Joe Truelove, Director of Carey Commercial Limited shares his
People like pigeon holes and businesses like silos. Large
organisations seeking to maximise efficiency group together similar
clients and build teams to serve them so they can share experience,
utilise common systems and deliver consistent solutions to similar
clients. Generally funds are administered in specialist fund
administration teams and trusts are looked after by specialist
teams of appropriately qualified trustees. Silos are created,
systems are implemented and everyone knows what styles of clients
fit where. Service delivery is "solutionised"!
But what if a private client wants to utilise a fund structure
that a typical private client trust team is unfamiliar with like a
General Partner and Limited Partnership or a Protected Cell
Company? What if a private equity fund manager wants to launch a
fund but can only find one investor so it's not actually a
fund? What if a fund manager needs a combination of fund
administration and trustee services?
These are increasingly common situations. Fundraising for
investment funds has been very difficult for a number of years now.
Rather than abort the fund launch private equity fund managers are
increasingly entering into club deals, joint ventures and forming
single investor funds. In the open ended fund world the term
"separate managed accounts" has become increasingly
popular. There is no legal definition of a separate managed
account: it has only one investor; it's not a fund but it looks
like a fund. Many commercial properties in the UK and elsewhere are
owned through Guernsey Property Unit Trusts (GPUTs) or other
special purpose vehicles (SPVs). These are corporate trustee
arrangements with trusts which issue units, not the classic
discretionary trust, and may or may not be considered as funds.
In these circumstances firms may need to build bespoke solutions
and smaller more entrepreneurial firms with staff who have a range
of professional experience spanning both trustee services and
corporate administration are well placed to understand client
requirements and provide an appropriate service.
Given ever greater regulation in the EU, the styles of
investment funds forming in jurisdictions such as Guernsey which
are outside the EU are increasingly those which are not regulated
and may not even be funds. The expression "family office"
is regularly bandied about. Family offices have long been courted
by hedge fund managers at conferences held in Monaco where family
office representatives attend for free. Now private equity managers
are chasing the same investors and creating "high net worth
feeder funds" to allow them to invest into their acquisitions.
In these circumstances managing the structures will need a mix of
skills and Guernsey is very well placed with its strong funds and
fiduciaries sectors to provide services to these hybrid
The ideal service provider for this style of hybrid client would
itself be a hybrid team. The firm would need to be dual licensed
under The Regulation of Fiduciaries, Administration Businesses and
Company Directors, etc. (Bailiwick of Guernsey) Law, 2000 and the
Protection of Investors (Bailiwick of Guernsey) Law 1987. The firm
would have a long track record and existing clients who invest in
real assets whether that means private trading companies, property,
infrastructure, ships and planes etc. The company would be used to
working with entrepreneurs, adopt a commercial approach and be able
to make decisions locally. The team in question would understand
both regulatory regimes in place and be close enough to the GFSC so
that when these sometimes unusual structures are first mooted the
new business representative feels confident to discuss any issues
direct with the regulator. Ideally individuals within the team
would have a mixture of company, trustee and fund experience and
relevant qualifications. Being a member of the Channel Islands
Stock Exchange would be an additional advantage.
Any firm with these attributes will be excellently placed to
deal with a rash of new hybrid structures.
Joe Truelove is a Chartered Accountant and a member of the
Society of Trust and Estate Practitioners. He is the Vice Chairman
of the Guernsey Investment Fund Association. His experience
encompasses a wide variety of investment fund structures including
open and closed ended, listed and unlisted funds invested into both
liquid and illiquid assets as well as employment benefit trusts,
international pension plans and assorted special purpose vehicles.
He joined Carey Group in July 2013. Carey Group has been in
existence for 45 years and provides support to a wide variety of
structures for commercial, fund administration, private clients,
family offices and pensions and benefits and was a founding member
of the Channel Islands Stock Exchange.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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