors
across the globe looking to build on their existing fund
relationships. Asset managers are particularly appreciative
of the fast track regulatory options available in Guernsey.
HFM: What services does RBC off er to private equity
funds in Guernsey?
VV: We provide a full suite of services necessary for asset
managers looking to establish fund structures in Guernsey.
Most private equity fund structures are established as
closed-ended limited partnerships with a Guernsey company
acting as the general partner. Th ere are also carried
interest and co-investment structures oft en included in
Our services include administration and fi duciary services
to the fund, general partner and the related carriedinterest
structures along with custody and banking services
necessary to fund structures. We off er a highly customised
approach and work with all types of asset managers - be it
a start-up manager or an established asset manager raising
their follow-on funds - and can assist right from the inception
stage working with the legal advisers and other key
Aside from the core fund administration service, our institutional
reach means that we are able to provide more
value-added services such as bridge fi nancing options,
wealth management solutions to the key investment professionals
and other stakeholders with the asset manager,
and also custody options when the portfolio companies
decide to go for a listing. We work closely with colleagues
is an alternative investment
funds specialist with
over nine years’ relevant
experience. Based in
London and having worked
for organisations in North
America, the Caribbean,
Western Europe and
the Middle East, he has
been with RBC since 2011,
focusing on new business
VIGNESH VIJAYAKUMAR, SENIOR MANAGER, CORPORATE &
INSTITUTIONAL SERVICES, RBC WEALTH MANAGEMENT, DISCUSSES
THE MAIN TRENDS IN THE FUNDS INDUSTRY IN GUERNSEY
HFMWEEK . COM 11
F I N A N C I A L S E R V I C E S
in our capital markets division to fully leverage this institutional
reach in order to provide the best value-added
service to our clients.
HFM: What are the main trends you see in the administration
sector in Guernsey?
VV: Private equity fund administration has always been a
highly customised service offering for us and increasingly
each client adopts a slightly different approach either with
the fund structures, economic terms or investor reporting
with more tailored capital account statements etc. Though
managers have generally adopted the EVCA reporting
guidelines, we are seeing many managers now considering
some of the ILPA guidelines towards reporting.
It is important that service providers are well-equipped
to handle more complex fund structures and flexible reporting
requirements for the asset managers. We are also
seeing an increasing number of side letters with investors
and often many of the side letter terms provide for
an enhanced reporting frequency or additional information.
We assist the asset managers in meeting the requirements
and ensure that the fund complies with the obligations
assumed in the side letters.
HFM: What are the typical challenges faced by fund
managers when establishing a private equity fund?
VV: Be it a start-up asset manager or an asset manager
with a track record, it is beneficial to engage key service
providers from a very early stage of the discussions. It is
important to discuss with the legal advisers establishing
a well thought out fund structure with carried interest,
co-investment and holding companies for the relevant
investments. It is also important to consider the target
investor market and adequately provide for any feeder
structures, if necessary.
Aside from the structure aspect, there are challenges
relating to the economic terms and particularly investors
requesting preferential fee arrangements for seed capital.
Investors are also often quite keen to understand the deal
flow of the asset managers and seem to focus both on the
investment and operational due diligence aspect prior to
HFM: How does RBC help asset managers meet the
requirements of the changing regulations such as Fatca
and the AIFMD?
VV: There have been lots of regulatory changes within the
asset management industry. We follow regulatory updates
closely and work with legal advisers in all the jurisdictions
to ensure that we remain well-positioned to assist our clients
in meeting the relevant obligations. Our clients often
look to us to guide them through the ever-changing regulatory
landscape and being part of a larger institution puts
us in a favourable position in having these conversations.
We have dedicated teams looking at the regulatory changes
and receive frequent updates about how the changes
impact the industry.
HFM: What are your predictions for the market in
Guernsey over the next year?
VV: Guernsey has always been an attractive domicile and
this will continue to be the case. Private equity and real
estate structures are quite popular and we anticipate increasing
activity levels in the market. Guernsey’s robust
regulatory regime will continue to remain attractive for