Guernsey: Guernsey And MENA – The Right Place At The Right Time

Last Updated: 11 October 2013
Article by Fiona Le Poidevin

Most Read Contributor in Guernsey, July 2017

Fiona Le Poidevin, of Guernsey Finance explains why Guernsey is a leading investment funds domicile and why it attracts significant business from the MENA region.

In July, the MENA Private Equity Association published its annual report for 2012. It reported that the fundraising environment remained relatively challenging with a decrease in total funds raised compared to 2011. However, the private equity industry in the Mena region was continuing to show signs of recovery in 2012 with an increase in the number and total value of known investments compared to the previous year.

It will be very interesting for us to hear how the Mena private equity community is faring this year when we attend the SuperReturn Middle East conference in Abu Dhabi in October. The conference has become a staple of our marketing activity in recent years. This year, the representatives joining us from Guernsey's investment funds sector will be Richard Avery-Wright from asset manager RAW Capital Partners, Mark Douglas of fund administrator Mercator and Darren Bacon from law firm Mourant Ozannes.

We are reminding private equity managers in the Middle East that during the past 50 years Guernsey has established a reputation as a leading investment funds domicile. It possesses a wealth of expertise and first class infrastructure for the structuring, management, administration and custody of not just traditional funds but also alternative and esoteric asset classes.

Indeed, during the past two decades, the sector has seen the balance of business move from being largely retail, equity-traded/cash-based schemes to predominately institutional and alternative funds, especially private equity. This period has also seen us attract significant business from the Mena region.

Mena business in Guernsey

Mena asset managers with Guernsey-domiciled investment funds include Arab Bank, Ahli United Bank, Global Investment House, Kuwait Investment Company, MENA Capital, Mubadala, the National Bank of Abu Dhabi and Strategia Investment Company.

More specifically, Arab Bank has a number of investment products domiciled in Guernsey. The funds, structured within Protected Cell Companies (PCCs), have been set up to attract investment from institutional clients in the Mena region.

Examples include the AB MENA Feeder Fund, the IIAB Sukuk & Murabaha MENA Fund and the IIAB MENA Feeder Fund which were each established with legal advice from Mourant Ozannes and are serviced by local administrators Legis and custodians Butterfield Bank. All three are listed on the Channel Islands Stock Exchange (CISX) and were established adhering to Shariah principles.

Locally based Argyll Investment Services (now part of MitonOptimal) was responsible for the launch of 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 and the fund administrators are Legis.

In addition, other Mena investment houses such as SHUAA Capital and the Islamic Development Bank have their funds domiciled in another jurisdiction but the administration is carried out in Guernsey due to our mature infrastructure and expertise.

Infrastructure and expertise

The net asset value of investment funds under management and administration in Guernsey reached more than £286bn (US$452bn) at the end of June 2013 – up 5.6% year on year and 26% in the last three years. Within these figures, private equity has experienced particularly strong growth, reaching more than £86bn (US$136bn) at the end of June 2013 – up 6% in the year and 65% since June 2010.

Guernsey's expertise in the private equity space was confirmed by a Private Equity News and State Street survey where 61% of chief financial officers who responded said the island was their preferred destination for private equity outsourcing.

Guernsey-based administrators range from large, multinational organisations to independent, boutique providers. These include specialised private equity fund administrators such as Alter Domus, Augentius, Aztec, International Administration Group (IAG) and Ipes, as well as globally recognised names such as HSBC, JP Morgan, Northern Trust, RBC and State Street who can also act as custodians. A large part of their business relates to Guernsey open and closed-ended funds, which are now promoted and sponsored by leading institutions in more than 55 financial centres globally. These can be established through a range of flexible investment vehicles such as companies, limited partnerships, unit trusts, the Guernsey-pioneered PCCs and Incorporated Cell Companies (ICCs).

However, the high levels of expertise and mature infrastructure of the island's investment funds sector mean that Guernsey providers are often asked to service schemes domiciled in another jurisdiction, such as the Cayman Islands or the British Virgin Islands (BVI). As previously mentioned, some Mena asset managers already take this approach.

Managers who have used the 'non- Guernsey schemes' route have been so impressed by the service standards in the island that they have either migrated funds to, or established subsequent structures in, Guernsey. This is something we might expect to see continue, if not accelerate, as the legacy of the global financial crisis leaves fund managers and investors increasingly seeking greater substance to their arrangements.

Indeed, Guernsey is also home to some of the leading global private equity houses, including Apax, BC Partners, EQT, Mid Europa, Permira and Terra Firma. They not only have their funds serviced in Guernsey but have also established a physical presence in the island with offices and staff.

This is another trend we might expect to see continuing, if not accelerating, especially among European-headquartered investment houses who are seeking to ensure there is sufficient substance behind their arrangements in order for their management entities to be outside the EU for the purposes of the EU's Alternative Investment Fund Managers Directive (AIFMD).

Regulation

The AIFMD seeks to regulate EU-based Alternative Investment Fund Managers (AIFMs), managers of EU established Alternative Investment Funds (AIFs) and managers that market AIFs into the EU. So, in essence, if either the manager or the fund has a relationship with the EU then the Directive comes into play.

Guernsey is not in the EU (although it is in the European time zone) and therefore, is not required to implement the AIFMD. However, Guernsey has evolved its regime to ensure that we can continue to service both EU and non-EU business in the most effective way.

Managers and funds with no connection to the EU continue to be able to use the existing regulatory regime which is completely free from the requirements associated with the AIFMD, thereby having significant operational and cost benefits. Yet, Guernsey can also offer managers access to the EU markets through the continuing National Private Placement (NPP) regimes until at least 2018, while the Island is also in the process of establishing a fully equivalent AIFMD regime from 2014.

This means that Mena investment houses can use Guernsey for either non- EU or EU business. Indeed, the island is ideally placed for Mena fund managers to access European capital markets. Guernsey structures can list on the CISX, Euronext Amsterdam, Frankfurt and the London Stock Exchange (LSE). Indeed, there are more non-UK entities listed on the LSE markets from Guernsey than any other jurisdiction globally. Guernsey also offers access to other exchanges around the world, including Toronto, Australia and Hong Kong.

Conclusion

The conclusion is that Mena investment houses, in particular those wishing to access EU markets, should be aware of Guernsey's strength as a private equity funds centre. The Mena investment community already uses structures or services in the island and the changed international environment means that Guernsey is very much the right place at the right time for Mena private equity business.

Originally published by Mena FM, October 2013.

For more information about Guernsey's finance industry please visit www.guernseyfinance.com.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
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).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.