Originally published in The Fund Business, Guernsey
Supplement, February 2008
Andrew Howat, managing director, Capita Financial
Group in Guernsey, answers some of the critical questions
surrounding the funds industry and specialist investment on the
How Do You Account For The Success Guernsey Has Seen In
Attracting Specialist Investment Funds?
The main attraction has been the regulatory environment the
GFSC (Guernsey Financial Services Commission) has established
us a reputation for robust but pragmatic regulation. Their
willingness to talk to and work with the industry has enabled
us to be more creative with our offerings.
The Island has had a fund industry for four decades, with
significant growth over the last five years. As a result there
is a lot of administrative capability on Guernsey, covering the
funds sector from private equity to hedge funds, fund of funds
and property. There are some well-known participants here who
have built up their portfolio and talent pool over time and can
support the industry.
Another key factor is the flexible investment vehicles that
are available, from unit trusts to limited partnerships, PCCs
(Protected Cell Companies), ICCs (Incorporated Cell Companies),
and closed-ended companies.
Which Vehicles Are Particularly Suited To The Island, And
In recent years we've seen growth in tax-transparent
general partnership and limited partnership structures,
especially in the private equity world.
Other areas of growth include qualified investor funds aimed
at professional investors. ICCs and PCCs are also important
these have been created out of Guernsey with the idea of making
the Island more competitive, particularly in terms of
Many Asset Managers Are Considering Diversifying Into
Property, Hedge Funds And Fund Of Funds What Are The Practical
The big growth areas have been in property and fund of
funds. Property managers seeking to invest outside of the UK
have had to come to terms with multi-jurisdictional structures
perhaps put through places like Luxembourg and Cyprus. Those
are becoming more prevelant as the asset base spreads across
the continent and farther afield. A big challenge, particularly
in property and institutional private equity, has been getting
the correct service providers with adequte expertise and
accounting platforms. For hedge funds, the focus has been
hiring the right administration partner to provide efficient
solutions for calculating underlying fees, making equalisation
calcuations, et cetera.
What Are Closed-Ended Funds As Defined In Guernsey And Why
Are They Popular?
One of the most recent changes that the GFSC has adopted has
been the introduction of the registered fund regime for
closed-ended companies. This has resulted in the ability to use
a structure that's not directly regulated by the
Commission the onus is passed on to the administrator for the
necessary checks. Commercially the impact has been faster
turnaround times for fund raisers to get their schemes
together, enabling them to do so within reasonably tight
timescales. We had a surge last year, for example, in AIM
listings and the turnaround times for closed-ended schemes
helped immensely in allowing us to meet their time frames.
The Market For Offshore Domiciling Of Funds Is Very
Competitive What Should Asset Managers Look For In A
Having a pragmatic, innovative regulator and service
providers is a key factor the GFSC's open dialogue has
been instrumental in providing a good regulatory environment.
That gives our fund industry a competitive edge over other
jurisdictions. Having an educated and flexible workforce is
also essential, as are well-established and qualified service
How Well Positioned Is Capita Financial Group, And The
Guernsey Fund Industry In General, To Manage Asset Growth Going
Capita Financial Group are very well positioned we have
invested in the latest suite of applications from SunGard,
capable of catering for most types of offshore structure. We
also have a robust outsourcing operating model, with accounting
valuations and transfer agency processing handled in our
centres of excellence outside the Island. Our solid operating
model uses economies of scale and will allow us to grow
substantially over the next few years, ensure quality of
service, and not be dependent on the restrictions of limited
employment within a small jurisdiction.
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