This article was originally published on 7 January 2008.
The value of private equity funds in Guernsey rose by 9% in the third quarter of 2007.
Figures from the Guernsey Financial Services Commission (GFSC) show that by the end of September 2007 there were 226 such funds with a total value of £28.4bn up £8bn (40%) in the first nine months of 2007 and 2.4bn (9%) during the third quarter alone in spite of the credit crunch.
"These statistics are particularly impressive given the economic climate during the period. As such they illustrate how Guernseys vast private equity experience and expertise is gaining ever-increasing recognition from fund sponsors and promoters across the world," said Peter Niven, Chief Executive of Guernsey Finance the promotional agency for the Islands finance industry.
These results follow from a trebling in the value of Guernsey private equity funds between the end of 2002 and the end of 2006.
The excellent figures have also been backed up by third-party endorsements: leading City of London lawyer, Bridget Barker of Macfarlanes, has asserted that Guernsey is "the jurisdiction of choice for private equity"; and Jon Moulton, Founder and Managing Partner of Alchemy Partners who now lives in Guernsey has said that the Island is "a terrific place in which to do business".
In addition, leading private equity firm Terra Firma has announced that early in 2008 it is opening an office in the Island.
These ringing endorsements come on the back of Guernsey listed fund transaction, KKR Private Equity Investors LP, from Kohlberg Kravis Roberts & Co, raising more than US$5bn before being launched on Euronext Amsterdam. It subsequently won Equity Deal of the Year at last years International Financial Law Review (IFLR) European Awards.
Following on from KKR there have been other notable Guernsey private equity funds, including the largest central European buyout fund in excess of ¬1bn Mid Europa III LP; Valdivia Private Equity Fund; Energy Ventures III; AA Development Capital India Fund a joint venture between Ashmore and Alchemy; and EQT V Limited (Clifford Chance) which raised ¬4.25bn.
Mr Niven added: "This body of evidence is just the tip of the iceberg but it clearly illustrates Guernseys credentials as a jurisdiction of choice for private equity the Island is a private equity success story."
Mike de Haaff, chairman of the Guernsey Investment Funds Association (GIFA), said: "Even putting aside the tax neutrality of the Island, our success in private equity is down to the intellectual property that has built up, the experience and infrastructure now on the Island in not only setting up these products but also in their administration. Guernsey has a long-established expertise in this area.
"The majority of the business still comes through lawyers in London and it is a known fact that people come to Guernsey for private equity. Word of mouth is a big factor in the relatively small private equity community. Its recognition that we have everything in place and are well placed to set up these products.
"Also in the private equity arena, as with many other products now, management control issues and corporate governance are more to the fore and we are very conveniently located for directors to get on an aircraft to Guernsey for board meetings on the Island."
Notes:
Guernseys Fund Industry
Overall fund business in Guernsey grew by £8.9bn (5.7%) in the three months to the end of September despite significant market turbulence during the quarter. That took the total value of funds under management and administration to a new high of £164.5bn an increase of £44bn (36.5%) year on year.
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.
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