Guernsey Finance's Dominic Wheatley explains how the
island is working with the BVCA for the future success of British
private equity and venture capital.
At the end of last year, Guernsey Finance was delighted to
attend the inaugural meeting of the BVCA's Channel Islands
Guernsey's geographical location in the English Channel, the
island's close links to the City of London and our position as
one of the world's leading private equity fund domiciles, means
that we have always had a close relationship with the
This is reinforced by the fact that, for several years, Guernsey
Finance has been the exclusive jurisdiction sponsor for the
BVCA's International Series of events held in London. The
formation of the BVCA's Channel Islands Group reflects the
increasing number of issues of common interest and demonstrates
that working together can be of mutual benefit.
One such area is European regulation that impacts on private
equity funds. We have already tackled the initial formulation of
the EU's Alternative Investment Fund Managers Directive
(AIFMD), and this has been deemed a success for both the UK private
equity industry and Guernsey as a private equity fund domicile.
Guernsey is not in the EU (or wider EEA) and therefore, as a
third country, is not required to implement the AIFMD. However, a
large proportion of our funds business relates to Europe in some
form, and we also have a substantial amount of business that
originates from outside Europe.
As such, the island has put in place a dual regulatory regime so
that it is possible to continue to distribute funds into both
European and non-European countries. The previously existing regime
remains for those investors and managers not requiring an AIFMD
fund, including those using National Private Placement (NPP)
regimes and those marketing to non-EU investors, as well as an
opt-in regime, which is fully AIFMD compliant.
Guernsey's opt-in equivalent regime, which has been in place
since January 2014, is appropriate for funds requiring full AIFMD
compliance. However, thus far, many Guernsey managers accessing
Europe have continued to use the less burdensome NPP regimes.
These are working well, with 34 Guernsey managers promoting
funds into 15 EU countries using their NPP regimes during the
transitional year for the implementation of AIFMD. Indeed, it is
understood that several Cayman Islands-domiciled funds are being
migrated to Guernsey to take advantage of the effectiveness of our
route for distribution into EU countries using NPP regimes.
For those with a growing non-European focus, it is possible to
place this business in parallel or feeder structures for which
AIFMD compliance and the associated costs are not required. For
example, Investec Asset Management recently re-domiciled a US$1.2
billion fund focused solely on non-EU investors from Ireland to
Guernsey, to take advantage of our dual regime response to
NPP regimes are expected to remain until 2018, while full
passporting for non-EU managers is expected from July 2015.
Guernsey is doing its utmost to ensure that the island is part of
the first wave of approved jurisdictions for the third-country
This will ensure that a familiar and local jurisdiction with
experience, expertise and a common business culture is able to
continue to offer full market access for the UK private equity
industry. Guernsey is an integral and thriving part of the British
private equity and venture capital industry, and we look forward to
keeping it that way with the support of the BVCA.
An original version of this article was published
inBVCA Journal, Spring
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).