Modern Guernsey is not medieval Venice but there are some similarities – even if they might not be immediately apparent, says Paul Everitt, Providence Group European CEO
In the Middle Ages Venice was a centre of financial innovation and economic prosperity.It was well placed geographically to act as a conduit for trade between Western Europe and Constantinople, the gateway to the East. But international trade was a complex business and financing a shipment of goods across continents was a perilous affair.
Unless you were fabulously wealthy and engaged in multiple deals, there was a terrible concentration of risk. If your ship sank you were in serious trouble. You also had to put an enormous amount of trust in the ship’s captain and crew responsible for delivering your goods, and in the recipients’ willingness to pay you properly.
The genius of the Venetians was to recognise the trading opportunities and to create the means to help people to exploit them. They invented joint-stock limited liability partnerships that enabled risk (and rewards) to be pooled, they developed secondary markets for debt instruments to help make capital available, and they created a banking infrastructure and, in the ducat, a reliable currency of exchange.
In short, they encouraged international trade, facilitating the mobility of money. The model encouraged social mobility, too
– opportunities were open to all, and everyone benefited.
Fast-forward to modern Guernsey and you will see the same ingenuity and ethos that generated so much prosperity and economic benefit in medieval Venice.
The aftershocks of the 2008/9 liquidity crisis are still being felt, with the modern banking system failing to transfer capital from those who have it to those who can successfully use it. But as Winston Churchill once said: ‘A pessimist sees the difficulty in every opportunity – an optimist sees the opportunity in every difficulty.’
Providence has recognised the opportunities arising out of the current difficulties. It is living up to its motto to ‘view the world differently’ and generating rich rewards for investors in the Channel Islands and beyond.
A good illustration of this is provided by the Guernsey- domiciled Providence Investment Funds PCC – a fixed income fund that provides capital through factoring in Brazil.
Factoring is a secured form of business finance that enables the owners of firms that have delivered goods and services but are awaiting invoice payments to borrow against those invoices
to release capital immediately, helping their businesses survive and thrive.
It is a form of short-term finance that is particularly popular and successful in Brazil, enabling us to deliver returns to high net worth investors and institutions of up to 14.25% per annum.
So we are providing vital capital to businesses around the world and generating strong returns for investors. As with the Venetian model, everyone benefits.
Providence opened its international administration headquarters in St Peter Port last year and we continue to grow. Like Venice in Medieval times, modern Guernsey is strategically placed – enjoying the benefit of being between the time zones of the US/Latin America and the Far East.
We completed our acquisition of the Guernsey fund administration business, Fund Corporation, since renamed Lumiere Fund Services.
We have now launched a new wealth management business in Jersey, Lumiere Wealth. This is another example of seeing opportunity where there is difficulty and offering solutions to meet needs.
A shake-up of the way advisers in the Channel Islands can charge is undermining the profitability of institutions that have traditionally enjoyed weighty commissions on initial fees. In response they are looking to close offices and withdraw services.
Using the latest wealth management techniques and unburdened by needlessly large overheads, we can deliver expert financial advice cost-effectively, on the ground and without any erosion of service.
Lumiere Wealth has been founded by a team of financial planning experts with more than 100 years of experience between them. It is already attracting a significant number of clients and growing.
These successes in the Channel Islands are part of a global success story. In just 10 years Providence has become a global business, employing over 200 people in 21 offices across 12 territories throughout the developed and developing world.
We are showing that the principles that underpinned the success of the Venetian empire centuries ago can still bring powerful benefits today.
52 | July 2015
It’s how we view the world.
The Providence Group is a fast-growing network of global financial services businesses. With strategic operations
in the US, UK, Channel Islands, Asia and South America, we use insight and innovation to provide exceptional opportunities for our clients.
Our reputation is built on offering an exciting alternative to traditional models, underpinned by a willingness to behave responsibly, something our investors and the communities in which we operate embrace.
To discover more about what we can do for you, contact info@ProvidenceGlobalSolutions.com
Providence Investment Management International Limited
PO Box 268, Mill Court, La Charroterie, St Peter Port, Guernsey, GY1 3QZ
T | +44 (0)1481 753333
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