During the last few years a large
section of the European private
equity community has been
focused on the European Union’s (EU’s)
drive for increased regulation, principally
through the Alternative Investment Fund
Managers Directive (AIFMD).
Speaking to promoters and investors
further afield it is quickly apparent that
AIFMD has been less of a pressing
issue however, when they discover that
it means a growing compliance burden
and therefore increased costs then they
are instantly more cautious about raising
money from within Europe.
the guernsey model
Yet, rather than being part of the
problem, Guernsey is part of the solution
because while the Island is in Europe
geographically, it is not in the EU and
therefore, has not been required to
Guernsey has introduced a dual regulatory
regime whereby it is possible to continue
to distribute Guernsey funds into both EU
and non-EU countries.
The approach means managers and funds
with no connection to Europe can still use
Guernsey’s continuing regulatory rules which
are completely free from the requirements
and costs associated with AIFMD.
For managers wishing to market into
Europe, Guernsey provides a European
platform but one which is not actually
in the EU. Indeed, the National Private
Placement (NPP) route is being favoured
by many as it means little or no change to
how things were done before AIFMD.
For those managers with elements of EU
and non-EU business, parallel structures
can be utilised. It will be possible to place
non-EU business in a parallel or feeder
structure for which AIFMD compliance
would neither be required nor necessary.
Guernsey also has a new opt-in regime
which is fully AIFMD compliant for those
who require it.
The point is that Guernsey’s dual
regulatory regime provides optionality
that allows clients to be serviced in the
manner most appropriate to their specific
Guernsey has significant substance
already present within many existing
structures and professionals with
expertise in portfolio and risk
management. Corporate governance is
enhanced by having a significant pool of
experienced non-executive directors.
Global private equity houses Apax,
Apollo, BC Partners, Coller Capital,
HarbourVest, Pantheon and Permira have
their funds domiciled and serviced in
Guernsey (with a number also having
offices and staff present).
Guernsey has administrators and
custodians ranging from major international
names, such as Northern Trust and State
Street, to specialist independent private
equity service providers.
Guernsey’s funds industry now manages
and administers more than 1,000 funds
valued at nearly half a trillion US dollars, with
the net asset value of private equity funds
increasing 123% over the last five years.
Guernsey domiciled investment funds are
distributed to all corners of the globe.
The first Chinese currency focused bond
fund, the Renminbi Bond Fund was
established in Guernsey in 2007 by Stratton
Street Capital LLP as an open-ended fund in
a Protected Cell Company (PCC) structure. It
is listed on the Irish Stock Exchange.
Quality of service in Guernsey is
evidenced by the fact that our providers
now service $140 billion worth of openended
funds which are domiciled in other
jurisdictions where there may be local
Guernsey’s strong ethos of corporate
governance is also demonstrated through
its position as a centre for listed vehicles;
the two largely go hand-in-hand as
companies are subject to and adhere to the
rules applicable to the various international
stock exchanges on which they list.
Guernsey acts as a gateway to list vehicles
on stock exchanges around the globe,
including, among many others, the local
Channel Islands Securities Exchange (CISE),
exchanges in Frankfurt and Amsterdam, the
Hong Kong Stock Exchange (HKEx) and the
London Stock Exchange (LSE). LSE figures
show that there are more Guernsey entities
listed on its markets than from any other
jurisdiction globally (ex-UK).
Non-EU managers, including many from
Asia, are of the view that regulation is
making it especially difficult to market
funds into the EU. Guernsey offers a
solution based in a European time zone
with access to the EU market but without
the administrative and cost burden of
AIFMD and from a jurisdiction which has
significant substance, high standards and
a global reach.
Guernsey – A European fund
centre with a difference
By Fiona Le Poidevin, Chief Executive of Guernsey
Finance – the promotional agency for the Island’s
www.guernseyfinance.com | [email protected] | +44 (0) 1481 720071