Guernsey 2019 Special Report

FEATURING EY // Guernsey Investment & Funds Association // Guernsey Finance // Locate Guernsey // Northern Trust // Ogier // Walkers WE ARE SPECIALIST

Traditional Guernsey milk cans have been crafted in Guernsey for more than 1,000 years by specialist crafters.

Today, our investment fund practitioners are renowned for their ability to craft specialist products for their clients’ needs.

Guernsey has recently launched its own Private Investment Fund regime to provide managers with greater ﬂexibility and simplicity.

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E: [email protected] weareguernsey.com T: +44 (0)1481 720071 CONTENTS

Guernsey 2019 Special Report

Fund services 06 GUERNSEY: A GLOBAL FINANCIAL CENTRE FOR FUNDS Christopher Jehan, of GIFA, extols the virtues of Guernsey as a stable and amenable funds domicile

Fund services 08 GUERNSEY: INNOVATION, STABILITY AND SUBSTANCE Mark Le Page, an advisory director at EY, displays his views on Guernsey in 2019, and how technology is set to transform the industry over the coming years

Legal 11 THE CAPITAL ALTERNATIVE Craig Cordle, of Ogier, provides his views on Consultancy 18 the current state of the funds environment in MAKING GREEN FINANCE A COMMERCIAL Guernsey, and gives thought to the rise in private REALITY capital sources Dr Andy Sloan, of Guernsey Finance, reflects on the part Guernsey has to play in green finance Financial services 14 SURFING THE WAVES OF OPPORTUNITY IN Legal 20 GUERNSEY GUERNSEY: THE NATURAL HOME FOR Dave Sauvarin, of Northern Trust, discusses how PRIVATE CAPITAL the island is responding to key global market Kate Storey, of Walkers (Guernsey) LLP, explains trends impacting the fund industry why Guernsey is perfectly positioned to support the rise of private capital Financial services 17 PRIVATE CAPITAL AND PRIVATE Government 23 EQUITY ARE COMING TOGETHER GUERNSEY, THE PERFECT HOME FOR FUND Dominic Wheatley, chief executive of Guernsey MANAGERS Finance, highlights new research on a specialist Jo Stoddart, of Locate Guernsey, identifies the development for Guernsey strength of Guernsey’s funds industry

GUERNSEY 2019 HFM.GLOBAL 03 Est. 1964

Walkers Guernsey Legal, Corporate, 12-14 New Street St. Peter Port Guernsey, GY1 2PF Fiduciary & Compliance T +44 (0)1481 723 723 E [email protected] Walkers provides practical and commercial legal advice to our international client base which includes global corporations, ﬁnancial institutions, investment fund managers and high net worth individuals. Advising on the laws of Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland and Jersey from our global network of ofﬁces, Walkers has the expertise to deliver every time.

www.walkersglobal.com Global Legal and Professional Services

Guernsey leads on innovation and substance

ith more than 800 funds domiciled, £280bn in AuM, and more than 50 years of expertise, Guernsey is a significant player in the investment W funds world. That history has been used to develop expertise, particularly in the field of alternative investments and private equity, and continues to be enhanced LONDON by innovations. One London Wall London, EC2Y 5EA And the island has built up significant substance, so that earlier this year the T +44 (0) 20 7832 6500 island received confirmation from the EU Council’s Code of Conduct Group and NEW YORK the European Council of Finance Ministers (ECOFIN) that it had satisfied its legal 41 Madison Avenue substance requirements for entities operating in or through the jurisdiction – that 20th Floor New York, NY 10010 Guernsey was ‘white-listed’ as a cooperative jurisdiction with respect to tax good T +1 646 891 2110 governance. EDITORIAL We were confident about the process. Our diversity, breadth and depth of exper- REPORT EDITOR tise naturally creates a competitive global finance centre, not just around funds, Ross Law and based on the substance of the advice and services we deliver. T: +44 (0)207 832 6535 [email protected] White-listing is a real endorsement of Guernsey as a cooperative jurisdiction and further indication of our ongoing commitment to meeting international standards. HFMWEEK EDITOR Matt Smith In meeting those standards we T: +44 (0)207 832 6627 are able to provide the certainty, [email protected] Our diversity, breadth and depth stability and competitiveness that HEAD OF PRODUCTION our clients demand. The commit- of expertise naturally creates a Claudia Honerjager ment to being a mainstream com- SUB-EDITORS petitive jurisdiction is at the heart competitive global ﬁnance centre Alice Burton, Charlotte Sayers, of our offer. Luke Tuchscherer DOMINIC WHEATLEY Innovation is also at the centre COMMERCIAL of that offer. In the past couple of ASSOCIATE PUBLISHER years Guernsey has launched its Lucy Churchill T: +44 (0)20 7832 6615 Private Investment Fund, a structure ideally suited for ‘club deals’ and attracting [email protected] private capital. HEAD OF NORTH AMERICA And last year we launched the world-leading Guernsey Green Fund, still, to our Tara Nolan knowledge, the only regulated investment fund regime for green assets globally, +1 (646) 335 3438 [email protected] offering market confidence in the product from the regulatory wrapper. That innovation is tapping into the trend of green and socially responsible invest- SENIOR PUBLISHING ACCOUNT MANAGER ing which will not be stopping any time soon. David Butroid The Guernsey funds sector has lived with the shadow of Brexit now for the past T: +44 (0)207 832 6613 three years. Brexit has no direct impact on Guernsey funds as the island is now, and [email protected] will continue to be, outside the European Union, and treated as a third country. Our PUBLISHING ACCOUNT MANAGERS view is that this will create opportunities, as an established and stable jurisdiction Victoria Bennis T: +44 (0)207 832 6615 to establish funds for marketing in Europe through National Private Placement and [email protected] throughout the world. Guernsey’s strengths in global distribution of funds, being the base for Lon- Sigita Gravere T: +44 (0)207 832 6631 don-listed structures, and our ability to address political and regulatory challenges [email protected] through the virtues of both stability and nimbleness, continue to serve us well. THE MEMBERSHIP TEAM There is no doubt that Guernsey – with a combination of high-quality fund ser- +44 (0)20 7832 6511 vice providers and a pragmatic and responsive regulator – is well positioned to con- [email protected] tinue to thrive. CIRCULATION MANAGER As we also look to new markets and opportunities, we can send a strong message Fay Oborne to international investors and managers that Guernsey’s funds industry will contin- T: +44 (0)20 7832 6524 [email protected] ue to be at the forefront of innovation and modern practices. CEO Dominic Wheatley Charlie Kerr

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GUERNSEY 2019 HFM.GLOBAL 05 FUND SERVICES

