In little more than a couple of months since the new funds regime was rolled out at an industry briefing in London's financial heartland, two significant global players have set up new hedge fund manager operations and others are laying plans to follow.
Legislation required to introduce the new Specialist Fund and Qualifying Fund – and to update the Experienced Investor Fund, took effect at the beginning of November. It follows publication of the Smith Report earlier this year, which looked at future opportunities for the Island's funds industry. Central to its recommendations was the introduction of two new fund types, one targeted at the institutional funds market and another aimed at non-retail investors.
There were also implications for existing Experienced Investor Funds and the Financial Supervision Commission have announced new licensing arrangements for managers and asset managers to complement the new regime.
The Smith Report was commissioned by the Treasury and chaired by Paul Smith, formerly Head of HSBC's Alternative Fund Services Division. It comprised both public and private sector interested parties, including the Fund Managers Association and was coordinated by Isle of Man Finance.
FSC Chief Executive, John Aspden, said: I am delighted that the successful partnership with industry, Treasury and the Commission has resulted in a new suite of funds appropriate to the modern marketplace for both institutional and non-retail investors. It is pleasing that this close cooperation has allowed the Island to swiftly and commercially implement these recommendations of the Treasury appointed Funds Review Group. I look forward to continuing this partnership as we work to provide the appropriate regulatory environment to support the Island's funds industry now and going forward.'
Unveiled At InvestHedge
David McGarry of KPMG, who has steered the changes on behalf of the fund managers, said: 'Having successfully implemented many of the recommendations set out in the Review Group report, which was submitted to the Treasury earlier this year, we re-launched the Isle of Man's funds offering at the major InvestHedge Conference held in the British Museum in mid-September.
'Our marketing efforts have already translated into two new hedge fund manager setups (see stories below). These are very early success stories and it is now vital that we maintain our momentum over the coming months. In this regard, it is proposed the Isle of Man will sponsor two major hedge manager focused conferences during 2008 – EuroHedge Paris in April and InvestHedge London in September. It is planned that significant Isle of Man representation will be present at each of these events.
Isle of Man Finance' Brian Donegan believes the success of the new initiative will spur on the industry to reach its targets of (US)$50 billion in funds under management and (US)$100 billion under administration by 2010.
'Tremendous Scope To Expand'
'The establishment of these high calibre organisations in the Island is a testament to our dynamic new funds regime and a further indication of the success of the model developed from our recent strategic review of the sector. There is tremendous scope for the international hedge fund manager community to base a substantial part of its operations in the Isle of Man.'
Emerging Markets Specialist – Bridge Asset Management Sets Up Operation
Bridge Asset Management is moving significant middle, back office and trading execution to the Island, while basing the fund advisor in its prestigious head office in London's Mayfair.
Bridge Asset Management is a leading specialist in emerging markets that will now base a substantial portion of its global business in the Isle of Man. This includes middle, back office and trading execution while its fund adviser will operate from the company's head office in London's Mayfair.
The company has moved to the Island as a direct result of the Island's new regime for alternative funds. Bridge can take advantage of the strong regulation, robust infrastructure and cost-effective base that the Island offers businesses.
Bridge Asset Management Launch First Fund
Partners Nick Corby, Gary Cressman, Aelita Arampova and Mark Slater established Bridge Asset Management in August. The firm's first fund, Bridge Global Opportunities Fund, was launched in October.
The event-driven fund, which is set up as part of a Cayman Islands segregated portfolio company, will concentrate on special opportunities within emerging markets. Over time, Bridge plans to increase the size of its operations in the Isle of Man as other fund strategies are added.
Mark Slater, Bridge's General Counsel, said: 'When we formed the business we were presented with a number of choices in the decision of where to base our management services. In the end, the choice was simple.
'The Isle of Man authorities were eager to assist us in the establishment of operations and the process of gaining the requisite licences was extremely efficient and prompt. The prevailing can-do attitude and professionalism is impressive.'
Pelham Sets (US)$500 Million New Fund Target
Hedge fund manager Pelham Capital Management is splitting its new operation between the Isle of Man and London.
Headed by Ross Turner and Hadyn Cunningham, Pelham opened its London office in July and launched its new long/short European Equity Hedge Fund on November 1. The firm has set a target of raising (US)$500 million from institutional investors.
'As a Triple A-rated jurisdiction by Standard & Poor's, the Isle of Man offers an investment grade location for hedge fund managers,' said Director Ross Turner. 'In addition, the dual attraction of experienced staff and a competitive cost base make the Isle of Man a perfect location for growing the business.
'Further attractions for us are the Island's tax neutral environment, strong regulatory reputation and its close proximity to our London office within the same European time zone,' he added.
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