Guernsey has established itself as a sophisticated, stable jurisdiction for the structuring of alternative investment funds and bespoke vehicles. Among its suite of offerings, Guernsey permits the formation of unregulated structures specifically designed for single investors who wish to invest in a portfolio of assets and for multiple investors who wish to invest in a single asset – with both of these options usually falling outside the scope of regulatory supervision. In these cases, the Guernsey regime provides fund managers and investors with efficiency, flexibility and commercially pragmatic solutions.
Strategic use
The Guernsey regulator adopts a risk-based, proportionate
approach. For fund managers, the key takeaway is that Guernsey does
not impose regulatory obligations where the risks to investors or
the jurisdiction's prominence as a leading financing centre are
minimal.
Single investor structures, such as managed accounts, co-investment
vehicles or private client structures, and single asset vehicles
such as real estate or infrastructure holding companies can be
typically used in the following contexts:
- Dedicated mandates for one investor: A fund
manager may establish a structure to execute a tailor-made
investment strategy for a specific institutional client or family
office.
- Sidecar and co-investment or parallel
vehicles: Managers may form a Guernsey vehicle to offer
co-investment rights or opportunities alongside a main regulated
fund, often for a single transaction, potentially jurisdictionally
driven.
- Single asset structures: Particularly for real
assets or direct private equity deals, it is common to establish a
special purpose vehicle for the sole purpose of holding one asset,
potentially with multiple investors. This may could be for a range
of purposes, including offering investment exposure to investors
who wouldn't ordinarily be able to access such opportunities
alone.
- Seed structures: Early-stage investment ideas or strategic joint ventures may be structured without significant fundraising, often with just one strategic or cornerstone investor. For new and upcoming managers, the ability to create lightly regulated or unregulated vehicles for single investors or to invest in a single asset or opportunity allows them to respond quickly to investment opportunities, reduce time-to-market, and execute one off deals, all within a well-respected international finance centre.
In these scenarios, Guernsey's framework enables managers to launch a vehicle that operates with minimal regulatory friction, keeping costs down, while still relying on a robust legal and fiduciary backbone.
Why are these structures often outside regulatory scope?
Those structures which have only a single investor or invest in
a single asset are not considered to be collective investment
schemes (funds) under Guernsey's regulatory laws and would not
generally be subject to regulation.
Each structure should always be assessed on a case-by-case basis to
establish whether regulation may be triggered.
Furthermore, if a structure grows in complexity, and the fact
pattern changes, it may then fall within the scope of
regulation.
Service providers are key
It is important to note that while the fund or vehicle may not
be regulated under Guernsey's regulatory laws,
Guernsey-licensed service providers including administrators,
directors and custodians remain subject to legal and regulatory
supervision. This ensures that the infrastructure supporting even
private vehicles maintains professional standards and upholds
adequate AML and CFT oversight and functions.
This approach instils confidence to fund managers and investors
alike, without introducing regulatory burdens disproportionate to
risk.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