Guernsey: a global financial centre for funds

Christopher Jehan, of GIFA, extols the virtues of Guernsey as a stable and amenable funds domicile

ncreasingly, Guernsey Christopher Jehan Financial crime ﬁghting is seen as a global fi- Guernsey Investment & Funds Association As with all jurisdictions, Guernsey is I nancial centre of choice Christopher Jehan was elected chair of the Guernsey Investment & Funds Asso- assessed against the recommenda- for many reasons. The ciation in April 2019, prior to which he had served as both vice chair and chair tions set out by the Financial Action of the technical subcommittee. Following a 22-year career with Investec Asset island has an impressive history in Management (ultimately as technical director and director of various funds), he Task Force (FATF), an intergovern- financial services, and our funds launched Midshore Consulting in September 2016. Jehan specialises in regulatory mental organisation established to implementation and international regulation, including cross-border regulation offering has been a major part of applicable to the provision of products and services and automatic exchange of develop policies to combat money information. that over the past four decades. The laundering and terrorism financing. Guernsey Investment and Funds As- Guernsey is measured for compli- sociation, representing our industry, Placement Regime (NPPR, for non- ance against these recommenda- is now 30 years old and our flagship EU funds) faster than utilising the tions by MONEYVAL, a permanent annual event in London, the Guern- passport route, and in some cases monitoring body established by the sey Funds Forum, has just been run cheaper. Secondly, a Guernsey fund Council of Europe. MONEYVAL last for the tenth time. operating under NPPR has to com- made a follow-up visit to Guernsey Guernsey funds can access Eu- ply with eight articles of the AIFMD, in 2014, and the report produced rope. We are not in the European whereas an EU-based fund would showed that Guernsey was compli- Union and, as a result, we do not have to comply with all seventy- ant or largely compliant with all but have access to the funds passports one articles. Finally, an EU-based one of the forty-nine recommenda- available to Ucits and Alternative In- fund must be either Ucits or AIF – tions and special recommendations, vestment Funds (AIFs) in the EU. This, a Guernsey fund does not have to an achievement yet to be matched. however, can be a benefit for Guern- comply with the requirements of ei- sey funds. Firstly, a number of key Eu- ther directive, but instead can make Tax transparency ropean jurisdictions can be reached use of the flexible regulation availa- In 2017, Guernsey underwent its by way of the National Private ble in our island. second-round review in the OECD’s

06 HFM.GLOBAL GUERNSEY 2019 FUND SERVICES

peer review process on exchange of list of requirements beyond what is that are funds and others that are information on request. At this re- applied in its own fund jurisdictions. insurance transformers. view, Guernsey managed to move The GFSC is open to innovation from being ‘largely compliant’ to Regulation and has a regulatory ‘soundbox’ for ‘compliant’. This rating, a testament The Guernsey Financial Services innovation. Last year it undertook to Guernsey’s tax transparency, puts Commission (GFSC) is the island’s fi- two key initiatives. Firstly, it held a the island ahead of many larger ju- nancial services regulator and is an ‘Soundbox Sprint’ competition in risdictions such as Germany, the UK, approachable and pragmatic regu- Guernsey, a chance for firms to bring and the US. lator ensuring Guernsey firms apply their best ideas before a panel of ex- Moving to automatic exchange quality regulation that is recognised perts. The other initiative was to join of information, Guernsey has con- in the international community. the Global Financial Innovation Net- cluded an inter-governmental work joining other financial services agreement with the United States regulators in the world in creating a of America to provide the US In- The Guernsey Financial Services ‘global sandbox’ for innovation. ternal Revenue Service with in- Commission is the island’s formation on US persons holding Global distribution financial accounts in the island. ﬁnancial services regulator and is One key thing when choosing a fund Along similar lines, Guernsey was an approachable and pragmatic jurisdiction is the distribution foot- an early adopter of the Common print it can achieve. Guernsey funds Reporting Standard, another OECD regulator have pedigree in many key markets initiative, and now reports on fi- and are known to many regulators nancial account holder information in the world. There are many facts as part of a network of over one about Guernsey global fund distri- hundred jurisdictions. Also being The GFSC is a full member of the bution, here a few key highlights: a signatory to the OECD country- International Organisation of Se- • A Guernsey fund enables man- by-country reporting convention, curities Commissions (IOSCO), the agers to reach markets repre- Guernsey will likely implement the international body for securities senting 80% of global wealth OECD mandatory disclosure require- regulators. While the island is aware • Guernsey is in the top four ju- ment by the end of the year. of EU directives and regulations, risdictions (outside the US and the GFSC applies IOSCO standards, Canada) for Regulation D private Substance which are the international stand- placement into the US Guernsey is an island of substance. ard of regulation in the fund space. • Guernsey is one of the top four The financial services sector is When looking at EU regulation, jurisdictions for registering the largest group of employers in the Guernsey fund regime has now funds for sale to retail clients in Guernsey. In the funds space we twice been assessed by the Europe- South Africa have fully staffed fund administra- an Securities and Markets Authority • Guernsey has a retail fund sales tors, custodians, fund managers and as being worthy of the AIFMD third Memorandum of Understanding investment managers as well as a country passport, a process that has with Switzerland, and is one of large group of experienced non-ex- been stalled in the European politi- only three jurisdictions outside ecutive directors (NEDs). cal process. the European Union/European When the aforementioned AIFMD Economic Area to have one came into force in the EU in 2014, Innovation • All types of Guernsey fund have Guernsey fund managers had to Guernsey has a history of innova- been successfully registered for show sufficient substance to avoid tion in the fund space. Decades ago, retail sale in Bahrain being seen as ‘letterbox entities’. Guernsey pioneered the umbrella • A Guernsey umbrella fund is one This was a test that we met and ex- fund and since then the first protect- of only four non-Ucits to register ceeded, down to a combination of ed cell companies. This continues, as for retail sale in Luxembourg staff within firms and NEDs togeth- last year Guernsey showed its pio- • Guernsey has all three regulato- er with our decades of experience neering spirit again and put itself ry Memoranda of Understand- managing funds. at the forefront of environmentally ing with the Chinese regulators, Earlier this year, Guernsey was friendly regulation with the advent allowing it to reach the widest assessed by the EU Code Group and of the Guernsey Green Fund, the range of Chinese investors cur- our legislative and regulatory envi- world’s first regulated green fund. rently possible. ronment was found to be compli- Another key innovation resulted ant with the EU’s requirements on from cross-sectoral work between Conclusion substance and placed on the ‘white the funds industry and the insurance- The global reach of Guernsey funds list’. A number of other funds juris- linked securities (ILS) sub-sector and Guernsey’s positioning as a dictions remain on the ‘grey list’ and of our insurance industry. This has quality global financial centre make one was even temporarily added to resulted in the world’s first dual- the island an attractive proposition the ‘black list’. Again, as a jurisdic- regulated insurance and fund prod- for establishing funds. Our members tion we met international expecta- uct whereby a single protected cell are ready to assist you with launch- tions, especially as the EU gave us a company (PCC) can have some cells ing your next fund in Guernsey.

GUERNSEY 2019 HFM.GLOBAL 07 FUND SERVICES

Guernsey: innovation, stability and substance

Mark Le Page, an advisory director at EY, displays his views on Guernsey in 2019, and how technology is set to transform the industry over the coming years

How is the Guernsey fund in- Mark Le Page launches. This reflects Guernsey’s Q dustry looking in 2019? EY relative immunity to the chal-

Guernsey is building on the Mark Le Page joined EY in the Channel Islands as an advisory director in January lenges of Brexit. Managers realise Asuccess of a strong 2018, which 2019 and is based in Guernsey. He previously spent over 16 years working for the Guernsey can access European Guernsey Financial Services Commission, as deputy director for the investment saw welcome headlines through sector, during which time he was responsible for the development and implemen- capital irrespective of the Brexit tation of fund strategy. the launch of the flagship green outcome. Guernsey continues to be fund. The green fund provides a a stronghold for private equity and kitemark reassuring investors of The good news has continued this infrastructure and is the premier its green credentials. A product year. In March 2019, the EU Coun- jurisdiction outside of London for built on Guernsey’s expertise in cil’s Code of Conduct Group and the LSE listings. private equity and infrastructure, European Council of Finance Minis- it reaffirmed the island’s position ters (ECOFIN) confirmed Guernsey Do you foresee this rate of in the vanguard of responsible cap- satisfied the business taxation sub- Q adoption continuing? ital raising for the social good. Ac- stance requirements. This reflects Guernsey has the foundation cordingly, Guernsey was one of the the strong corporate governance A for continuing success. Quality founding members of the United culture driven by legislation and service providers facilitate global Nations International Network of regulation. managers managing their clients’ Financial Centres for Sustainability The first quarter of 2019 has wealth; Guernsey’s jurisprudence (FC4S). seen strong statistics in new rests on the proven Anglo-Saxon

