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FEATURING Bedell Group // Guernsey Finance // Locate Guernsey // Mourant Ozannes // Ogier
G U E R N S E Y 2 0 1 6WEEKHFM
S P E C I A L R E P O R T
MLPShifting the focus of regulation
INFRASTRUCTURE50 years of experience and support
TRANSPARENCYA symbol of trust
Guernsey is a centre of excellence for funds. With more than 800 open and closed ended funds domiciled in the Island, Guernsey has the critical mass, infrastructure and expertise for your fund management business to flourish. As a stable, low-tax jurisdiction offering quality professional services and a highly skilled workforce, Guernsey has many of the building blocks of business success.
It’s a great place to work and a great place to live, underpinned by
our safety, beautiful environment and high standards of education
and healthcare. The Island is already a thriving home to more than
50 fund managers, custodians and administrators. Talk to Locate
Guernsey about making the move and being part of that success.
locateguernsey.com
Excellent air links to London
Same time zone as UK English speaking British pound
GUERNSEY The perfect home for
fund managers
Locate Guernsey provides a single point of contact within
the island’s government to co-ordinate and assist corporate
and personal relocation enquiries.
H F M W E E K . CO M 3
ounded on the concepts of transparency, reliability and stability, Guernsey prides itself on the ability to birth innovative, market-changing ideas. With over 50 years of experience in the industry, the island is certainly well-established and boasts an air of confidence that, as recent growth figures attest, is more than justified.
The infrastructure on Guernsey is pivotal in retaining its hard-earned status of a market leader. An amalgamation of experienced service providers, a supportive regulator (the GFSC) and a flexible legal framework characterise the island as a desirable destination for a huge range of fund types.
Officially launched in May 2016, the manager led product (MLP) will certainly build on Guernsey’s attractiveness as a domicile. The introduction of the MLP and the island’s own AIFMD equivalent regime symbolises the intent of Guernsey to stay at the forefront of hedge fund business.
This HFMWeek Guernsey Report 2016 features a range of Guernsey-based industry experts who discuss the benefits of the offshore domicile as well as examining how the island continues be looked upon as the epitome of transparency.
Tom SimpsonReport editor
FG U E R N S E Y 2 0 1 6 I N T R O D U C T I O N
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REPORT EDITOR Tom SimpsonT: +44 (0) 20 7832 6535 [email protected]
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GROUP COMMERCIAL MANAGER Lucy Churchill T: +44 (0) 20 7832 6615 [email protected]
PUBLISHING ACCOUNT MANAGERSAlex Roper T: +44 (0) 20 7832 [email protected]
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HFMWeek is published weekly by Pageant Media Ltd ISSN 1748-5894 Printed by The Manson Group © 2016 all rights reserved. No part of this publication may be reproduced or used without the prior permission from the publisher
FUND MANAGEMENT
MANAGER LED PRODUCT IS GUERNSEY’S LATEST FUND OFFERINGThe MLP launch is expected to add to Guernsey’s attractiveness as a domicile, writes Guernsey Finance chief executive Dominic Wheatley. He also reports that two notable funds migrated to Guernsey at the turn of the year
REGULATION
GUERNSEY’S NEW MANAGER LED PRODUCTBryon Rees of Ogier examines a new Guernsey fund product that removes regulatory duplication by focusing regulation on an investment manager, while creating an efficient platform for funds and related vehicles
FINANCIAL SERVICES
A BAILIWICK OF SUCCESS Darren Bacon and Caroline Chan of Mourant Ozannes explore Guernsey’s financial landscape
FUND SERVICES
GUERNSEY: YOUR HOME, YOUR BUSINESS, YOUR LIFERichard Le Tocq, of Locate Guernsey, examines the financial infrastructure of the island and why it remains a favoured domicile
REGULATION
GUERNSEY CONTINUES TO STAND STRONG Oliver Godwin of Bedell Group examines the fund landscape of Guernsey
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4 H F M W E E K . CO M
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Dominic Wheatley is chief executive of Guernsey Finance, the promotional agency for Guernsey’s finance industry. His role includes business development and the promotion of Guernsey’s finance industry in the island’s target markets including Europe, the US and the emerging markets, technical research to support promotional activities and liaison with industry associations and government.
Guernsey has always adapted well to the changing requirements of fund managers and investors.
Indeed, our core strategies as a fi nance centre are founded on a reputation for quality, compliance, economic stability,
eff ective regulation, substance and the ability to respond quickly to changing market demands. With this in mind, we have introduced many changes over the years to bring fl exibility and ease of doing business to the market while not compromising our strategic positioning.
2016 has seen a continuation of this with the introduc-tion of Guernsey’s manager led product (MLP), which shift s the focus of regulation to that of the managers, rather than relying on the direct regulation of funds themselves.
MLP CONCEPTOffi cially launched at the annual Guernsey Funds Forum in May, the MLP aims to ensure a proportionate risk-based level of product regulation for any Alternative Investment Fund Manager (AIFM) that establishes itself in Guernsey and seeks to market into Europe under national private placement regime (NPPR) arrangements. Th e main at-traction is that the MLP will allow one AIFM to absorb all the incidence of conduct and capital adequacy rules, permitt ing many fund structures – whether limited part-nerships or other – to exist under its banner.
In this fi rst application of the principle, MLPs will re-spond to the same market pressures that have given rise to Luxembourg’s Raifs and Malta’s Naifs, allowing ap-propriate derogation of AIFMD rules and facilitating streamlined and more effi cient fund formation processes. However, MLPs go further than both Naifs and Raifs in
allowing regulatory effi ciencies for managers housing several funds in Guernsey, while maintaining appropriate segregation, thereby nullifying contagion risk. We believe this off ers a very att ractive vehicle for managers needing substance in the island.
Once an AIFM has been licensed by the Guernsey Fi-nancial Services Commission (GFSC), they will then be able to launch new partnership structures and corporate funds by simple notifi cation. Capital will be concentrated at the AIFM level. Th is will facilitate the quick and effi cient launch of new funds with a minimum requirement for red tape but with no diminution of the quality of regulatory oversight.
Th e principles underlying this product will ultimately produce a separate regime for non-AIFMD managers mar-keting outside of Europe. We see this as very much the fi rst of a number of developments based on a similar theme of moving the focus of regulation to facilitate greater ease of doing business and speed to market without compromis-ing on regulatory standards.
WORKING TOGETHER Encouragingly, the creation of the MLP came about through discussions between the GFSC and industry practitioners, thereby demonstrating the pragmatic and open-door approach to regulation that our fi nancial ser-vices regulator has become renowned for. It also ensures that such developments are eff ective and practical.
A similar approach has been taken with Guernsey’s plans for its own very private funds regime. Productive meetings between representatives from the Guernsey In-vestment Fund Association (GIFA) and the GFSC have already taken place and a consultation period with wider industry is expected to follow soon. Recommendations will likely include a relaxation of prospectus disclosures while maintaining high standards of governance.
