Much focus in Europe in recent years has been on the
European Union's (EU's) drive for increased regulation,
principally through the Alternative Investment Fund Managers
As a result, promoters and investors from further afield have
become more cautious about raising money from within Europe because
of what they regard as a growing compliance burden and increased
The Guernsey model
However, rather than being part of the problem, Guernsey is part
of the solution because while the Island is in Europe
geographically, it is not in the EU and therefore, has not been
required to implement AIFMD. Guernsey offers 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 still use
Guernsey's continuing regulatory rules which are 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. Guernsey also has a new opt-in regime which is fully AIFMD
compliant for those who require it. For those managers with
elements of both EU and non-EU business, parallel or feeder
structures can be utilised. In summary, the point is that
Guernsey's dual regulatory regime provides optionality that
allows clients to be serviced in the manner most appropriate to
their specific circumstances.
Promoters can achieve true substance in Guernsey fund
structures. The infrastructure offers professionals with in-depth
expertise in structuring, administering and advising on complex
vehicles and structures as well as experience in portfolio and risk
The Island plays host to a number of major managers such as
Apax, Apollo, HarbourVest, Man Group, M&G, Pantheon, Permira
and Schroders, all of whom have their funds domiciled and serviced
in Guernsey (with a number also having offices and staff present).
Administrators and custodians range from major international names,
such as Northern Trust and State Street, to specialist independent
There is also a plentiful supply of independent non-executive
directors who underpin Guernsey's reputation for high standards
of corporate governance.
Guernsey's funds industry now manages and administers more
than 1,000 funds valued at nearly half a trillion US dollars, with
Guernsey domiciled investment funds distributed to all corners of
the globe. Quality of service is evidenced by the fact that
Guernsey providers now service US$140 billion worth of open-ended
funds which are domiciled in other jurisdictions where there may be
local substance challenges.
The Island is a gateway to capital markets and is currently the
global leader for non-UK London Stock Exchange (LSE) listings.
Guernsey companies can also list on many other international stock
exchanges including Euronext, Hong Kong, and Australia amongst
others. In addition, the internationally recognised
Channel Islands Securities Exchange (CISE) provides a
cost-effective means to access capital or technical listings.
The first Chinese currency focused bond fund, the Renminbi Bond
Fund was established in Guernsey in 2007 by Stratton Street Capital
LLP as an open-ended fund in a Protected Cell Company (PCC)
structure. It is listed on the Irish Stock Exchange.
Managers, including many from Asia, are of the view that
regulation is making it especially difficult to market funds into
Europe. 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 unless required and from a jurisdiction which
has significant substance, high standards and a global reach.
Situated in Europe between the United Kingdom (UK) and
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