08 HFM.GLOBAL GUERNSEY 2019 FUND SERVICES

concept of common law. Further, and regulatory advice is now in- innovation leader for blockchain, the non-party political system extricable. EY has been advising Paul Brody, recently said our cli- leads to considered legislative clients through our expertise in ents are increasingly entrusting change, rather than the fulfilment both areas. Since joining EY, I have key enterprise business processes of politically partisan objectives. been working with our global reg- and valuable investments to soft- Yet, as the green fund and private ulatory network and risk and com- ware code, and one wouldn’t run investment fund have shown, pliance advisory professionals to enterprise computing systems Guernsey is not afraid to innovate assist clients in responding to the without anti-virus tools. There- where there is social benefit to be changing risk management and fore, it only makes sense to run made through responsible wealth prudential regulatory ecosystem; blockchain-based investment sys- creation. and, as discussed above, with local tems with smart contract and to- We have seen a particular up- tax advisors. ken testing tools. surge in interest from US manag- We have enquiries seeking both EY also sees advances in the ap- ers who have previously tended to assessments and support for op- plication of robot process auto- use jurisdictions in their time zone. erational restructuring in the light mation to compliance procedures, The catalyst was the successful of the Guernsey Financial Services ‘regtech’, and we are currently substance work that Guernsey Commission’s Handbook on Coun- devising and testing prototypes in undertook with the Code of Con- tering Financial Crime and Terror- our local offices. duct Group. Those who have mi- ism. Additionally, we are asked to The list could go on, but a grated portfolios here have been report to boards on independent concluding thought is on cyber- impressed by the high standard assessments of rules made under security, where we offer through of service delivery, and this is a the Protection of Investors (Baili- our IT risk assurance team a cyber message resonating in the global wick of Guernsey) Law, 1987. assessment across financial servic- market. es. EY Document Intelligence, for Guernsey has third-party access Guernsey is not afraid to example, is a tool which improves to the EU and EEA markets through the speed and accuracy of inter- the national private placement innovate where there is social preting mass contracts – ultimate- regime. This is certainly proving ly allowing audit teams to focus on attractive to the North American benefit to be made through higher value activities. These tools market, who feel they have not responsible wealth creation will enable EY to provide quality quite tapped European capital. support for our clients. Guernsey offers an efficient and effective way in for them. Indeed, What is the future of research suggests formation costs What is EY currently hoping Q Guernsey? tend to be at least 10 basis points Q to develop within Guernsey? Guernsey has always been a lower on average than for a fund EY has been proud to have con- Acrucible for developing inno- set up by an EU domiciled AIFM. Atributed thought leadership by vative ideas. We have seen, this I have attended several road- providing representatives to the year, a hybrid ILS/fund structure. shows to New York with WE ARE fund strategy working parties that As already discussed, fintech and GUERNSEY, the brand under which WE ARE GUERNSEY has formed. regtech will play a significant role Guernsey Finance promotes the is- These strategies will be the bed- in Guernsey’s financial services in- land’s financial services sector, and rock for the island’s future. dustry. Guernsey has a regulatory observed a considerable warming Additionally, EY welcomes the and jurisprudential regime that of sentiment towards Guernsey introduction of the Electronic empowers – not discourages – in- over the last 18 months, and this Transactions (Electronic Agents) dividuals to innovate, both in fund from established market players. (Guernsey) Ordinance, 2019. Close- structures and investment strat- Professional advisers are now in- ly reflecting the United States UETA egy. Guernsey will not stand still, terested in giving their clients a and E-Sign Act, this clears legal ob- it will grow in intellectual capital range of options, as opposed to stacles for the implementation of and ever-increasing reputation. presenting a well-trodden previous smart contracts within distributed- Guernsey remains ready and able path. This evolution of attitude has ledger systems. Guernsey’s finan- to prove that it is a jurisdiction of been quite marked. cial services industry is no stranger substance and stability. to ‘blockchain’ systems and smart With continued access to Euro- What queries and concerns contracts are the next great pro- pean markets, irrespective of the Qare you hearing from your cess evolution for the island. Smart Brexit outcome, Guernsey is a juris- clients? contracts automate operational diction offering capital raising for Clients continue to seek ad- routines and even the implemen- responsible investment strategies. A vice on how to structure funds tation and enforcement of legal I suspect the market can look for- appropriately. With the substance agreements, reducing the need ward to further developments in requirements resting on regula- for oracles – human intervention. ESG-driven product strategies and tory as well as taxation principles, EY has developed software that service providers offering the best the convergence between tax tests smart contracts. EY’s global technology solutions.

GUERNSEY 2019 HFM.GLOBAL 09 No minimum revenue levels to gain residency The island that World-class ﬁ nancial, professional and legal services centre

Well regulated, secure internationally works for you recognised and compliant jurisdiction Strong digital and telecommunications Whether it’s for business or improved quality of life, living in infrastructure for connectivity Guernsey is hard to beat. Less than an hour from most UK Leading jurisdiction for private equity and airports, and close to Europe, it’s a small island with a big heart home to ‘The International Stock Exchange’ where everything is nearby. A hidden gem surrounded by Strong investor networks helping stunning scenery, beautiful beaches, captivating cliffs and crystal scale-up businesses clear waters, it has everything to make a better life for you. Excellent connections to UK airports and ports, many within an hour

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GUERNSEY

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Guernsey is situated 50km off the north-west coast of France in the Bay of St. Malo, 120km from the English coast.

To start your journey call the Locate Guernsey team on +44 (0)1481 743834 email [email protected], or visit locateguernsey.com

The capital alternative

Craig Cordle, of Ogier, provides his views on the current state of the funds environment in Guernsey, and gives thought to the rise in private capital sources

What do we mean by the term Craig Cordle this into increasingly more main- Ogier Q ‘private capital’ really? stream investments which is this There really isn’t a fixed term Craig Cordle is an asset management lawyer advising on all aspects of the private capital/PE sphere and try- A structuring, restructuring, merger, establishment and operation of investment for this but to my mind, by ‘pri- funds and other collective investment arrangements, including the marketing ing to get exposure not just to debt vate capital’, we’re fundamentally of investment vehicles in numerous jurisdictions. Cordle acts as legal counsel to investments but also to real assets boards of investment fund companies, investment managers and sponsors, and has talking about a source of capital extensive experience of listing investment vehicles on numerous markets. Cordle and being willing to take some risk. – be it a loan or equity investment provides regulatory advice, including to funds and asset managers on the applica- If you look at the typical PE mod- tion of AIFMD, as well as bespoke long-term investment management agreement – that is not coming from an insti- arrangements for insurers. el of funds established for a life tutional or public source. of anywhere between 5-10 years, Rather, we’re talking about mon- started to see alternative types of there are increasingly private in- ey derived from very high-net- debt emerging, with other types of vestors taking a long-term view worth individuals or family offices, non-bank lenders getting into the to place some of their wealth in a multi-family offices who are mak- space. This event also saw the es- structure investing in these sorts ing these investments or making tablishment of an increased num- of assets. There are some affluent capital available to these types of ber of investment funds, conceived people out there who are looking structures. This isn’t just a devel- to start lending, including in the for places to invest. In the case of opment for Guernsey, but seems consumer credit space. Guernsey, there are strong connec- more like a general trend across As a general trend, this has con- tions with South Africa. Our private the world. tinued. We first saw it with a raft wealth team also sees an increas- Following the financial crisis in of lending funds which were plug- ing amount of work and enquir- 2008, the ability of banks to lend ging a gap half way between where ies coming out of the Middle East. and their willingness to lend, was banks were unwilling to tread. There is also a lot of interest from restricted. From this point, we Now, we’ve seen an extension of our Asian client base.