FUND MIGRATIONS In addition to the launch of the MLP, Guernsey’s funds in-dustry has seen a number of positive recent developments. For example, the VinaCapital Vietnam Opportunity Fund completed its migration from the Cayman Islands to
THE MLP LAUNCH IS EXPECTED TO ADD TO GUERNSEY’S ATTRACTIVENESS AS A DOMICILE, WRITES GUERNSEY FINANCE CHIEF EXECUTIVE DOMINIC WHEATLEY. HE ALSO REPORTS THAT TWO NOTABLE FUNDS MIGRATED TO GUERNSEY AT THE TURN OF THE YEAR
MANAGER LED PRODUCT IS GUERNSEY’S LATEST FUND
OFFERING
KEY FACTFigures for the island’s fund industry to the end of De-cember 2015 show that the sector has enjoyed year-on-year growth, with the net asset value of all funds under management and administration reaching £227.6bn – an increase of £8.2bn (3.7%) on the same point in 2014.
F U N D M A N A G E M E N T
H F M W E E K . CO M 5
Guernsey. The closed-ended investment company, which had net assets of $710.5m at the end of March 2016, is one of the largest and most successful funds investing in growth areas in the Vietnamese economy. In explaining the reasons for the migration, the fund’s directors said it had become apparent that its place of domicile was a barrier to certain potential new investors, while reasons for choos-ing Guernsey included its well-established infrastructure for the administration of closed-ended funds listed on the LSE and a robust regulatory and compliance regime.
Another fund relocation has seen SafeCharge Interna-tional Group Limited migrate from the British Virgin Is-lands. A provider of payments services, risk management and IT solutions to global online businesses, SafeCharge is listed on LSE’s AIM and is currently capitalised at about £400m. SafeCharge’s decision to move to Guernsey was motivated by several factors, but the key factors among them were Guernsey’s reputation for LSE listings and that it would therefore be well-positioned for a potential move to the London Stock Exchange’s Main Market in the fu-ture. Having its domicile in Guernsey will also enable the company to enjoy greater exposure to potential investors, thereby facilitating liquidity in its shares.
CHINA MOUGIFA signed a Memorandum of Understanding (MoU) with the China Association of Private Equity (CAPE) in March 2016. The agreement sets out a statement of intent to facili-tate collaboration in the areas of training, corporate governance, events, research and public affairs.
Our funds industry, particularly the private eq-uity and venture capital space, has considerable expertise and substance to call upon, which we are more than happy to share with our counterparts in China. We know there is significant interest in China and Asia generally in doing business with Guernsey and we hope the MoU will help to facili-tate those business flows.
AIFMDThe launch of the MLP is not the only example of the regulator working effectively with industry in Guernsey. Another was Guernsey’s response to AIFMD, which included early and pro-active en-gagement with Brussels throughout the evolution of the Directive. Cathy Pitt, a corporate partner at leading global funds lawyers CMS in London, has praised this approach and said it was a likely fac-tor behind the European Securities and Markets Authority (Esma) announcement in July 2015 that recommended Guernsey for a third country passport under AIFMD.
Guernsey is one of only three jurisdictions to receive the recommendation to date, which, if approved by the Euro-pean Commission later this year, would further enhance Guernsey’s position to distribute funds into Europe.
“Regulators and lawmakers worked alongside industry to develop a regulatory regime that is compatible with the Directive, while leaving market partici-pants the flexibility to fall within or without the AIFMD regime for so long as Europe permits. The GFSC was also able to demonstrate to Esma a cul-ture of robust enforcement and co-operation with EU regulators that gave Esma the confidence to recommend the extension of the AIFMD passport to Guernsey,” said Ms Pitt.
Guernsey’s response to AIFMD was to intro-duce a dual regulatory regime in which it is pos-sible to continue to distribute Guernsey funds into both European and non-European countries. This consists of the existing regime for those managers not requiring an AIFMD fund, including those us-ing NPPR and those marketing outside Europe, as well as an opt-in regime which is fully AIFMD compliant.
Guernsey’s regime enables managers and funds with no connection to Europe to continue to op-erate under Guernsey’s existing regulatory frame-work, which is completely free from the require-ments and costs associated with AIFMD. For managers wishing to market into Europe, Guernsey
provides a platform to access all the benefits and oppor-tunities of European capital markets, but crucially is not actually in the EU.
Figures released in Esma’s July 2015 advice also under-lined how Guernsey is a key route into Europe for AIFs. Data showed that Guernsey was in the top three non-EU fund domiciles when it came to the number of non-EU AIFs being marketed into Europe: in particular, core mar-kets such as the UK, Ireland, Sweden, Benelux, Finland and Denmark.
ONCE AN AIFM HAS BEEN LICENSED BY THE GUERNSEY FINANCIAL SERVICES COMMISSION (GFSC), THEY WILL THEN
BE ABLE TO LAUNCH NEW PARTNERSHIP STRUCTURES AND CORPORATE FUNDS BY
SIMPLE NOTIFICATION
”
KEY FACTGuernsey remains the jurisdiction of choice for entities listing on the LSE. Data shows that at the end of De-cember 2015, there were 129 Guernsey-incorporated entities listed on the Main Market, AIM and the Spe-cialist Fund Market (SFM) – more than any other juris-diction globally (except the UK).
A private and closed forum designed to educate and inform hedge fund
allocators and their advisersHFMAllocatorNetwork.com
UPCOMING EVENTS FOR 2016/17:
EUROPEAN SUMMITS London: June
Switzerland: September
London: October
London: February 2017
UK DINNERS – LONDON September
November
January 2017
US SUMMITS New York: May
New York: September
New York: November
Dallas: November
New York: January 2017
ALLOCATOR CONTACT Kate Sparrow
Engagement Manager
+44 (0)20 7832 6530
MANAGER CONTACT Alex Roper
Senior Publishing Account Manager
+44 (0)20 7832 6594
US DINNERS – NEW YORK June
September
February 2017
R E G U L AT I O N
H F M W E E K . CO M 7
G U E R N S E Y 2 0 1 6
Bryon Rees A partner in Ogier’s Guernsey office, Bryon advises on a broad range of Guernsey investment fund, corporate and regulatory matters. He is a Guernsey advocate, a South African attorney and an English solicitor.
THE CONCEPTGuernsey has recently introduced the manager led prod-uct (MLP), a new fund classifi cation which follows the ap-proach of the European Union AIFMD)of regulating the investment manager instead of the underlying investment funds and related vehicles.
Historically, Guernsey has regulated both funds and service providers and the MLP seeks to remove this regu-latory duplication.
Under the MLP regime:• A single Guernsey regulated investment manager is
required• By virtue of regulation of that investment manager,
none of the related funds, general partners or manag-ers formed solely for the purposes of those funds will have rules imposed on them by the Guernsey Finan-cial Services Commission (the Commission)
• A one business day fast track notifi cation process is available for underlying funds and related vehicles.
Th e new classifi cation has been made possible by the Commission’s risk-based approach to regulation. Regula-tory oversight remains through an appropriately regulated investment manager within the structure, while at the same time investors and promoters will benefi t from:
1. Th e removal of regulatory duplication 2. A more effi cient path to market 3. Reduced administration fees in respect of those ve-
hicles no longer subject to various rules.
Th e MLP allows one investment manager to absorb all the incidence of conduct of business and capital adequacy rules, while permitt ing multiple fund structures to exist under its regulatory obligations.
SCOPE Th e MLP may be used by investment managers considered to be ‘AIFMs’ under Guernsey’s AIFMD Rules, 2013 (the Rules). Th ese are legal persons whose regular business is managing one or more collective investment undertak-ings. Th e Rules enable ‘Guernsey AIFMs’ to opt into an AIFMD equivalent regime, whereby on election the Rules are imposed on that investment manager.
