Originally published in the HFM Week, Guernsey Report, June 2008
Ian Hunt of tells HFMWeek why Fortis Fund Services (Guernsey) has reason to be proud
When dealings commenced at 8am on Thursday 29 May at the London Stock Exchange, Fortis Fund Services (Guernsey) Limited, along with Guernsey-based law firm Ogier, had particular reason to be proud. It was at this time that the first fund company admitted to the Stock Exchange's Specialist Fund Market began trading, and the two Guernsey firms had played an instrumental role in making it happen.
The Specialist Fund Market was launched by the London Stock Exchange in November 2007 as a regulated market for highly specialised investment entities. Its lighter regulations were to be aimed squarely at attracting hedge funds and private equity funds – this event marked the culmination of these aims. The listed company in question is the Da Vinci CIS Private Sector Growth Fund Limited (trading under the ticker symbol: DVPS), and it represents both a landmark in the fund industry and the evolving relationship between Fortis and Ogier Law.
Ian Hunt director of Fortis Fund Services (Guernsey) Limited and his team acted as administrator to the Da Vinci CIS Private Sector Growth Fund Limited flagship fund, the CIS Private Sector Growth Fund, and William Simpson and Frances Watson of Ogier advised on the deal. Da Vinci is a Guernsey-based investment management company that focuses investment in Russia and the former Soviet Union.
The Private Sector Growth Fund invests in pre-initial public offering (pre-IPO) investments in the consumer, retail, infrastructure, engineering, financial and real estate sectors in the Commonwealth of Independent States (mainly Russia, Kazakhstan, Ukraine and Central Asia), and is structured as a four-year closed-end vehicle with a two-year extension option.
The Fund is already listed on the Channel Islands Stock Exchange, where it has raised approximately US$90m from private and institutional investors through a private placement at the end of January 2008. With additional funds raised as part of the admission to the Specialist Fund Market, a total of approximately US$110m was admitted to trading today. Having observed this early activity, Hunt says: 'This is a first for the Specialist Fund Market, as well as a milestone for Guernsey and the Channel Islands in general.'
Having a certain appeal
According to Hunt, the nascent pre-IPO market has particular appeal in the current uncertain market climate: "High net worth and institutional investors are shying away at the moment from hedge funds, fund of hedge funds. They're looking for a ready market, tangible and realisable rate of return, which pre-IPO funds are currently providing. Guernsey, and particularly Fortis, specialise not just in pre-IPO funds, but property funds.
"Pre-IPOs absolutely seem the flavour of thelast 12 months. We see no slowing down in that and, indeed, we have a number of pre-IPOs in the pipeline. It's very seldom you see a pre-IPO that doesn't have a very high percentage feeding of equity from the entities or the sponsors related to that fund, so it gives it a high level of confidence for the high net worth and institutional investor. That's at whom these markets are aimed", explains Hunt.
According to William Simpson, partner and head of Ogier in Guernsey, "This was a challenging and immensely satisfying project and a superb opportunity for Guernsey."
Oleg Jelezko, managing partner and CEO of the Da Vinci Capital Group of companies, is also keen to express his satisfaction and concludes: "Da Vinci CIS Private Sector Growth Fund Ltd's admission to trading on the London Stock Exchange's new market, the Specialist Fund Market is a vital step in the development strategy of this flagship product of Da Vinci Capital Management."
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.
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