GUERNSEY 2019HFM.GLOBAL 11 LEGAL

of generating a good return be- cause they were not seeing it from the more traditional routes. They’re searching for yield but at the same time there’s been a sophistication jump for some investors. Gradually, investors have been educated and investors follow one another, so this trend has emerged. Investors are more willing to ask for bespoke solution which are increasingly less expensive to put in place than may previously have been the case. Sometimes we see clients, and maybe if someone wants their own holding company in Guernsey, this effectively be- comes a family office.

Are bespoke solutions now the Q norm? It is no longer unusual to end Aup with an investment fund with multiple bolt-ons, or sidecars to allow for certain investors to get exposure to the same assets, but they don’t necessarily want to be part of the fund. They may want to co-invest, or would rather hold a debt instrument, so we may set up If you really look at what peo- It is no longer unusual to end up a SPV for them which would in turn ple are after, it tends to be capital invest into the wider fund. preservation. How do we not lose with an investment fund with In one sense, it’s essentially a our money? Banking is expensive multiple bolt-ons, or sidecars to case of investors wanting their own and so private capital investors vehicle which they can control. Of- are looking to deploy their wealth allow for certain investors to get ten investors feel more security safely in a way that it will not be holding assets through a company eroded. exposure to the same assets but or partnership rather than hold- they don’t necessarily want to be ing those assets personally. And Q Does a long strategy seem saf- this trend leads into what we’ve er in some ways? part of the fund seen in the past couple of years: Perhaps. It’s certainly safer there has been an increase in quasi- A in the sense that it will pro- fund-like structures – they’re not tect against the cyclical nature of a collective investment schemes investments. (given they may only invest in a sin- There are good times and bad What other factors are aﬀect- gle asset) but they have fund-like times and there is a degree of un- Qing the market? characteristics. certainty in the market at present I see the aforementioned The bespoke solution also comes for various reasons. Brexit does A changes that have led to a de- back to the point about increasing make things a little bumpy in terms ployment of private capital as an levels of investor sophistication. A of closing transactions but I think emergent or growing trend, but group of investors come together it’s interesting that in the last cou- on top of this, if you look at 2008 and they know what they want to ple of months the market view is and the GFC, you had a flat lining of buy; they just need the overarching beginning to change – and for the interest rates, and so what do you assistance in terms of how to buy it. positive. do? As an investor, you need to find Where Guernsey has been good We’re at a point now where peo- somewhere to make money. about this is that it’s a relative- ple simply need to, and are begin- You’re looking for places to de- ly simple regime. We don’t over- ning to, act irrespective of Brexit. ploy your cash but returns from complicate structures and I think Brexit cannot be looked at as a traditional investments are low this is reflected well in the speed to three-year excuse and eventually – basically private capital is on a market and actual cost of working decisions must be made. search for yield – alternative ways on these transactions.

12 HFM.GLOBAL GUERNSEY 2019 EUROPEAN OPERATIONAL LEADERS’ SUMMIT

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Surfing the waves of opportunity in Guernsey

Dave Sauvarin, of Northern Trust, discusses how the island is responding to key global market trends impacting the fund industry

What is Guernsey doing to rom the surge in alter- Dave Sauvarin Q native assets and ‘green’ Northern Trust keep up with the pace of mar- investing to the fintech ket changes – including the intro- F Dave Sauvarin is chief executive of Northern Trust’s business operations in tidal wave, Guernsey Guernsey. He has over 20 years' experience in a wide range of operational and duction of the AIFMD and the drive client-facing roles for funds sectors including private equity, real estate and is playing a key role in supporting infrastructure, and open- and closed-ended hedge funds. for tax transparency, for instance – investment managers to rise to the and how can it oﬀer managers the challenges. This encompasses act- market access they require? ing as a global launch pad for alter- years and continues to innovate to Guernsey continues to be a flex- native investment funds, helping in- meet the needs of investors and pro- A ible and cost-effective base to vestors establish ‘green’ investment moters alike. The ‘hands-on’ experi- distribute funds to the global mar- credentials, and working to further ence of our finance professionals is ketplace. As an example, managers establish its reputation as an inter- supported by a favourable legal and looking to market EU investment national hub for fintech innovation. regulatory environment, which is funds to European investors need Alternative asset investment con- tailored to meet the unique attrib- to comply with the extensive continues to experience rapid growth utes of alternative assets. ditions of the AIFMD, which can be with market data suggesting global In the case of private equity, The quite costly. alternative assets under manage- Limited Partnerships (Guernsey) However, Guernsey-domiciled ment could top $21trn by 20251. Law, 1995 (as amended) provides investment funds can ‘opt-in’ to an This represents a dramatic increase a highly regarded and established equivalent regime and may be mar- from the record $9.4trn in global al- legal framework for general part- keted to European investors under ternative assets under management ner and limited partner structures. the National Private Placement Re- reported2 for 2018, encompassing This has provided a foundation for gimes (NPPR). This is on a country-by- private equity, hedge funds, real es- Guernsey to be regarded as one of country basis, rather than a full pass- tate, infrastructure and natural re- the world’s leading jurisdictions to port, and provides a more stream- source funds. domicile private equity funds with lined approach for managers who This transformational shift in in- assets under administration for this are not targeting a European-wide stitutional investor appetite is being asset type larger than many other investor base. Depending on the driven by a diverse range of factors, jurisdictions. fund structure, it also negates the including the potential to gener- From a regulatory perspective, the need for a full AIFMD ManCo and full ate healthy returns, protect against Private Investment Fund (Pif) regime depositary solution. This is proving volatile capital markets and meet offers an expedited route to market to be attractive to managers who, ethical investment goals such as for eligible funds and provides fund with rising levels of investor trans- sustainability. managers with greater flexibility. parency, are increasingly challenged We recently supported the launch to demonstrate value for their man- How is Guernsey positioned to of a Pif fund in under three weeks, agement fees. Q take advantage of the surging which included securing regulatory A recent study conducted by the alternative assets market? approvals and all the due diligence industry confirmed Guernsey could Guernsey has longstanding ex- checks. This successful launch illus- access markets representing 80%3 A perience across alternative as- trates Guernsey’s flexible and pro- of global wealth, which is an impres- sets with an important role to play portionate regulation allowing fund sive statistic for those considering in supporting the global growth. managers to access markets quickly, where to launch their next fund. The island has been at the helm of enabling them to respond to com- The island also has an impres- the alternatives sector for over 30 petitive global opportunities. sive track record regarding tax