Th e Rules were introduced to assist Guernsey AIFMs demonstrate to European Union competent authorities
their intention to be compliant with AIFMD. Th e idea be-ing that this could be benefi cial at the time a third country passport is granted, as to receive the benefi t of a passport non-European Union alternative investment fund manag-ers will need to comply with the same obligations as Euro-pean Union alternative investment fund managers, abiding by the rules of AIFMD.
While, to make use of the MLP the investment man-ager needs to be subject to the Rules, the Commission has indicated in a guidance note that the investment manager may apply for derogations from the Rules and it is anticipated that these may be signifi cant if required. Th is would be subject to ensuring reporting require-ments are maintained to a suffi cient standard and, prac-tically, regulation remains suffi cient to market into rel-evant jurisdictions.
Th is ability to obtain derogations from the Rules is im-portant and relevant at the present time because the third country passport has not yet been made available under the AIFMD. Accordingly, if marketing is taking place into the European Union through national private placement regimes, then equivalence is not, at present, required and the manager should not need to subject itself to the full scope of the Rules.
Th at said, while third country passports have not yet been made available, the European Securities and Markets Authority has recommended to the EU Commission that Guernsey be granted a third country passport. Upon that taking place, an investment manager wishing to make use of a passport would have to be compliant with AIFMD and any derogation referred to above would need to be considered.
Lastly, the MLP may apply to open-ended or closed-ended funds for whom the investment manager is seeking a registration under the Protection of Investors (Bailiwick of Guernsey Law), 1987 (the POI Law) and associated prospective licensees that are not the alternative invest-ment fund manager, for example general partners to lim-ited partnerships.
APPLICATIONS AND REGULATORY OVERSIGHT To utilise the MLP, an investment manager will need to be licensed under the POI Law, as well as opt into the Rules (subject to derogations). New investment managers will need to apply for both a licence under the POI Law and for the Rules to apply to them (subject to derogations), while
BRYON REES OF OGIER EXAMINES A NEW GUERNSEY FUND PRODUCT THAT REMOVES REGULATORY DUPLICATION BY FOCUSING REGULATION ON AN INVESTMENT MANAGER, WHILE CREATING AN EFFICIENT PLATFORM FOR FUNDS AND RELATED VEHICLES
GUERNSEY’S NEW MANAGER LED PRODUCT
R E G U L AT I O N
8 H F M W E E K . CO M
G U E R N S E Y 2 0 1 6
existing investment managers already licensed under the POI Law will need to opt into the Rules (subject to derogations).
Accordingly, the Guernsey licensed investment man-ager will be subject to the POI Law (and the Licensees (Conduct of Business) Rules, 2014 (the COB Rules) and the Licensees (Capital Adequacy) Rules, 2010 (the CAP Rules) made thereunder), as well as the Rules (subject to derogations).
The underlying fund or funds, which are or-dinarily subject to regulation, will still be regis-tered by the Commission but no rules will apply to them. The licensed investment manager will notify the Commission using a prescribed form (Form MLP) and the Commission will register the fund within one business day of receipt of the notification.
Neither the Registered Collective Investment Scheme Rules 2015 nor the Prospectus Rules 2008 will apply to funds registered under the MLP regime.
A Guernsey MLP fund is not required to pro-duce a specific form of offering document. While an offering document is still expected for a fund offering through national private placement into Europe, this may offer flexibility in respect of of-ferings outside of Europe.
The MLP will also benefit funds using legal forms re-quiring a management company or multiple management companies, such as a limited partnership with a general partner. The general partner or related management com-pany would still require a licence under the POI Law but under the MLP no rules will be applied to them. These management vehicles can be included in the notification referred to above for the fund and, again, the Commission will issue a licence under the POI Law to those vehicles within one business day. Neither the COB Rules nor the CAP Rules, which currently apply to licensees under the POI Law, will apply to those vehicles licensed pursuant to the MLP regime.
In each case, the manager filing the Form MLP will give certain warranties to the Commission, which the Com-mission will rely on granting the relevant registration or li-cence. It should be noted that a single investment manager is able to notify and obtain registration of multiple funds
and licences for multiple related vehicles. There is no numeric restriction on the number of funds or vehicles which may sit under the licensed invest-ment manager. It is anticipated this might facilitate or encourage promoters to create more substance in Guernsey in respect of the regulated investment manager and to use that vehicle for its entire struc-ture. One would also envisage that the MLP will lead to the creation of platforms providing a third-party investment management company to enable promoters to avail themselves of the MLP regime. There is no requirement that the investment man-ager be a member of a group or own any general partners licensed under it.
In addition to the investment manager being regulated, again as is currently the case, the Guern-sey administrator and, if any, custodian or trustee of the relevant MLP fund or funds will continue to be regulated in Guernsey, which enhances investor protection and oversight.
WHAT’S NEXT?Through the introduction of the MLP, Guernsey continues to show its adaptability and place as a leading investment funds jurisdiction, committed not only to being an effi-cient place to do business but also to ensuring it continues to maintain its highly regarded regulatory standards.
While the MLP in its current form can be used to mar-ket outside of Europe, it is a product currently tied to the Rules (albeit with derogations). The Commission has in-dicated that the next phase will be the development of a product using the same principles but with a discrete set of rules for investment managers marketing to jurisdictions outside of the European Union.
INVESTORS AND PROMOTERS WILL BENEFIT FROM THE REMOVAL OF
REGULATORY DUPLICATION, A MORE EFFICIENT PATH
TO MARKET AND REDUCED ADMINISTRATION FEES
”
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1 0 H F M W E E K . CO M
G U E R N S E Y 2 0 1 6
Experience, expertise and solid regulation are just some of the reasons why Guernsey’s repu-tation as a major investment funds domicile continues to grow. Figures from Guernsey Fi-nance show that funds under management and administration in Guernsey stand at £227.6bn
(December 2015). Th ese funds cover multiple asset class-es and types, including closed-ended and open-ended fund structures, hedge funds, real estate and infrastruc-ture. The island is also currently the global leader for non-UK London Stock Exchange (LSE) listings, acting as a gateway to capital markets. As a European off shore jurisdiction with a fl exible but solid regula-tory regime, the Guernsey market lends itself to the establishment of hedge funds and provides a more accessible, European time zone al-ternative to the traditional Cayman Islands structure.
WHAT ELSE SETS GUERNSEY APART?Guernsey’s fl exible approach to-wards open-ended and closed-ended funds makes the jurisdiction very at-tractive to set up a vast array of alter-native investment funds including hedge and private equity funds. Th e regulator, the Guernsey Financial Services Commission (GFSC), has a fast response time enabling fi rms to register quickly. It takes a sensible approach to invest-ment restrictions, opening the doors for a diverse range of fund products to establish themselves in the jurisdiction. Guernsey’s broad expertise and service provider creden-tials make it well suited to service a number of invest-ment vehicles including limited partnerships, unit trusts, protected cell companies (PCCs) and incorporated cell companies (ICCs). Th e island is also home to some of the leading global service providers covering law, corporate governance, administration, accounting, valuation and registrar services. Th ese organisations, including Mourant Ozannes, have a long history on the island, meaning that they are well-placed to meet the challenging requirements of fi nancial institutions and service complex structures which may need to adapt to regulatory challenges.
