Originally published in HFM Week, Guernsey Special Report, May 2012
The depth of experience within Guernsey's fund administration sector for listing on stock exchanges globally is well founded, as John Le Prevost of Anson Fund Managers explains.
For centuries Guernsey has enjoyed a very close trading relationship with the City of London. While folklore tells us London's streets are paved with gold, the Guernseyman knows they are paved with granite. In 1840, Blackfriars Bridge was paved with setts of Guernsey granite and later in 1862-74, Guernsey setts were again used for London Bridge, the Strand and the Thames Embankment.
Today, Guernsey continues to provide support and services to the City of London but the nature of the supply has moved on from granite setts to become a conduit of financial services for an international client base. More and more businesses from around the world are now looking to use the Channel Islands as their gateway for doing business with the City, and with elsewhere.
In 2010, the then Lord Mayor of London commented while visiting Guernsey: "The Islands are an important conduit for business to and from London, and complement the City's offering in areas including banking, wealth management and specialist insurance."
Guernsey's affinity with stock exchanges
An example of this conduit working exceptionally well for both the City and Guernsey with its international client base is the number of local companies now listed with the London Stock Exchange.
The London Stock Exchange has announced its 2011 year-end statistics showing that Guernsey, as a jurisdiction, was home to more companies listed on its markets than any other non-UK jurisdiction. Guernsey's 108 companies listed on the LSE markets was comfortably more than from any one of the major economic powers of the USA, Russia or India. Within its own group of competitor centres Guernsey was clearly 50% ahead of Jersey, Ireland or the Isle of Man and more than double that of Bermuda, Cayman or the BVI.
Interestingly, Guernsey's dominance as a non-UK jurisdiction hosting listed entities on the LSE's markets is just part of a bigger picture. It surely is no coincidence that Guernsey is home to the Channel Islands Stock Exchange?
The CISX is a success story in its own right, having at the end of last year over 4,300 securities admitted to its official list. This compares favourably with the London Stock Exchange, which lists over 2,500 companies of which nearly a third come from foreign countries.
One of the strengths of Guernsey as a jurisdiction is that its incorporated companies are well recognised and respected by stock exchanges around the world. The CISX's Spring 2012 edition of its magazine Bulletin reports that of its own listed securities, some also hold dual listings on Euronext Amsterdam and the exchanges of Frankfurt, Toronto and Australia, among others.
Dual listing on stock exchanges is not a new concept but it certainly has started to gain a momentum of its own as issuers strive to find the best solutions to satisfy their every increasing requirements and demands.
Whereas perhaps in the past a company might have selected one jurisdiction for its good points and accepted a compromise on other points, internationalisation means no company need be wedded to any one jurisdiction. Obtaining a dual listing on stock exchanges is just one example of 'menu shopping' within multiple jurisdictions, picking from each country whatever is best for the company.
Many a Guernsey company may first list its shares on the CISX for the regulatory and international recognition such a listing provides and then obtain a secondary listing on an exchange in the jurisdiction where most of its prospective investors will reside and so like to trade their shares in the company. In this example the menu items being satisfied are 'recognition' and 'effective trading platform'.
However, while being a Guernsey company it is not necessary to list first on the CISX before seeking a listing elsewhere.
Anson Fund Managers Limited has and does administer Guernsey companies listing their shares solely on London's main market, AIM and the Special Funds Market (SFM); NYSE Euronext Amsterdam, the Irish stock exchange and even the Budapest stock exchange. Through their Crest compliant registrar business, Anson Registrars Limited, they have over the years seen Guernsey companies list on all the home markets as well as abroad using the TSX Venture Exchange in Canada and Hong Kong's stock exchange and recently the GXG Markets for small to medium European businesses.
While many Guernsey investment funds have become listed on many exchanges, a more recent new user has been the hedge fund sector. In November 2006, MW Tops Limited had a most successful €1.5bn raising on Euronext Amsterdam and two years later dual listed on the LSE main market. BlueCrest AllBlue Fund Limited first listed in May 2006 and now has on the LSE main market a capitalisation in excess of £900m.
Another success story
Private equity funds have been a success story too, with HarbourVest Global Private Equity Limited's $830m raising on Euronext Amsterdam in December 2007. There really is no limitation as to what a listed company might invest in or trade in and for Guernsey, that's the interest of administering such companies.
Increasingly, many a listed Guernsey company is no longer a regulated collective investment scheme. A growing number are trading businesses in their own right or the holding company of trading businesses operating in other jurisdictions. For example, in our own stable of clients we have Mytrah Energy Limited owning wind farms in India and the Doric Nimrod Air One & Two companies owning aircraft.
This wide potential of underlying activity provides an interesting dimension to company administration and enhances the inherent knowledge and skills of the workforce. Coupling this variety of activity to a broad range of listing requirements from so many different exchanges has helped Anson carve out for itself a niche skill in a challenging market.
As a true Guernseyman I have absolute faith in the ability of this island to go from strength to strength regardless of the external hurdles to business which appear from time to time. The island once had a formidable ship building industry, then came privateering followed by exporting Guernsey cattle to the Americas and beyond; next came quarrying and of course our export of granite setts to London, and then tomatoes, growers and tourism. They all have had their time as important drivers of the island's economy.
Today the island can be viewed as a gateway to London and beyond for all types of financial services including listing a Guernsey company on a variety of stock exchanges, be they a main market or a specialist sector market. Perhaps in a few years time we might be viewed as becoming a niche gateway into and out of Europe, who knows?
What is known is that Guernsey's finance industry has the ability to look ahead and round corners and view the future in a positive light. When one door closes, invariably another opens, and sometimes two or three. The tenacious Guernseyman will survive and prosper and so too, hopefully, will his ever increasing international client base.
John Le Prevost is the CEO of Anson Group which delivers fund administration and Crest compliant registration services in Guernsey and also in the United Kingdom. John has over 35 years experience of fund administration, stock exchange listings and registration services acros smany jurisdictions
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.