14 HFM.GLOBAL GUERNSEY 2019 FINANCIAL SERVICES

transparency and data security, be- Moreover, The International Stock including with the local audit and ing an early adopter of the Common Exchange (TISE), headquartered in legal community, has resulted in fur- Reporting Standard (CRS) as well as Guernsey, has launched a new green ther milestone innovations. enacting legislation equivalent to market segment, TISE GREEN. This We recently announced an agree- the European General Data Protec- aims to enhance the visibility of in- ment to transfer our pioneering pri- tion Regulation (GDPR), last year and vestments which make a positive vate equity blockchain technology economic substance requirements impact on the environment. It is to Broadridge Financial Solutions, a effective the beginning of 2019. open to all types of green invest- global fintech leader. This exciting ments, including bonds, funds and development marks a significant Does the global trend for some trading companies, from any juris- step towards delivering an industry- Q of the world’s largest asset diction meeting an internationally- wide private equity blockchain solu- owners and family offices to tran- recognised green finance standard. tion. Initially, the solution will be sition from an investor role by Guernsey can also demonstrate made available to all private equi- seing up their own alternative a robust governance and substance ty funds domiciled in Guernsey and investment funds represent an in- framework. It is recognised as a top- Delaware. creased opportunity for Guernsey? tier international finance centre with Guernsey has also led the way in Yes – most definitely. Guern- strong governance from regulators creating new laws to support new A sey offers a number of flexible and an experienced pool of non- fintech applications. The Electron- structures which can be tailored to executive directors, service provid- ic Transactions (Electronic Agents) the needs of asset owners and fami- ers and qualified individuals. (Guernsey), Ordinance 2019 gives ly offices who are looking for ways to greater certainty to support the use achieve full control over investment How is Guernsey embracing of both artificial intelligence (AI) and decisions. Rather than establish an Q the opportunities that tech- blockchain-enabled technology. In in-house team of operations sup- nologies such as blockchain and ar- short, Guernsey law now recognis- port staff and make significant tech- tificial intelligence can offer? es the role of AI in forming legally- nology investment, they can use a Guernsey leads the world binding contracts, which is a first, third-party fund administrator who A on the application of block- and reinforces Guernsey’s impor- already has experience supporting chain technology in private equity tance as a base to develop and roll day-to-day fund operations. This en- administration. In 2017, North- out these technology solutions for ables them to focus on recruiting in- ern Trust launched the industry’s the global marketplace. vestment management talent while first commercial deployment of the administration activities are ful- blockchain technology for the 1 PwC, Asset & Wealth Management ly supported with a scalable model private equity market in Guern- Revolution: Embracing Exponential with ongoing capital investment. sey. This was supported by full Change, 2017 Our private wealth team is working consultation with clients, tech- 2 The Preqin Investor Outlook: Alterna- with family office clients to build out nology leaders and Guernsey- tive Assets, H1 2019 these arrangements using Guernsey based regulators to bring this mile- 3 Guernsey Finance: https://www. as a base. stone development to market. weareguernsey.com/finance-industry/ Since then, further collaboration, thematics/global-distribution/ Environmental, social and Q governance (ESG) investing has become high on the global investor agenda. How has Guernsey Disclaimer responded? A Guernsey has been at the fore- © 2019 Northern Trust Corporation. Head Office: 50 South LaSalle Street, Chicago, Illinois 60603 USA. Incorporated front of this trend. The recent with limited liability in the US products and services provided by subsidiaries of Northern Trust Corporation may vary publication of the Guernsey Green in different markets and are offered in accordance with local regulation. This material is directed to professional clients Fund Rules is the foundation for only and is not intended for retail clients. For Asia-Pacific markets, it is directed to expert, institutional, professional Guernsey to be a leading jurisdiction and wholesale clients or investors-only and should not be relied upon by retail clients or investors. For legal and reg- for green investment. The desig- ulatory information about our offices and legal entities, visit northerntrust.com/disclosures. The following informa- nation enables investors to pursue tion is provided to comply with local disclosure requirements: The Northern Trust Company, London Branch; Northern environmental objectives while in- Trust Global Investments Limited; Northern Trust Securities LLP. Northern Trust Global Services SE, 6 rue Lou Hemmer, vesting into well-regulated vehicles. L-1748 Senningerberg, Grand-Duché de Luxembourg RCS B232281; Northern Trust Global Services SE UK Branch, 50 Guernsey is also part of the United Bank Street, London E14 5 NT; Northern Trust Global Services SE, Abu Dhabi Branch, registration Number 000000519 Nation’s Financial Centres for Sus- licenced by ADGM under FSRA # 160018. The Northern Trust Company Saudi Arabia, Nakheel Tower, 11 Floor, P O Box tainability Network. From Northern 10175, Riyadh 11433, KSA – a Saudi Joint Stock Company – Capital 52 million SAR. Regulated and Authorised by the Trust’s perspective, we have seen Capital Market Authority License # 12163-26 CR 1010366439. Northern Trust Luxembourg Management Company global clients with strong sustain- S.A., 6 rue Lou Hemmer, L-1748 Senningerberg, Grand-Duché de Luxembourg, Société anonyme RCS B99167. Northern able investing mandates decide to Trust (Guernsey) Limited (2651)/Northern Trust Fiduciary Services (Guernsey) Limited (29806)/Northern Trust Interna- launch funds in Guernsey, drawn by tional Fund Administration Services (Guernsey) Limited (15532) Registered Office: Trafalgar Court Les Banques, St Peter the speed to market and consulta- Port, Guernsey GY1 3DA. tive approach.

GUERNSEY 2019 HFM.GLOBAL 15

FINANCIAL SERVICES Private capital and private equity are coming together

Dominic Wheatley, chief executive of Guernsey Finance, highlights new research on a specialist development for Guernsey

uernsey’s funds sector Dominic Wheatley Guernsey certainly retains the flex- Guernsey Finance is not alone in clearly ibility to reflectsophisti cated inves- G seeing the merging of Dominic Wheatley is chief executive of Guernsey Finance, where his role includes tor requirements. business development and the promotion of Guernsey’s finance industry in its the private equity and target markets, including Europe, the US and emerging markets. He moved to the The introduction of the Guernsey private capital space. Private capi- island nearly 25 years ago as an insurance underwriter Private Investment Fund, which has tal has become a normalised source proved popular both for new man- of financing, while the investment high-net-worth individuals have agers looking to launch a first fund, management sector is seen increas- been the beneficiaries of that. and existing promoters wanting ingly as a gateway to a direct invest- But liquidity is an obvious chal- to offer simple product to inves- ment opportunity. lenge for private capital looking at tors quickly. A Pif can be open- or And a survey carried out by Guern- private equity or infrastructure long- closed-ended, is flexible in its forma- sey Finance at this year’s SuperRe- life funds, and so there is a growing tion, and is restricted to a maximum turn conference in Berlin showed focus in the market on building of 50 investors. that jurisdictional choice would be structures to offer a degree of liquid- Our SuperReturn survey also increasingly dominated by special- ity. Industry experts believe technol- showed that private capital and ists whose substance can support ogy holds the key to unlocking this. family offices are looking for be- the convergence the rise of private Private wealth is a very different spoke structures to address specific capital and the desire for bespoke market to dealing with institutional commercial, legal, regulatory, tax- structuring. money. New structures and differ- ation or operational concerns over Guernsey is well-placed to service ent distribution methods are coming their investment. The PIF is an ideal the growing trend for attracting and into play as institutional clients are vehicle for private capital to invest in securing private capital investment, interested in democratising tradi- private equity. whether that money is drawn from tional institutional private fund illiq- At the Guernsey Funds Forum in family offices, high-net-worth indi- uid products to secure greater access London in May – an event which viduals, private client customers of to the private capital community. attracted more than 500 delegates banks, and other non-institutional And with the increasingly sophis- – London lawyer David Williams, money. Private wealth is estimated ticated demands of clients, so the partner at Simmons & Simmons, to exceed $170trn worldwide in the Guernsey funds industry has devel- described the Guernsey funds suite next 18 months, against total insti- oped, with its renowned flexibility and environment as “coherent, sta- tutional assets under management able to provide different solutions ble, well-regulated, neatly-defined, of $100trn. for different people in different flexible and responsive”. That growth has driven more in- circumstances. Guernsey certainly offers distinc- vestment into alternatives. In the It is yet another stage of Guern- tive solutions in the funds world past decade, since the global finan- sey’s 50-year funds journey, from – private capital, green funds, and cial crisis, returns to private cap- primarily a retail fund domicile to bespoke, tailored product, in a ital investors just have not been an alternative assets specialist, us- world-leading business environ- there. Liquidity has been gener- ing our key attributes of being nim- ment, for those looking for a differ- ated by central bank policies and ble and responsive to the market. ent approach.