Th e GFSC is an experienced and pragmatic regulator. It
sets high standards but ensures that fi rms remain competi-tive, a feat that is not always achieved by other regulatory bodies. Th e GFSC’s response to the AIFMD is testament to this pragmatism. Although not in the EU or part of the EEA, Guernsey has implemented its own AIFMD equiva-lent regime. Under this dual regulatory regime, it is possi-ble to continue to distribute Guernsey funds into both EU and non-EU jurisdictions: the existing regime remains for those not requiring an AIFMD fund, including those using national private placement regimes and those marketing to non-EU investors; and there is an opt-in regime which
is fully AIFMD compliant. Firms may utilise the national pri-
vate placement regimes on off er in the 28 EU member states and adhere to the rules laid down by AIFMD. Th e national private placement route is currently being favoured by many fund managers who do not undertake pan-EU marketing of their funds. Alterna-tively, they can simply solicit non-EU investments and absolve themselves from the onerous compliance obliga-tions laid down in the directive. In particular, Guernsey fund structures will provide a cheaper “out of scope” option for marketing into non-EU ju-risdictions, including the important markets of the US, Asia Pacifi c, the Middle East, Latin America and other emerging markets, which EU jurisdic-
tions will not be able to provide.Th e European Commission is going to determine
whether national private placement can continue, or whether the passport will be extended to non-EU manag-ers of non-EU funds; however, Guernsey is a strong can-didate to be a benefi ciary of the pan-EU marketing pass-port, which allows unimpeded distribution rights across the EU. Guernsey’s regulatory regime has been at the forefront of att aining compliance and equivalence with the AIFMD, and indeed the European Securities and Markets Authority (Esma) has already announced its rec-ommendation to grant Guernsey such a passport. As and when the passporting regime is implemented, Guernsey managers and funds should be ideally placed to take ad-vantage of the pan-EU marketing opportunities. In the meantime, Guernsey off ers a dual regulatory regime for
GUERNSEY’S FLEXIBLE APPROACH TOWARDS OPEN-ENDED AND
CLOSED-ENDED FUNDS MAKES THE JURISDICTION VERY
ATTRACTIVE
”
DARREN BACON AND CAROLINE CHAN OF MOURANT OZANNES EXPLORE GUERNSEY’S FINANCIAL LANDSCAPE
A BAILIWICK OF SUCCESS
Caroline Chan advises on investment funds, listings, M&A transactions, financing, security and regulatory work . Caroline is a partner an Guernsey advocate who trained and worked as a solicitor in London and Hong Kong.
Darren Bacon specialises in advising on investment funds, regulatory work and corporate transactions. Darren is a partner and Guernsey advocate who trained and worked as a solicitor in London.
F I N A N C I A L S E R V I C E S
H F M W E E K . CO M 11
the continued distribution of funds into both EU and non-EU jurisdictions.
All open-ended funds in Guernsey are required to appoint a Guernsey-regulated custodian. Th e GFSC has, however, relaxed its rules for hedge funds, deem-ing such relaxation to be appropriate in the case of funds targeting institutional and/or expert individu-als. An example of this relaxed approach is that a repu-table prime broker may be appointed as the ‘designat-ed’ custodian and the GFSC will not require the prime broker to take on formal duties of oversight over the fund manager. Th e GFSC has also introduced a regis-tered fund regime which off ers a streamlined approval process for both open and closed-ended funds. It is the responsibility of the licensed Guernsey fund adminis-trator to conduct due diligence on the fund promoter and the fund structure and to provide certain warran-ties to the GFSC that the proposed fund satisfi es the criteria for authorisation. Providing the fund adminis-trator confi rms to the GFSC that the criteria are met, the GFSC will grant the required approval within three working days. Th ese changes signifi cantly accelerate the regulatory approval process.
INDUSTRY LEADERGuernsey continues to lead the way among off shore juris-dictions regarding the exchange of information and was one of the fi rst to sign an Intergovernmental Agreement (IGA) with the US authorities as mandated under the Foreign Account Tax Compliance Act (Fatca). Th e UK launched its own variant of Fatca with the Crown Depend-
encies and Overseas Territories, again, something Guernsey has been fully cooperating with. Th is deter-mination to att ain tax compliance makes Guernsey ex-ceptionally well-placed to adhere to the rules laid out by the Organisation for Economic Cooperation and Development’s (OECD) Common Reporting Stand-ard (CRS). Even the yet-to-be-determined Base Ero-sion and Profi t Shift ing (Beps), another OECD initia-tive, should not overly concern Guernsey. At the heart of Beps is the requirement that fi rms using lower tax jurisdictions have a substantive presence in those ju-risdictions. Th is is already a requirement in Guernsey.
Guernsey has demonstrated that it is a competi-tive, well-regulated and experienced fund domicile. Its regulator is market-friendly and pragmatic, its ser-vice provider community is world-leading and it has a political environment which supports the industry and innovation. Recent prospects for the industry have been very positive, with a number of signifi cant new investment fund launches and other transac-
tions. Fintech continues to att ract investor interest and peer-to-peer lending, in particular, appears to be gaining signifi cant momentum. The London listed funds sector remains active and activity may increase further follow-ing the outcome of the UK’s EU Referendum. There is great potential in Guernsey’s new manager led product which provides a very att ractive vehicle for fund manag-ers needing substance in the island. Th e island has re-peatedly demonstrated its robustness, continues to att ract best of breed talent and recent growth shows no sign of slowing down.
GUERNSEY CONTINUES TO LEAD THE WAY AMONG OFFSHORE
JURISDICTIONS REGARDING THE EXCHANGE OF INFORMATION
”
Partner led, team built About Bedell Cristin Bedell Cristin is a leading provider of legal services with a presence in the key financial centres of Jersey, Guernsey, London, Mauritius, BVI and Singapore.
Working with corporate clients, high net worth individuals and intermediaries, alternative investment managers, world class institutions, we offer a broad range of specialist legal advice with a client-focused approach.
We believe in being accessible and personal, encouraging our clients to stay with us for the long term to develop exceptional levels of service and our understanding of their personal and business needs in a partner-led environment.
Recent Accolades
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Our Services We provide Jersey, Guernsey, Mauritian and BVI legal advice.
As a full-service offshore law firm, we have client-focused core business lines in corporate and financial services (private equity, real estate, funds, banking, capital markets and insurance), litigation, insolvency and restructuring, and private client work (local and international, trusts, foundations, employment, commercial and residential property and probate).
We provide advice and expertise to clients worldwide. We have the expertise and resources to handle large and complex cross-border transactions.
As a partner-led offshore law firm, our team culture is focused on providing exceptional client service. We attract and retain the most skilled and experienced lawyers and support staff which is supported by our exceptional reputation and working environment.
