VISITING BRAZIL, CHILE and Colombia earlier
this year I was struck by the way in which Latin American
institutional investors are shifting their allocations away from
simply the traditional domestic market to incorporate wider asset
classes, such as private equity and with global exposure, including
These factors, coupled with a desire to access European capital,
are driving Latin American fund managers to establish
European-based platforms subject to European regulation, such as
the Undertakings for the Collective Investment in Transferable
Securities (UCITS) and the Alternative Investment Fund Managers
However, these platforms require additional layers of compliance
and as such, drive up costs which may be passed on to investors.
Some may be established in this way due to a perceived requirement
for an AIFMD compliant platform.
Whether this is the case or not, Latin American managers and
investors should be aware that Guernsey is a long-standing fund
domicile and service centre, with particular expertise in private
equity, which is able to offer a well regulated environment and
distribution to both EU and non-EU countries.
THE GUERNSEY SOLUTION
Guernsey is in Europe geographically but it is not in the EU
and, therefore, is not required to implement EU directives, such as
UCITS or AIFMD. Guernsey has introduced a dual regulatory regime
whereby it is possible to continue to distribute Guernsey funds
into both EU and non-EU countries. The approach means managers and
funds with no connection to Europe can use Guernsey's
regulatory rules which are completely free from the requirements
and costs associated with AIFMD.
For managers wishing to market into Europe, Guernsey provides a
European platform but one which is not actually in the EU. Indeed,
the National Private Placement (NPP) route is being favoured by
many as it means little or no change to how things were done before
AIFMD. For those managers with elements of EU and non-EU business,
parallel structures can be utilised. It will be possible to place
non-EU business in a parallel or feeder structure for which AIFMD
compliance would neither be required nor necessary.
Guernsey's dual regulatory regime provides optionality that
allows clients to be serviced in the manner most appropriate to
their specific circumstances. Guernsey's funds industry now
manages and administers more than 1,000 funds valued at nearly half
a trillion US dollars, with the net asset value of private equity
funds increasing 6.2% over the year. Guernsey domiciled investment
funds are distributed to all corners of the globe. Global asset
managers such as Apax, Ashmore, Coller Capital, HarbourVest,
Investec, Pantheon and Schroders have their funds domiciled and
serviced in Guernsey. In addition, Brazilian fund manager
Providence Investment Management established an office in Guernsey
earlier this year.
Guernsey also has administrators ranging from major
international names, such as Northern Trust, State Street and
Citco, to specialist independent private equity administrators.
Major global custodians are based in Guernsey and they are now
being supplemented by specialist depositary-lite operations. In
addition to Guernsey funds, our providers service $150 billion
worth of open-ended funds which are domiciled in other
jurisdictions, typically the Cayman Islands or Delaware, where
there may be local substance challenges.
Guernsey offers a solution based in a European time zone with
access to the EU market but without the administrative and cost
burden of AIFMD and from a jurisdiction which has significant
substance, high standards and a global reach.
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.
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