GUERNSEY 2019 HFM.GLOBAL 17 FINANCIAL SERVICES

Making green finance a commercial reality

Dr Andy Sloan, of Guernsey Finance, reflects on the part Guernsey has to play in green finance

ntering the green and we were by the development of new Dr Andy Sloan sustainable finance Guernsey Finance products and what we were seeing in E space is a real oppor- terms of changed investor and public Dr Andy Sloan is deputy chief executive, strategy, at Guernsey Finance and chair tunity for financial ser- of Guernsey Green Finance, the industry group developed to promote the green behaviour. vices to be a force for good. We see sector. At Guernsey Finance he is responsible for the development of a jurisdic- But still there were concerns that tion-wide financial services strategy. it as finance with purpose – binding although much has been achieved, together a sustainable economy there is still a long way to go. Renew- with a sustainable plan for ethical London Green Finance Initiative, the ables, Professor Skea said, have been living. The potential for transition to value chain needs to be untangled “the easy bit”. More challenging in- a low carbon economy is huge and to unlock the private capital needed vestment propositions lie further finance can very much be part of this to make green finance much more down the line. We are talking about solution. widely available through society. trillions in financing required to find Guernsey, a global finance cen- And where there is a need for capital its way into real assets and climate tre providing specialist services for from issuers there will be opportu- mitigation projects. a sophisticated client base across FC4S has already uncovered some the world, has really taken a stake The value chain needs to be of the issues – blockers include a lack in green and sustainable finance of transparent product and a lack of over the past two years. We intro- untangled to unlock the private consistent standards, so it is good duced the Guernsey Green Fund, the capital needed to make green to see moves continuing to develop world’s first regulated green fund a standard taxonomy. We need to, product, enabling a Guernsey fund ﬁnance much more widely available again as FC4S has said, start “shifting to be certified as green, based on an through society gears” and to funnel capital invest- assessment of investment creden- ment into projects around the world. tials against an internationally rec- In my view, the demand is clearly ognised taxonomy. there, both from investors looking Our industry steering group nity for investors. There has been a for green assets, and for emerging Guernsey Green Finance has become sense that countries have been re- technologies and developing green members of the United Nations’ Fi- luctant to talk about difficult issues infrastructure looking for funding. nancial Centres for Sustainability in this field. The big challenge facing What is currently missing is the (FC4S) network – alongside more us all in green finance is the aspira- means to bring the two together. than 20 global finance centres in- tion and action gap. Some people are Having confidence in the product is cluding London, Paris, Hong Kong very committed – but that does not key, and that is our rationale with the and Shanghai. There is now glob- always translate into activity on the Guernsey Green Fund. I can only see al recognition of the commercial ground. the market for similar products con- opportunity presented by green Recently I was privileged to share tinuing to grow. finance, as well as the environmen- a platform at London’s famous Guild- It is our purpose as financial cen- tal imperative, as highlighted by hall during the City of London Cor- tres to help smooth and facilitate the the International Panel on Climate poration’s City Week with Sir Roger growth of green finance around the Change’s (IPCC) report for climate Gifford, chair of the London Green globe, and to connect investors to action to be taken to restrict global Finance Initiative; Katherine Garrett- opportunities. This will be critical to warming to a maximum of 1.5°C over Cox, CEO of Gulf International Bank meeting IPCC targets and building a the next dozen years. UK; and Professor Jim Skea from the sustainable future for the husbandry As has been highlighted by the IPCC. We spoke about how enthused of our planet.

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Guernsey: the natural home for private capital

Kate Storey, of Walkers (Guernsey) LLP, explains why Guernsey is perfectly positioned to support the rise of private capital

he term ‘private capi- Kate Storey on-island service providers support- tal’ can be used to re- Walkers ing those structures. fer to the nature of the A further trend being seen in the T Kate Storey joined Walkers’ Guernsey office in 2018, where she is a partner in the investor, namely family Investment Funds and Corporate Group. Storey specialises in investment fund private capital world has led Preqin, structuring and finance, equity fundraising and listings, mergers and acquisitions offices, high-net-worth individuals, and group reorganisations. She is also a prominent Guernsey insurance expert, the UK company which provides private banking clients and other having advised on the Guernsey legal aspects for most of the pension scheme market data on the global private longevity swaps which have executed in Guernsey, as well as major insurance non-institutional investors, and it linked securities transactions. capital industry, to redefine its sec- can also refer to the nature of the in- tor terminology earlier this year. vestment, i.e. investment in private Guernsey financial services industry, Whereas it formerly used the term companies as opposed to publicly showed two trends: ‘private equity’ as the generic term traded companies, although the • The significantrise of private for all private asset classes, that term encompasses much more than capital in private equity and oth- has now been confined to the core just private equity these days. This er alternative investments; and asset class centred on the buyout article looks at trends in the global • Investment managers are being and venture capital industry, to- private capital industry, principally seen as a gateway to direct in- gether with other closely related the coming together of private investment opportunities for pri- strategies. vestors with private equity and oth- vate investors. ‘Private capital’ is the generic term er private asset investments that it now uses to refer to the range of have traditionally been the main- Guernsey, as a longstanding lead- private closed-ended funds, includ- stay of institutional investors, and er in the private wealth and alter- ing private equity, private debt, pri- how Guernsey is the natural home native investment fund sectors, is vate real estate, infrastructure and for the bespoke structuring required facilitating and catering for these natural resources – reflecting the for private capital investments. private capital transactions through wide choice of private capital funds, Recent research by Guernsey Fi- its choice of bespoke investment of which private equity is the most nance, the marketing agency for the structures and the quality of the established sub-sector, but these