To find out more please contact:
Kate Ovenden
Partner T: +44 (0)1481 812861 E: [email protected]
legal serviceswww.bedellgroup.com
Jersey | Guernsey | London | Mauritius | BVI | Singapore
F U N D S E R V I C E S
H F M W E E K . CO M 13
G U E R N S E Y 2 0 1 6
GUERNSEY: YOUR HOME, YOUR BUSINESS, YOUR LIFE
RICHARD LE TOCQ, OF LOCATE GUERNSEY, EXAMINES THE FINANCIAL INFRASTRUCTURE OF THE ISLAND AND WHY IT REMAINS A FAVOURED DOMICILE
HFMWeek (HFM): For its size, Guernsey has a very large funds sector, how did that come about?Richard Le Tocq (RLT): It’s been steady organic growth for many years. There are now more than 800 Guernsey-domiciled investment funds, which shows the scale of the industry. In private equity alone, for example, there is more than $120bn worth of assets under management. We’ve had a funds business community in Guernsey since the 1960s, which was attracted, in the beginning, to the island’s offshore status and our own independent govern-ment. But it was the UK’s suspension of exchange controls in 1979, and their subsequent abolition that produced a
step change for the funds sector in Guernsey. The island proved adept at being innovative in funds structures: able to execute things that couldn’t be achieved in the more traditional UK marketplace. Growth was rapid and the island became known as a centre of excellence with a strong funds infrastructure. And, that island expertise and infrastructure is now the key driver for business flows into Guernsey. Ultimately, success breeds success.
HFM: What fund types tend to be administered in Guernsey? Why do these types of funds thrive in Guernsey?
F U N D S E R V I C E S
1 4 H F M W E E K . CO M
G U E R N S E Y 2 0 1 6
Richard Le Tocq is the head of Locate Guernsey; an initiative which promotes Guernsey as a destination of choice for the relocation of businesses and high value individuals. He has 25 years’ experience of the Guernsey Financial Services sector and is the immediate past chairman of the Guernsey branch of the IOD..
RLT: Guernsey has a wide range of fund types managed or administered on the island. Some of the notable catego-ries of fund would be private equity, commodities, debt, emerging markets, infrastructure, real estate, equity funds and alternative funds. Outside of London itself, Guernsey is the favoured domicile for funds listed on the London Stock Exchange. I doubt if I’ve mentioned all the types and, of course, these can be in either open-ended or closed-ended funds. Furthermore, there’s a very broad geographi-cal spread too. Why do they fl ourish? Once again, that’s the combination of very positive hygiene factors including pragmatic regulation, infrastructure, tax neutrality, our well-justifi ed reputation and the island’s funds expertise.
HFM: Guernsey is an industry-leader in fund admin-istration, but why would it be a good location for fund managers to consider basing themselves?RLT: Th e environment in Guernsey is very supportive of funds businesses, whether that’s funds managed or admin-istered in Guernsey, so it’s easy to see why the conditions are right for fund managers to fl ourish. It doesn’t overstate things to call Guernsey a centre of excellence for the funds sector and managers can and do take advantage of that by basing themselves in the island. With the professional ser-vices sector, and here I’m thinking primarily of legal and accountancy fi rms, the level of expertise and funds-related experience is akin to that of a major European city. On top of that, Guernsey’s proximity to the UK and its regular fl ights to London in about 40 minutes are also positive fea-tures of island living. Talk to businesses that have relocated to the island over the last few years and they’ve all got posi-tive stories to tell.
HFM: Is it all about the business reasons, or does lifestyle play a part too?RLT: Lifestyle defi nitely plays a part. I might be a bit biased, but Guernsey is simply a fantastic place to live. Th e quality of life is exceptional: a great work-life balance where commutes are measured in minutes rather than hours means that you can put in a full day at the offi ce and still get home for time on the beach, on the bike or on the boat. It’s also a safe place for families, the schools are good and it happens to be beautiful too. As I say, I may be a bit biased, but plenty of others have come to Guernsey over the years, put down roots and been very glad they did.
HFM: Explain where Locate Guernsey fi ts into this and the role you and your team provide.RLT: Locate Guernsey is all about assisting in the process of relocation, both business and indi-vidual. Whether it’s a corporate relocation, such as a fund management business, or indeed the principal or members of the senior management team of that fi rm for example, we help in a number of ways. It can manifest itself in diff erent ways, but one important com-mon theme is that we’re the primary single point of con-tact for the client. Th at’s a help for them of course as we can ensure the answers they need are provided quickly. Th at will probably involve navigating and contacting the vari-ous Guernsey stakeholders who might be touchpoints for
the enquirer. It’s helpful that, unlike some locations, there’s no requirement to register a business with the government in order to be allowed permission to trade.
We also have a marketing role too, to promote and ex-plain why Guernsey is such a good place to live and work. Our strapline is ‘Locate Guernsey: Your Home, Your Busi-ness, Your Life’, which neatly covers all the important as-pects about living and working in Guernsey.
HFM: How do you view the future for Guern-sey’s funds sector and perhaps new businesses sett ing up in the island? What industry trends will be of the most signifi cance in the next 18 months?RLT: I’m really bullish about the future. Any-one who att ended the Guernsey Funds Forum in London could only have that view. Th e Guernsey funds sector is vibrant, the numbers being posted by island administrators and managers remain very positive, even if the industry itself is globally slow-ing. Guernsey will continue to be a market leader given the positive funds infrastructure and our ex-pert practitioners and professional services com-panies. But innovation remains another Guern-sey hallmark and the recent announcement by the Guernsey Financial Services Commission of what’s called the ‘manager led product’ represents another chapter in Guernsey’s long history of in-novation. Quite rightly, there’s a lot of interest in this and it will be of particular interest to AIFMs
who are seeking to market an AIF into a European host country under the national private placement regime.
Globally the regulatory landscape will change in the years to come, as we’ve seen in the past of course, but Guernsey’s excellent international regulatory reputation together with its track record for innovation will continue to see the island well regarded and these changes will, I ex-pect, continue to present opportunities.
THE ISLAND PROVED ADEPT AT BEING INNOVATIVE IN
FUNDS STRUCTURES: ABLE TO EXECUTE THINGS THAT COULDN’T BE ACHIEVED IN THE MORE TRADITIONAL
UK MARKETPLACE
”
R E G U L AT I O N
H F M W E E K . CO M 15
G U E R N S E Y 2 0 1 6
Oliver Godwin is an experienced corporate lawyer at Bedell Cristin. He specialises in the structuring, establishment and operation of offshore investment vehicles including cellular and non-cellular companies, trusts, limited partnerships and limited liability partnerships. Having acted as legal counsel to a wide variety of regulated and unregulated offshore companies in multiple jurisdictions he has a detailed knowledge of the legal and regulatory frameworks underpinning the operation and management of such structures.
HFMWeek (HFM): Over the last 12 months, what regulatory changes have been of the most signifi cance to Guernsey and why?Oliver Godwin (OG): Regulation is constantly chang-ing, not only within Europe, but worldwide. Th is ever-evolving process creates an air of uncertainty for many jurisdictions, although, Guernsey continues to more than just meet its regulatory obligations on the local and international stage.
Th e proof of this is evidenced by Esma recommending that Guernsey be given the third country passport under AIFMD. Th is recommendation highlights that Guernsey is receiving recognition for its hard work in having a re-gime that meets the requirements of the AIFMD rules, being OECD compliant for tax transparency and having appropriate AML laws in place.
Other developments have come in the form of the manager led product (MLP), which is aimed at AIFMs establishing themselves in Guernsey to market AIFs into the EU under the applicable national private placement regime. It en-sures a proportionate risk-based level of regulation by placing the regulations on the AIFM only, avoiding duplication of regulatory requirements over several entities. Within 24 hours of receipt of a notifi cation the GFSC will license open-ended or closed-ended funds, as well as general partners or managers formed solely for the purpose of such funds.
