Originally published in the Private Equity
Wire, Guernsey Supplement, April 2008
Since 2000 Guernsey has been growing its reputation as a
leading private equity domicile. There is strong competition
between jurisdictions for this business but events of the past
few weeks and months have really crystallised the fact that the
Island now heads the pack.
What really set the ball rolling was the Guernsey listed
fund transaction, KKR Private Equity Investors LP, from
Kohlberg Kravis Roberts & Co, raising more than US$5bn
before being launched on Euronext Amsterdam. It subsequently
won 'Equity Deal of the Year' at last
year's International Financial Law Review (IFLR)
Following on from KKR there have been other notable Guernsey
private equity funds, including the largest central European
buyout fund – in excess of €1bn –
Mid Europa III LP; Valdivia Private Equity Fund; Energy
Ventures III; AA Development Capital India Fund – a
joint venture between Ashmore and Alchemy; and EQT V Limited
(Clifford Chance) which raised €4.25bn.
The latest statistics released by the Island's
financial services regulator, the Guernsey Financial Services
Commission (GFSC), show that overall fund business in Guernsey
grew by £13.7bn (8.3%) in the final three months of 2007
despite continued market turbulence during the quarter. That
took the total value of funds under management and
administration to a new high of £178.2bn – an
increase of £48bn (37%) year on year.
The value of private equity funds trebled between the end of
2002 and the end of 2006 and at the close of last year values
had increased by £5.5bn (19%) during the fourth quarter
and £13.6bn (66%) year on year to reach £34bn at
the end of December 2007.
These impressive figures have also been backed up by the
fact that at the start of this year leading private equity firm
Terra Firma opened an office in the Island.
There has also been significant third-party endorsement by
way of London lawyer Bridget Barker, Partner at Macfarlanes,
who has asserted that Guernsey is "the jurisdiction of
choice for private equity."
In addition, Jon Moulton, Founder and Managing Partner of
Alchemy Partners and who now lives in Guernsey, has described
the Island as "a terrific place in which to do
business." Indeed, he will be the keynote speaker at the
private equity masterclass 'Guernsey –
leading the way in private equity' which is being held
in central London at the start of May in conjunction with the
Guernsey Investment Funds Association (GIFA).
I agree with senior GIFA figure Mike de Haaff when he says:
"Even putting aside the tax neutrality of the Island, our
success in private equity is down to the intellectual property
that has built up, the experience and infrastructure now on the
Island in not only setting up these products but also in their
administration. Guernsey has a long-established expertise in
"The majority of the business still comes through
lawyers in London and it is a known fact that people come to
Guernsey for private equity. Word of mouth is a big factor in
the relatively small private equity community. It's
recognition that we have everything in place and are well
placed to set up these products.
"Also in the private equity arena, as with many other
products now, management control issues and corporate
governance are more to the fore and we are very conveniently
located for directors to get on an aircraft to Guernsey for
board meetings on the Island."
This body of evidence is just the tip of the iceberg but it
clearly illustrates Guernsey's credentials as the
jurisdiction of choice for private equity – the
Island is pre-eminent in private equity.
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