20 HFM.GLOBAL GUERNSEY 2019 LEGAL

days not necessarily the fastest 75% to 100% of assets under man- neutral investment vehicle and re- growing. agement, particularly for smaller/ duced costs compared to the likes of At Walkers in Guernsey we are first-time managers. Guernsey has Luxembourg due to not being sub- seeing a particular uptick this year always been a perfect incubator for ject to full AIFMD compliance. in LSE-listed Guernsey private debt first-time managers, being outside funds and technology funds, which of AIFMD until third country pass- 2. Trend for direct investment by is testament to Guernsey’s leading porting is introduced, but offering private capital investors: position in the listed private capital the option to be fully AIFMD com- The Guernsey Finance research funds space, having more LSE-listed pliant from set up and to avail of showed that investment manag- entities than any other jurisdiction, Guernsey’s Manager-Led Product – a ers are being seen as a gateway to other than the UK itself. fast track regime for establishment direct investment opportunities Some commentators also foresee of investment funds under which for private investors. This is backed a blurring of boundaries between regulatory rules are only applied up by a recent Financial Times arti- private debt and private equity against the manager, not the indi- cle – Why the wealthy are investing funds, resulting in a new hybrid as- vidual funds. Guernsey also offers directly in private companies; Spe- set class giving investors exposure managed fund platforms, whereby cial Report FT Wealth: June 2019 – to both asset classes in a single [list- a new promoter can utilise a cell in which reported wealthy individuals ed] fund. Guernsey already caters a managed protected cell company are increasing their allocation to for diverse asset classes within a structure to pursue its own invest- private equity through means other single umbrella vehicle with its pro- ment fund and investment strategy than standard funds, including via tected cell company (PCC) structure, through that cell, whilst benefiting co-investment deals with fund man- which it pioneered in 1997. from the track record of the Guern- agers and asset by asset deals (e.g. Different asset classes can be held sey manager. club deals). Reasons given for this in separate ‘protected cells’ with- trend include: in the PCC structure, such that the Guernsey is the natural home for • Some private investors are assets and liabilities attributable themselves entrepreneurs or to each cell are legally segregated the bespoke structuring required private equity or hedge fund from those of the other cells and the for private capital investments professionals and understand ‘core’ of the PCC, but with central the risks and challenges in- management of the overall umbrel- volved in the early stages of la structure, which is a single legal growth entity. Complementing its thriving pri- • Private companies value the vate wealth sector, Guernsey has access to the expertise and con- The trends identiﬁed by the unrivalled experience and exper- nections of the investor base Guernsey Finance research tise as a home for private equity • As a direct investor an individual 1. Reasons for the rise in private and other alternative investment can get involved in the business capital and how Guernsey facili- funds of all asset classes, as well as and help shape its strategy tates private capital investments: LSE-listed private funds. For private • Investors not wanting to pay the Since the global financial crisis, pri- wealth managers, Guernsey offers management fees of private eq- vate wealth has doubled in nomi- the perfect fund structure for bring- uity funds nal terms. According to the Boston ing together clients for investment Consulting Group, Global Wealth in private assets – Guernsey’s Pri- Guernsey offers a choice of in- Report 2018, global personal finan- vate Investment Fund (Pif) is a prod- vestment structures for the be- cial wealth grew by 12% in 2017 to uct that is regulated by the Guern- spoke structuring requirements of break through the $200trn barrier. sey Financial Services Commission these private capital investments, These high-net-worth private in- (GFSC), but subject to lighter touch whether it be the traditional pri- vestors are increasingly looking for regulation than other Guernsey vate equity structure of the general portfolio diversification away from funds on the basis that the manag- partner/limited partnership; a unit the volatile equity and bond mar- er makes a declaration to the GFSC trust for tax transparent real estate kets towards private equity, real as to the ability of the investors to investment; or a PCC for deal-by- estate and debt investments, which sustain the loss of their investment deal investments, for example. For have often offered better capital (at the time of subscription); howev- that increasing number of private preservation and returns than public er, there are no prescribed require- investors who want to be involved securities in the past decade. At the ments on the type of investor, their in the management of their invest- same time, there are more private net worth or minimum subscrip- ments, Guernsey’s limited liability equity opportunities available, as tion. The Pif is a fast track product partnership, a tax transparent struc- many companies are staying private which will be registered by the GFSC ture which facilitates ownership and for longer, rather than rushing to a within 1 business day of receipt of management, may be appropriate. stock market flotation. the application. It can be marketed All of these Guernsey structuring According to the research by into the UK/EU under the national solutions can be rapidly established Guernsey Finance, private capi- private placement regimes. Like all and are serviced by GFSC regulated tal can now amount to as much as Guernsey funds, the Pif offers a tax service providers.

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Guernsey, the perfect home for fund managers

Jo Stoddart, of Locate Guernsey, identifies the strength of Guernsey’s funds industry

ince the 1960s, Guern- Jo Stoddart changes in legislation and interna- Locate Guernsey sey has had a funds tional best practice. S business community. Jo Stoddart is the director of Locate Guernsey, an agency funded by the island’s In 2017, the EU Council’s Code of government to promote Guernsey as a destination of choice for the relocation of It experienced massive individuals and businesses. Conduct Group undertook a screen- expansion following the suspension To start your journey call the Locate Guernsey team on +44 (0)1481 743834, email ing exercise to assess various juris- [email protected], or visit locateguernsey.com and subsequent abolition of ex- dictions on tax transparency, an- change controls in 1979, and over a body of experience and expertise ti-Base Erosion and Profit Shifting the following 40 years, evolved to accumulated across the island. This (Beps) and fair taxation measures. become one of the world’s largest created a significant snowball effect, Guernsey was found to be compli- offshore finance centres, with a and Guernsey soon became a world ant in the first two areas. However, thriving funds industry. leader among financial centres for concerns were raised around the Initially attracting the smaller the private equity funds market, and lack of legal substance requirements closed ended fund market in the home to the leading private equity for entities in, or through, the juris- ‘80s and ‘90s, Guernsey began ad- fund administrators. diction. Working closely with Jersey ministering private equity funds, Today, almost 1,000 investment and the Isle of Man, the three Crown at that time considered to be in an funds and well over 2,000 sub-funds dependencies enacted new legisla- alternative and start-up category. are administered in the island. The tion requiring tax resident compa- Regulated by the Guernsey Finan- current value of funds under man- nies, undertaking specific activities, cial Services Commission (GFSC), agement and administration in to demonstrate they have sufficient the island adopted a more open and Guernsey is £280bn. economic substance supporting the pragmatic approach to these types Growth has been rapid, and the activity. of products. As Guernsey attracted island has been able to maintain its In March of this year, the island more and more private equity funds, impressive ability to adapt rapidly to proved to the EU Council’s Code of

GUERNSEY 2019HFM.GLOBAL 23 GOVERNMENT

relocating to the island surprising- ly simple. Local Market homes are mostly restricted to local people who were born on the island or spent the majority of their childhood there. Open Market properties are in less abundance, and therefore cost more, but the benefits of moving to the island, both tax and life- style-wise more than make up for it. Anyone holding a British or EEA passport can rent or buy an Open Market Part A home in Guernsey. By Conduct Group and the European political and economic stability has doing so, people gain the right to live Council of Finance Ministers (ECOF- encouraged a number of high pro- and work in Guernsey indefinitely. IN) that with the new legislation, it file players to establish a physical Under certain circumstances new had satisfied its legal substance re- presence within the island, manag- businesses relocating to the island quirements for entities operating in, ing and administering their products may qualify for a limited number of or through, the jurisdiction. in Guernsey. The island’s excellent Housing Permits for occupation of With Brexit on the horizon, this work/life balance is a great magnet Local Market properties, but for the clearance did not come a moment for former city dwellers who appre- majority of new arrivals, the Open too soon. Guernsey’s status, as a ciate being able to regain time and Market is the key facilitator. third country, in relation to the EU in enjoy the island’s great quality of For example, anyone purchasing respect of services means it is able life. an Open Market Part A property to utilise National Private Place- within the first 12 months of resi- ment Regimes (NPPR) for marketing The current value of funds under dency at a value of £1.32m or above into Europe, to more than 70% of (paying document duty of £50,000 the nominal GDP across continental management and administration in or more), will be entitled to a tax Europe. With the existence of this Guernsey is £280bn cap of £50k per annum for up to four well-established process, Guernsey’s years. Furthermore, they will be en- ability to market into Europe will be titled to live and work in Guernsey unaffected by the UK’s departure. indefinitely. Financial sector compa- On the contrary, the UK will have to nies pay only a standard corporation follow in Guernsey’s footsteps and Indeed, the typical commute to tax rate of 10%, while there is 0% negotiate cooperation agreements work on the island is less than 15 tax for the rest. Guernsey imposes with the EU jurisdictions. minutes, and many people choose no inheritance, capital gains, wealth, This maturity means the island is to walk or cycle the short distance, gift or estate taxes, and there is no well placed for the future. Particu- leaving plenty of time to fit in an ac- VAT. Personal income is taxed at a larly where a fund manager has a tivity before or after work. Scenery is flat rateof just 20% and tax caps are targeted list of marketing jurisdic- breathtaking, as Guernsey boasts 29 available. tions, NPPR via Guernsey can be miles of impressive and varied coast- One very important point which faster, more efficient and more cost- line, and with a tidal range of 33 feet is worthy of note is that there is effective than the full AIFMD or Ucits (one of the largest in the world) the no minimum revenue requirement route. With Guernsey being a non- shores are transformed every six for individuals when relocating to EU jurisdiction, pre- and post-Brex- hours or so. Guernsey. The simple fact of living it marketing plans to market into All this healthy outdoor living is in an Open Market Part A home, en- Europe via the well-trodden NPPR encouraged by the more temperate titles the individual to live and work which Guernsey has established, will weather conditions that the island there. remain untouched. enjoys. It has been well documented A low tax jurisdiction with a prag- that the work/life balance is one of matic and innovative regulator, Centre of excellence the greatest advantages to relocat- skilled workforce and high-quality In the coming years, Guernsey is par- ing to Guernsey. In fact, according to professional services community ticularly keen to build upon its high the latest Organisation for Econom- provide Guernsey with all the key quality hedge fund business, and it’s ic Cooperation and Development elements for long-term hedge fund easy to see why the conditions are (OECD) Better Life Index Survey, such success. The island has personal right for fund managers to flourish. is Guernsey’s quality of life that it as well as professional appeal: it’s It doesn’t overstate things to call ranks 9th in the world for longest life beautiful, safe, with strong trans- Guernsey a centre of excellence for expectancy, of 82.3 years from birth, port links and an exceptional quality the funds sector and managers can only just beaten by Sweden. of life. Guernsey has the experience, and do take advantage of that by Guernsey’s property market is infrastructure and expertise for basing themselves on the island. split into two sectors – Open Mar- your fund management business to The island’s safety as well as its ket and Local Market, which makes flourish.