Guernsey committ ed itself to the adoption of the global Com-mon Reporting Standard on Automatic Exchange of In-formation (CRS) with eff ect from the beginning of this year, with fi rst reporting taking place in 2017. Guernsey is one of approximately 60 jurisdictions working to this implementation timetable, including all EU member states (with the exception of Austria, which will have an extra year before implementation of the CRS).
HFM: Guernsey is well known for its high standard of transparency, how did it achieve this reputation and how will it maintain it?OG: Guernsey has strong presence in international fi -nance and has fi rmly cemented itself in the funds market. With over 50 years’ experience of being an international fi nancial centre, Guernsey has worked extremely hard to
achieve its reputation. A key contributing factor to this success has been a willingness to engage with external au-thorities, for instance the UK and the EU, to give a level of transparency that provides a truly comfortable envi-ronment. Additionally, Guernsey is keen to work with other jurisdictions to ensure that it is transparent from a tax perspective.
Guernsey has traditionally listened to, and imple-mented, all of the requirements and rules raised by inter-national organisations such as the OECD and FATF. It has been a conscious movement of ours to comply with the highest levels of transparency available so, in rela-tion to the Base Erosion and Profi t Shift ing (Beps) and tax transparency, Guernsey is tax transparent and has tax neutral structures. Ultimately, we hope to be seen as the epitome of dependability by both onshore and off shore
jurisdictions. Th is reputation, in conjunction with a strong regu-latory system and a very knowl-edgeable regulator, acts as an impressive att raction for those considering Guernsey.
HFM: How does Guernsey in-novate to diff erentiate from other jurisdictions?OG: The island has always been an innovator. Guernsey has con-sistently been at the epicentre of the launch of new products, for example, we were pioneers of the protected cell company (PCC) structure, which is now being copied all around the world in various forms. The PCC has been an incredibly
popular product which has allowed Guernsey to ex-plore different markets, i.e. the funds market and the insurance market.
Additionally, Guernsey’s industry always works hard with the local regulator to ensure that there is fl exibility in our regulatory framework. Th is typifi es our business-friendly att itude. Despite being relatively small in size, Guernsey uses its stature in its favour, allowing for the utmost in versatility and enabling a speed of conducting aff airs that is second to none.
Our history speaks for itself and works as our best at-traction. Guernsey boasts an amalgamation of fl exible structures and regulators, laws, courts and experienced professionals who can come together to push the indus-try forward.
OLIVER GODWIN OF BEDELL GROUP EXAMINES THE FUND LANDSCAPE OF GUERNSEY
GUERNSEY CONTINUES TO STAND STRONG
GUERNSEY HAS STRONG PRESENCE IN
INTERNATIONAL FINANCE AND HAS FIRMLY
CEMENTED ITSELF IN THE FUNDS MARKET
”
R E G U L AT I O N
1 6 H F M W E E K . CO M
G U E R N S E Y 2 0 1 6
HFM: Which fund structures are the most popular in Guernsey, how much variety is there?OG: The popularity of the structure corresponds to the type of business. One of the structures more commonly used is the limited partnership structure, which is utilised for private equity funds and cleantech funds. Guernsey is used as a tax neutral jurisdiction which allows pension funds and internationally-based investors to really en-hance their return. The Class B funds regime, which is an open-ended fund regime, is also quite prevalent.
The PCC structure is widely used for fund platforms and insurance products because it permits the segrega-tion of assets and liabilities. In a similar vein, we have the incorporated cell companies where each cell is its own separate legal entity, under an umbrella. Ultimately, there is a vast variety of structures in place. Furthermore, Guernsey has just started consulting on very private funds, which is almost like a club deal and will require less regulation, thus will be quicker to get to the market.
HFM: How is Guernsey’s relationship with the Lon-don Stock Exchange?OG: Our relationship with the London Stock Exchange (LSE) is deeply ingrained. We have something resem-bling an ‘open mic’ relationship with them, and are in constant contact, directly and through lead counsel in London. The listing of Guernsey structures on the AIM market of the LSE, where Guernsey is a market leader, is a key driver in the relationship.
HFM: What other crucial components attract manag-ers and institutions to Guernsey?
OG: A key attraction is our very strong legal system which has its roots in Norman-French law, but is clearly recognisable to those used to common-law jurisdictions. Another huge factor is our position as a tax neutral and tax transparent jurisdiction. It all adds up to a solid and reliable offering for international investors who don’t want to be onshore.
HFM: What key industry trends will impact Guern-sey the most over the next 18 months?OG: The main obstacle that is perhaps of the most im-portance, and is certainly the most pressing, is that of a ‘Brexit’, which is ultimately more than just an “in” or “out” choice. There are two fundamentally different paths which the UK could follow and at the helm of this deci-sion are the British public. I think that in the short-term there will be disruption whatever the outcome, and as polls continue to see fluctuations in potential voting patterns and the outcome continues to remain uncer-tain, everyone is on the edge of their seat. Despite things looking slightly uncertain now, Guernsey is well-placed to react to either outcome. Much work has already been done by the States of Guernsey to understand the impact on Guernsey should the UK decide to leave the EU, and how to mitigate that impact. Indeed, Guernsey’s States Assembly has been told that the island is ‘well placed’ to deal with any challenges that occur, in the event of the UK voting to leave the EU and the potential change for Guernsey will be ‘less substantial’ than the potential change for the UK given that the Crown Dependencies are relatively stable in respect of their EU relationship, compared to the UK.
BVI / CAYMAN ISLANDS / GUERNSEY / HONG KONG / JERSEY / LONDON mourantozannes.com
Mourant Ozannes' investment funds team is 'particularly strong' and provides 'high-quality, pragmatic and solution-oriented advice'.
Legal 500 UK, 2015
"The standout fi rm in terms of investment funds" and "They are consistently excellent performers in all areas".
Chambers & Partners, 2016
Local expertise.International reputation.Mourant Ozannes has an international reputation in off shore investment funds. We advise on the formation, structuring and regulation of investment funds in the BVI, Cayman Islands, Guernsey and Jersey and provide ongoing legal advice to off shore funds and fund managers. Our clients range from leading asset managers and fund promoters to start-up ventures.
For more information please visit mourantozannes.com/funds
1 8 H F M W E E K . CO M
S E R V I C E D I R E C TO R YG U E R N S E Y 2 0 1 6
Guernsey Finance, PO Box 655, Somers House, Rue du Pre, St Peter Port, Guernsey, GY1 3PN // +44 (0) 1481 720071 // [email protected]
Guernsey Finance is the promotional agency for the island’s finance industry internationally. The joint government / industry body is responsible for promoting Guernsey as a leading international finance centre, including its internationally renowned banking, investment funds, private wealth and insurance sectors, across traditional and emerging markets. Headquartered in Guernsey, the organisation also has representation in Shanghai, Hong Kong and Dubai.Within the funds space specifically we have also become well known for hosting the hugely popular Guernsey Funds Forum in London. The conference, which takes place in May each year, is a one-day event that attracts around 500 funds professionals.
