In this Q&A James Tracey, Managing Director – Guernsey, highlights why Guernsey is the ideal jurisdiction for funds…
WHAT ARE THE BENEFITS OF CHOOSING GUERNSEY AS A FUND DOMICILE?
Guernsey is a well-established fund domicile and an international finance centre which works for many institutional wealth managers, providing stability and security for a global suite of clients. In the funds space we’ve got an excess of £260 billion of assets which are under administration in Guernsey.
JTC’s team of experts have a deep understanding of what our clients need, to deliver investment structures that work for investors. Guernsey has a wide variety of fund structures to suit each investment strategy and JTC has a long track record of deploying these successfully in partnership with our clients.
In addition to experience and breadth of choice for structuring, Guernsey offers innovative solutions that meet the developing requirements of investors. Guernsey is solidifying its credentials as a ‘green haven’ with its Guernsey Green Fund regime and the ability to list on the ‘TISE Green’ segment of The International Stock Exchange.
HOW IS GUERNSEY POSITIONED AS A FUND DOMICILE NOW IN TERMS OF BREXIT?
Guernsey is in a rare position in that we are not directly affected by the changes of Brexit, we remain outside of the EU but we have access to the European markets through National Private Placement. Guernsey therefore offers access to key European markets and investors without the additional complexity, establishment time and cost overheads often associated with European administration hubs.
While Brexit has undoubtedly been a concern for many investors, Guernsey has always remained positive that we are here to offer a solution for our clients. Dr Andy Sloan of Guernsey Finance wrote in January that “[Guernsey’s] success is built on a bedrock of strong service levels, maintenance of a competitive sector and a commitment to meeting international standards of regulation, tax transparency and, now, economic substance”. It is this certainty and stability that provides fund promoters and investors with peace of mind when choosing Guernsey.
HOW DOES THE GUERNSEY MANCO PLATFORM FIT INTO YOUR OVERALL SOLUTION FOR MANAGERS?
JTC’s management company services were established in response to opportunities for fund promoters to create investment structures, using Guernsey, that are both efficient and robust. One of the advantages of our Alternative Investment Fund Managers (AIFM) platform is that it can remove the requirement for an onshore depositary, which can save on costs and enhance the oversight and decision making of the structure.
JTC’s management company service also supports non-AIFMD investment vehicles. Guernsey has enjoyed a strong history of supporting South African investment managers to establish international investment vehicles. The management company service offering is complementary to the long running success of Guernsey’s Class B Scheme for South African investors. This structure provides additional governance (as is the case for AIFMD structures) and substance in Guernsey from a tax perspective.
WHAT IMPACT HAS THE INTRODUCTION OF ECONOMIC SUBSTANCE LEGISLATION HAD ON GUERNSEY?
The implementation of economic substance legislation has solidified and reaffirmed the best practices that Guernsey has had in place for many years. Guernsey’s approach to ensure that boards are directed, managed and controlled effectively. The legislation supports the existing best practices that board meetings that are convened and chaired in Guernsey and directors regularly attend those board meetings in the island itself.
TO WHAT EXTENT HAS THE LAUNCH OF THE GREEN FUND PROPOSITION BOLSTERED GUERNSEY’S CREDENTIALS?
Guernsey is leading the way globally in its development of Guernsey Green Finance. The Guernsey Green Fund is a very flexible product, allowing managers to have their green credentials certified, and it forms a critical part of Guernsey’s regulatory toolkit to support managers looking to raise capital from investors who are increasingly aware of the importance of sustainable finance and the pitfalls of ‘green-washing’.
In addition, the development of The International Stock Exchange’s green market segment is another way that Guernsey is leading the way in terms of ESG credentials – it’s specifically for green investments, including bonds, funds and trading companies, which enhance or protect the environment. The development of the green segment is not only important in an international context but also for Guernsey and local firms such as JTC where ESG is a core principle that drives behaviours and decisions.
HOW DO YOU SEE THE ALTERNATIVES LANDSCAPE EVOLVING THIS YEAR FOR GUERNSEY?
Alternatives have always been a core component of Guernsey’s funds industry, and Guernsey has a strong history of supporting private equity managers. We are continuing to see strength in venture capital and also opportunistic deals being made due to the current market disruption (and Guernsey offers a number of nimble authorisation routes, where speed to market is needed). We are also seeing a strengthening trend in certain asset classes such as healthcare, networking and distribution which are deployed through venture capital structures. In addition, infrastructure is becoming increasingly important across the Channel Islands.
I believe that our clients will be further diversifying their investments and looking to alternatives more as a result. It is also very relevant to consider the new market cycle phase that we are entering into and the asset class rotation that is being driven by the reallocation of capital by investors. Diversification shields investors from unexpected geopolitical shifts and seeking asset classes that offer real value will be key moving forward, as it always was. It is for these reasons that making a jurisdictional choice that truly supports investor needs (stability, certainty, trust) and their developing requirements (sustainability, governance) is critical to attract capital – and this comes with the benefits of Guernsey’s experience, flexibility and speed. Choosing Guernsey as a safe haven in these times of uncertainty would appear to be the logical choice.
If you would like to discuss the Q&A or find out about JTC’s Guernsey service offering please contact James directly.