Originally published in MENA Fund Review, October
Peter Niven, Chief Executive of Guernsey Finance
– the promotional agency for the Island's finance
industry, explains why the jurisdiction continues to prove
attractive to MENA managers.
As the promotional agency for the Island's finance industry,
we have just returned from exhibiting at SuperReturn Middle East in
Dubai. Making a visit to the region in the final quarter of the
year has become a staple part of our promotion and marketing
activity in recent years. Once again, we were joined by
practitioners from the Guernsey investment funds community,
including administrators Legis, Praxis and Kleinwort Benson and law
firms Ogier and Appleby. What we have learnt is that Guernsey
remains a jurisdiction which is very attractive to MENA fund
Guernsey's position between the UK and France makes it a
convenient location for doing business. There is connectivity to
the London and European markets and being in the same time zone as
the UK means that business can be conducted with the MENA region
– as well as both the Far East and the Americas
– during the same working day. In addition, Guernsey is
English speaking and uses the British pound (Sterling). As a
British Crown Dependency we have legislative and fiscal
independence and our special relationship with the EU means that
Directives do not apply, unless voluntarily accepted.
Infrastructure and expertise
This environment has attracted several hundred financial
services firms to the Island during the last 50 years. Today, we
have a broadly based finance industry, including a leading
investment funds sector with a wealth of expertise and first class
infrastructure for the structuring, management, administration and
custody of not just traditional funds but also alternatives and
esoteric asset classes.
This diversity has helped the sector insulate itself from the
worst effects of the financial crisis and rebound more quickly than
many of our competitors. The net asset value of investment funds
under management and administration in the Island reached more than
£274 billion (US$ 428 billion) at the end of June 2011
– up 4% in the quarter and 22.5% year on year.
One of our greatest strengths is the ability for Guernsey
structures to list on the Channel Islands Stock Exchange (CISX)
– which has more than 4,500 securities listed, Euronext
Amsterdam, the exchanges in Frankfurt, Toronto and Australia, as
well as the London Stock Exchange (LSE). Indeed, data from the LSE
shows that there are more Guernsey entities listed on its markets
than there are vehicles from any other competitor jurisdiction.
In addition, Guernsey has also recently received the green light
for local companies to list on the Hong Kong Stock Exchange (HKEx).
This approval is a particularly significant step in helping us to
diversify our business base. We remain focussed on maintaining
streams from our traditional introducer markets of the UK
(principally the City of London) and Europe but we are also seeking
to attract more flows from further afield and in particular the
A MENA favourite
Guernsey already has significant business from the MENA
For example, Global Investment House has launched Global MENA
Financial Assets Limited, a Guernsey closed-ended authorised
fund, which raised approximately US$500m and is
listed on the LSE. The fund is managed by Global Capital
Management, one of the largest private equity teams in the MENA
region, and is investing into a diversified portfolio of financial
sector assets focused predominantly in the MENA Region.
In addition, Arab Bank has established Guernsey-domiciled Class
B authorised open-ended investment schemes as PCCs with the cells,
the AB MENA Feeder Fund, the IIAB Sukuk & Murabaha
MENA Fund and the IIAB MENA Feeder Fund. These were
established with legal advice from Mourant Ozannes and are serviced
by administrators Legis and custodians Butterfield Bank as well as
being listed on the CISX.
The IIAB Sukuk & Murabaha MENA Fund and the IIAB
MENA Feeder Fund have been established as adhering to Shariah
principles. Guernsey's reputation for expertise in this area is
further illustrated by the fact that last year the locally based
Argyll Investment Services launched the World Shariah Funds PCC
Limited, a Guernsey-based suite of Islamic-compliant investments,
listed on the CISX. The legal advice was provided by Ogier, the
fund administrators are Legis.
These examples illustrate the way in which Guernsey is already a
favourite among MENA managers but we are looking to build on these
relationships so that these flows are enhanced in the future.
Many people are baffled by trusts, the purpose of which they don't fully comprehend. Some even regard them with suspicion, as tools of of opaque tax evasion strategies of a type favoured by wealthy individuals.
We were recently instructed by a Bank in relation to a regulatory matter. The Bank had made a suspicious activity report to the Financial Investigation Unit ("FIU") due to their concerns about the potential source of funds in an account.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).