Mourant Ozannes, Kate Wach, Business Development Manager // [email protected]
Mourant Ozannes has an international reputation as one of the leading investment funds practices in Guernsey. We advise on the formation, structuring and regulation of investment funds in Guernsey and provide ongoing legal advice to funds and fund managers. Our clients range from leading asset managers and fund promoters to start-up ventures. According to Legal 500 2015 Mourant Ozannes’ investment funds team is ‘particularly strong’ and provides ‘high-quality, pragmatic and solution-oriented advice’. Mourant Ozannes is regularly appointed as listing sponsor to funds listed on the Channel Islands Securities Exchange.
Locate Guernsey, Richard Le Tocq, Head of Locate Guernsey // [email protected] // M: +44 (0)7781 134567 // Raymond Falla House, Longue Rue, St Martins, Guernsey, GY1 6AF // www.locateguernsey.com
Locate Guernsey promotes and facilitates the relocation of businesses and high value individuals to the Channel Island of Guernsey. A part of the island’s government, the States of Guernsey, Locate Guernsey provides a single contact point that is friendly, confidential and free, for your relocation needs. Guernsey has an international reputation for its financial services in which funds is a growth area. The innovative approach taken in Guernsey makes it an excellent base for fund managers. The beautiful island is self-governing, has a competitive tax environment and an exceptionally high quality of life.
Ogier Redwood House, St Julian's Avenue, St Peter Port, Guernsey GY1 1WA // T+44 1481 721672 // F+44 1481 721575 // [email protected] Ogier employs more than 350 staff worldwide and has long-established relationships with many of the world’s leading international financial institutions, professional advisers and regulatory bodies. It has been at the forefront of the development of the offshore financial markets for more than 50 years. Ogier offers its clients the strength in depth to handle the largest, most demanding and most complex transactions, and prides itself on providing expert, efficient and cost-effective legal services across all time zones. Ogier provides advice on all aspects of BVI, Cayman, Guernsey, Jersey and Luxembourg law and has won numerous industry awards for its services. Ogier was the first law firm to establish a Channel Islands practice as its Hong Kong office to offer Jersey and Guernsey legal services to clients in the Asian time zone.
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LIVE SEARCHES: EXCLUSIVELY TELLING YOURFUND WHERE TO FIND INVESTMENT
DAILY NEWS SUMMARIES
EXCLUSIVE DATA ON LAUNCHES AND PERFORMANCE
TOPICAL COMMENT FROM LEADINGINDUSTRY FIGURES
EXCLUSIVE RESEARCH SURVEYS
REGULATORY DEVELOPMENTS
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JP MORGAN HAS seen sig-
nificant drops both in its hedge
fund prime brokerage and cus-
todian banking businesses,
while other large prime brokers
such as Credit Suisse have also
seen big falls, exclusive analysis
of SEC data reveals.
JPM has shed 824 hedge
funds from its custodian bank
and 136 from its prime bro-
kerage, the latest HFMWeek/
AlphaPipe Service Provider
Snapshot shows.
Sources close to the bank
said the drop, revealed in ADV
forms filed by funds in Q1, is
largely due to the winding down
of the broker dealer business it
acquired from Bear Stearns.
It announced in November
2014 that it was winding down
its third-party Broker Dealer
Services (BDS) arm and
Fidelity subsidiary National
Financial took on clearing ser-
vices for BDS clients.
JPM acquired the unit, which
was formerly known as Bear
Stearns Securities in 2008.
The number of funds using
JPM as a custodian fell by -33%
from 2,516 to 1,692. It fuelled a
$421bn, or 20% fall, in its cus-
todian RAuM from $2.1trn to
$1.7trn.
Northern Trust, Wells Fargo
and First Republic Bank were
the big winners among custo-
dians, adding 310,
124 and 126 funds
Latest AlphaPipe data shows
falls for JPM and Credit Suisse
BY SAM MACDONALD
03
COMMENT WILL NEW EUROPEAN STRUCTURES KNOCK CAYMAN OFF THE TOP SPOT? 14
Top custodians
and primes shed
1,000 hedge funds
A PRICE WORTH
PAYING?
ESMA’S CALLS FOR
COMMON EU FRAMEWORK
MET WITH SCEPTICISMANALYSIS 23
LAUNCHES 11
BOAZ WEINSTEIN’S SABA LAUNCHES HIGH-YIELD STRAT
New York credit fi rm adds to its stable of fi xed income funds
PEOPLE MOVES 06
CANTAB CO-FOUNDER LEAVES AFTER 10 YEARS AT THE FIRM
Schlaikjer’s responsibilities taken over by CTO Tom Howat
LAUNCHES 10
SWISS HF BETTING ON GREEK RECOVERY
RBR Capital carve out fund focused on indebted country’s banks
Brevan Howard’s Alan Howard
among the winners at last week’s
bash. For all the photos, see page 25
The long and the short of it
ISSUE 416 28 APRIL 2016
HFM EUROPEAN
PERFORMANCE
AWARDS
HFM416_News.indd 1
26/04/2016 16:56
CONTACT +44 (0)207 832 6511or email [email protected] to subscribe
or visit hfmweek.com for details
EVERY WEEK YOU WILL RECEIVE:
THE BEST READ IN THE HEDGE FUND INDUSTRY
www.hfmweek .com
POOR PER FOR MANCE
AND investor redemptions have
sparked an expansion of capacity
in funds previously closed to new
investments, with industry giant
Third Point among the managers
re-opening vehicles.Dan Loeb’s $16bn firm is
looking to extend capacity to
select investors, according to a
source familiar with the situation.
Acadian Asset Management and
AlphaGen Capital have also re-
opened respective funds in the last
quarter.JP Morgan’s private bank plat-
form is being offered new capac-
ity at Third Point – around $40m
– following a difficult quarter for
the event-driven manager which
saw it suffer redemptions and
left it down -2.3% YTD as of 31
March. It is not known whether Third
Point has offered additional capac-
ity to other allocators, but one
prime brokerage cap intro head
told HFMWeek that for hard-
closed funds like Loeb’s, it is com-
mon practice to have a waiting list
of vetted prospective investors to
provide “replacement capital”.Third Point hard-closed in
2011.The development comes as
investors yanked $15bn from
hedge funds between January and
March this year, leading data pro-
viders reported last month. Boston-based Acadian has space
in its flagship Global Leveraged
Market Neutral (GLMN) strategy due
Funds looking for fresh assets
after outflows and poor returnsBY JASMIN LEITNER
03
COMMENT THE NEW SIGNIFICANCE OF EMPLOYEE FILING AND DISCLOSURE14
Third Point among HFs re-opening to
new inflows
HEDGE FUNDS FACE LEVERAGE CURBSFSOC COMMITTEE
INVESTIGATES RISK AT LARGE MANAGERS
ANALYSIS 21
UCITS 11
GOLDMAN SACHS ONBOARDS FIRST CTA FOR UCITS PLATFORM
Teams up with pioneering managed futures fi rm Campbell & Co
REGULATION 03
FCA DRAFTS EXTRA STAFF FOR AUTHORISATION BACKLOG
Processing times increase 50% in past 12 months
LAUNCHES 05
EX-CONTRARIAN CAPITAL DUO LAUNCH EVENT-DRIVEN FUND
Neiss and Lax’s JH Lane Partners awaiting SEC approval
HFMWeek looks at the pros and
cons of choosing the sunshine state
as a hedge fund destination
The long and the short of it
ISSUE 417 12 MAY 2016
FLORIDA: MORE THAN LOW TAXES AND SUNSHINE?