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EY Mike de Haaﬀ Richard Le Tissier, Assurance Partner [email protected] // T: +44 (0)1481 249892 // M: +44 (0)7781 136994 T: +44 1481 717468 // [email protected] // www.ey.com/ci The Guernsey Investment Fund Association (GIFA) was established in 1989 as a trade association to EY is a global leader in assurance, tax, transactions and advisory services. The insights and quality services represent the Island’s funds industry and, following the merger with Guernsey Investment Management we deliver help build trust and confidence in the capital markets and in economies the world over. and Stockbrokers Association in January 2019, now represents the wider investment industry. GIFA’s We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so membership spans the whole spectrum of the Island’s investment community, including fund managers, doing, we play a critical role in building a better working world for our people, for our clients and for our administrators, custodians, investment managers, stock brokers, non-executive directors as well as communities. Our strong network has enabled us to build close working relationships with our colleagues professional firms such as lawyers and accountants who are closely involved in the work of the investment in EMEIA and across the world. This allows us to respond quickly to our CI clients' needs, drawing upon our business industry. industry experience across all our services lines. GIFA’s principal objective is to protect and enhance the collective interests of its members.

FINANCIAL SERVICES GOVERNMENT

LOCATE GUERNSEY GUERNSEY FINANCE www.LocateGuernsey.com // T: +44 (0)1481 743 834 // [email protected] // [email protected] // T: 01481 720071 Market Building, PO Box 451, Fountain Street, St Peter Port, Guernsey, GY1 3GX PO Box 655, St Peter Port, Guernsey. GY1 3PN Whether it’s for business or a better quality of life, relocating to Guernsey couldn’t be easier. Locate Guernsey Finance – the promotional agency for the island's finance industry internationally – is a joint Guernsey act as your one point of contact within the island’s government to provide free support and industry and Government initiative responsible for the promotion of Guernsey. Under the leadership advice for all of your business and personal relocation enquiries. of chief executive Dominic Wheatley, the agency ensures that the core values and competencies of As a self-governing jurisdiction, Guernsey has its own system of taxation. The island has a flat 20% income Guernsey's finance sector are accepted and respected by the global community, and that financial business tax rate. There are no inheritance, estate or gifts taxes, no wealth tax, no taxes on capital gains and no development flows in insurance, investment funds, trust, pensions, investment management and banking VAT or sales taxes. Companies are generally taxed from 0%, typical rates for financial services companies are enhanced. are 10%.

FUND ADMINISTRATOR

NORTHERN TRUST T: +44 (0)1481 745001 // [email protected]

Northern Trust is Guernsey’s largest fund administrator, custodian and transfer agent*, with a commitment spanning five decades. Our experienced and substantial team, provide a full range of services, including a global approach to regulatory support, to some of the world’s most successful and innovative investment managers as well as specialist boutique managers. We combine our global breadth and depth with significant local experience across traditional and alternative asset classes including private equity funds, hedge funds, real estate funds, infrastructure funds, and funds of funds. Our comprehensive service suite includes fund administration, banking and cash management, foreign exchange, global custody, depositary services and fiduciary services. To *As reported in the Monterey Insight Guernsey Fund Report 2018 LEGAL SERVICES promote

OGIER your T+1481 721672 // [email protected]

Ogier in Guernsey focuses principally on finance, including investment funds, private equity and corporate, banking and finance, restructuring and insolvency, and all aspects of trust and private wealth matters and commercial and trust dispute resolution. We act for a large number of leading global financial institutions, company investment managers and corporate entities, and are also instructed by many leading law firms and other intermediaries, on many of the noteworthy and complex transactions and cases that involve Guernsey. Ogier provides advice on all aspects of BVI, Cayman, Guernsey, Jersey and Luxembourg law.

LEGAL SERVICES

WALKERS 12-14 New Street, St. Peter Port, Guernsey, GY1 2PF email: [email protected] T: +44 (0)1481 723 723 // F: +44 (0)1481 723 023 // [email protected] or call UK +44 20 7832 6615 US +1 (212) 268 4919

Walkers is a leading international law firm. We provide legal, corporate, compliance and fiduciary services to global corporations, financial institutions, capital markets participants and investment fund managers. Our clients are the most innovative firms and institutions across the financial markets, and rely on us for our ability to provide solutions to their most important legal and business issues.

26 HFM.GLOBAL GUERNSEY 2019 FASTER FORWARD

Make change an opportunity instead of a challenge. Turn to us for the technology, insight and service that helps achieve your goals – so you can focus on your core business.

For more information, visit northerntrust.com or contact:

Douglas Gee Head of Business Development, EMEA [email protected] +44 (0) 20 7982 2376 ACHIEVE GREATER

ASSET SERVICING \ WEALTH MANAGEMENT \ ASSET MANAGEMENT

© 2019 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. For legal and regulatory information about individual market offices, visit northerntrust.com/disclosures.

DIRECTED TO PROFESSIONAL CLIENTS ONLY. NOT INTENDED FOR RETAIL CLIENTS. Celebrating 30 years of The Guernsey Investment & Funds Association

FINANCE WE ARE SUSTAINABLE

As members of the UN’s Financial Centres for Sustainability network, Guernsey is at the forefront of the development of green and sustainable ﬁnance. We are home to the Guernsey Green Fund, the world’s ﬁrst regulated product in this sector, and registrations include some of the largest London-listed renewable energy funds. guernseygreenfinance.org

Guernsey France

INSURANCE INVESTMENT FUNDS TRUST & COMPANY PENSIONS INVESTMENT MANAGEMENT BANKING

E: [email protected] weareguernsey.com T: +44 (0)1481 720071