ANALYS IS 17
1_003_HFM417_News.indd 1
www.hfmweek .com
FOHF GIANT Skybridge Capital
has raised concerns over certain liq-
uid alternatives strategies, claiming
they pose potentially “disastrous”
risks and are destined to underper-
form equivalent private funds.
Speaking at the Salt conference
in Las Vegas last week, Skybridge
partner and senior portfolio man-
ager Troy Gayeski, a key figure in
Anthony Scaramucci’s $12.5bn
FoHF, said he had concerns about
strategies other than managed
futures and long/short equity
being launched in a liquid alts ’40
Act format.“Strategies can perfectly fit in
liquid alts like CTAs or long/ short
equities but those are only two out
of numerous strategies that alter-
natives managers pursue,” he said.
“Strategies like structured credit
or distressed corporate credit are
impossible to put in daily liquid
products without creating a signif-
icant asset liability mismatch.
“How much return do you give
up by demanding daily liquidity?
And how much correlation ben-
efits do you give up by being more
long biased? We are pretty sure
that it is very difficult for liquid alts
to generate comparable returns
over a 10-year period.”Liquid alts strategies have grown
in popularity over recent years but
the latest Morningstar data shows
assets have fallen more recently.
US liquid alts assets total $286bn,
down over 10% compared to April
2015 when assets stood at $314bn.
Performance was down
-3% over the period.
$12.5bn FoHF warns of certain
strategies using daily liquidity
BY SAM DALE
03
COMMENT LESSONS FROM 40 YEARS INVESTING IN EMERGING MARKETS14
Skybridge raises concerns over
liquid alts failings
LIFE AFTER BREXITWHAT ARE THE POTENTIAL IMPLICATIONS
OF A ‘LEAVE’ VOTE FOR
HEDGE FUNDS?
ANALYSIS 19
REDEMPTION 08
CHINA SWF ATTACKS HF PERFORMANCE AND HERDING
CIC has $30bn invested in absolute return funds bucket
LAUNCH 03
MULTI-STRAT LAUNCH FOR ALTEGRIS AND CQS
US alternatives manager teams up with multi-strat giant
PEOPLE MOVES 06
CITCO FUND SERVICES CHIEF WILLIAM KEUNEN TO RETIRE
Admin’s global director to leave after 26 years at the fi rm
HFMWeek looks at the current
exposure levels of public pension
funds in states across the East Coast
The long and the short of it
ISSUE 418 19 MAY 2016
EAST COAST PENSIONS
ANALYS IS 16
www.hfmweek .com
TOTA L ASSETS IN the largest 10 managed accounts platforms (MAPs) have risen by almost 20% over the 12 months to 1 March, accord-ing to the latest HFMWeek Managed Accounts Universe study.Overall assets in the top 10 MAP providers jumped 17%, from $70.4bn to $82.5bn, with FoHFs and Solvency II needs cited by many MAPs as providing the bulk of the growth.
Last year’s largest platform, Infrahedge, continues to lead the way after increasing assets
23% over 12 months with its MAP AuM rising from $15.7bn to $19.3bn.MAP providers have point-ed to the increased use of managed accounts by FoHFs, as well as pressure caused by Solvency II capital require-ments which have forced insurance firms to look to alternatives to traditional hedge funds structures. Infrahedge CEO Bruce Keith said the firm continues to sees a growing amount of pipeline business.“If I look at the pipeline then I can see the adoption of managed accounts is grow-ing on a steep curve at the moment and the growth in our assets is testament to that. W hether it’s pension plans, fund
HFMWeek research highlights notable growth from major players year-on-year BY SAM MACDONALD
03
COMMENT RETIRING CITCO CHIEF REFLECTS ON THE FUTURE OF HEDGE FUNDS 14
FoHFs, Solvency II fuel 17% increase in MAP AuM
HEDGE FUNDS FEAR OFFSHOREBACKLASHPOLITICIANS COULD STRENGTHEN EXISTING LAWS
ANALYSIS 22
LAUNCHES 10
TWO DEUTSCHE PROS READY SYSTEMATIC ETF STRATEGYBrookVale Capital to launch fund once assets hit $50m
PEOPLE MOVES 06
SELWOOD AM RECRUITS EX-COMAC CHAIRMAN BUTLERFormer Citigroup fund services head joins as COO
SEEDING 08
SEATTLE PENSION SEEDS ARES HIGH-YIELD FUND WITH $80MManager added as ‘placeholder’ in ERS portfolio
lnfrahedge extends lead as largest MAP while diversifi cation in FoHF space fuels growth on many platforms
The long and the short of it
ISSUE 419 26 MAY 2016
ANALYS IS 16
2016
MANAGEDACCOUNTSUNIVERSE
www.hfmweek .com
P A R T 1 S I N G L E M A N A G E R S
THE NUMBER of global
hedge fund launches has fallen
to its lowest level in 12 years
with regulatory barriers and
a scarcity of start-up investor
capital being blamed for the
drop in activity.
Preqin data prepared for
HFMWeek shows a 51% fall in
in major hedge fund
2016 compared
2015,
the same period this year. This
is the lowest Q1 figure since
2004, when there were 106
launches, and just one-third
of the previous high of 307 in
2013.
Similarly, Preqin’s findings
show a 32% fall in UK launches
in Q1 2016 compared to Q1
2015, from 25 to 17. Launches
in Europe overall were flat,
with 34 in Q1 2016 and 35 in
Q1 2015.
HFMWeek recently revealed
an authorisation backlog at the
FCA, with processing times for
hedge fund approvals averag-
ing 30 weeks in the first quarter
around 20 weeks a year
fic region, tes
Q1 launch activity falls 51
%
from same period last year
BY MIKE SHEEN
FUNDS 14
Sharp drop sees HF
launches hit lowest
level since 2004
POWER
PLAYERS
WHO IN CONGRESS HAS
THE MOST POWER TO
INFLUENCE HEDGE FUND
REGULATION? ANALYSIS
18
The long and the shor
t of it
ISSUE 420 9 June 2016
LAUNCHES 11
ASPECT CAPITAL PREPARES ‘CORE TREND’ FUND LAUNCH
CTA giant to join low-fee set with Qiaif version of US ‘40 Act strat
LAUNCHES 03
EX-DAVIDSON KEMPNER MD PREPS LAUNCH
Tirschwell to oversee operations of the new distressed fund
EQUITY STAKES 05
AMG TO BUY GOLDMAN PETERSHILL I PORTFOLIO
$800m deal adds $55bn to Affi liated Managers Group AuM
HFMWeek asks experts fr
om across
the globe what has been driving the
steep fall in hedge fund launches
revealed in this week’s magazine
ANALYS IS16
THE US POLITICAL
POWER BROKERS
WHAT HAS
CAUSED
LAUNCHES TO
FALL TO THEIR
LOWEST LEVEL IN
12 YEARS?
WHAT HAS
CAUSED
LAUNCHES TO
FALL TO THEIR
LOWEST LEVEL IN
12 YEARS?
DOMICILE OF CHOICE FOR
INVESTMENT FUNDS
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To the point.
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