The Channel Islands fund industry has come out fighting after criticism about transparency in offshore fund jurisdictions. Nicholas Pratt highlights ten key people in the local business.
The two fund jurisdictions in the Channel Islands, Jersey and Guernsey, are distinct and funds do not position themselves as jointly domiciled offerings.
Guernsey has a longer history and greater number of assets under management than Jersey and it has developed a particular focus on private equity and hedge fund services. Meanwhile, Jersey has forged a reputation for securitisation and real estate funds.
However, while the competition between the two is an ongoing feature of the funds industry, the development of the Channel Islands Stock Exchange hints at some cross-jurisdictional co-operation that should benefit both domiciles.
Also, the fact that Guernsey and Jersey share the same office in Brussels suggests that in terms of legislative lobbying, the two jurisdictions face many of the same issues – particularly the how the Alternative Investment Fund Management Directive (Aifmd) will affect them.
The other regulatory challenge for the Channel Islands is taxation. Tax efficiency has become a highly politicised issue, especially in the UK, and fund managers and investors will look to service providers for innovative ways to remain tax efficient in a more open and transparent operating environment.
Forging international links will also be important both in terms of double-taxation treaties and also listing agreements with international exchanges, as will the pursuit of new asset classes and fund structures, from private placement funds to Islamic finance. The pursuit of emerging investment trends will be crucial.
The ten people represented here are some of the industry’s key players who shall help the Channel Islands deal with these challenges and opportunities.
Nigel Strachan – chairman, Jersey Funds Association (JFA)
Strachan has chaired the JFA since 2010 and is also managing director for Ipes, a Jersey-based private equity fund administrator. Originally from South Africa, Strachan moved to Jersey in 1998 and has consequently focused on offshore structuring and alternative fund administration. But it is in his role at the JFA where Strachan has had most influence, assisted by Graeme McArthur, who leads the association’s technical sub-committee.
Horace Camp – chairman, Guernsey Investment Funds Association
Camp has recently taken over the role of GIFA chairman from Patrick Firth after acting as vice chairman. He joined Kleinwort Benson in 1984 working in the offshore fund administration and custody, eventually serving as managing director of its Guernsey’s office. In addition to his GIFA role, Camp also serves as a professional non-executive director for various investment funds. Camp’s GIFA profile describes him as a “master in problem solving” which will be useful for his legislative lobbying. In April, the UK revenue commission reduced the number of approved Qualified Regionised Overseas Pensions (QROPs) on the island from 300 to three, prompting suggestions that Guernsey had been unfairly singled out. Meanwhile, the “Zero-10” corporate tax systems of the Crown Dependencies have come under European scrutiny.
Carla McNulty Bauer –minister, Guernsey Commerce and Employment Ministry
At the time of going to press, McNulty Bauer was facing a general election. Presuming that she is re-elected, the minister will be tasked with ensuring the best possible outcome from any legislative developments from the UK and from Europe, especially regarding tax exemption. McNulty Bauer will also be expected to help develop training and education resources in the island’s funds industry as Guernsey looks to address the human resources challenge that faces any off-shore domicile.
William Simpson – partner, Ogier
Law firms are pivotal in the creation of new fund types and structures in order to negotiate regulatory changes and meet investor demands. Lawyers from two local firms, Ogier and Mourant Ozannes, were instrumental in the establishment of Jersey’s Private Placement Funds and legal advice will continue to be critical for the two jurisdictions where the privacy of yesteryear is no longer a selling point. Simpson heads up Ogier’s Guernsey office and continues to rank highly in the list of Channel Islands lawyers for his work in the funds industry.
Geoff Cook – chief executive, Jersey Finance
Alongside the JFA, Jersey Finance has been the main lobbying voice for Jersey and Cook has been the main voice within Jersey Finance, joining as chief executive in 2007. In those five years, Cook commissioned a strategic review of Jersey’s finance industry entitled The Future of Finance 2015. More recently Jersey Finance and the JFA have helped to bring about the introduction of private placement funds – closed ended funds aimed at a limited number of professional investors.
Iain Stokes – senior managing director, State Street Global Services
Although Northern Trust is a big presence in private equity outsourcing, few individuals in that space have as good a reputation as State Street’s Iain Stokes. He spent seven years at Mourant’s fund administration business before it was acquired by State Street in 2010 making it the world’s largest provider of private equity and real estate fund administration. The combination of scale and specialism is likely to be increasingly important for Guernsey, especially as it seeks to become the prime location for private equity outsourcing.
Mark Huntley – managing director, Heritage International Fund Managers
Over the past 25 years in Guernsey, Huntley has been a founding director of the Channel Islands Stock Exchange. In 2006, he established Heritage’s fund administration business with a focus on emerging asset classes such as cleantech, litigation and forestry. It is an independent provider of client-focused, comprehensive, third-party fund administration with $50 billion (€38 billion) under administration.
Tamara Menteshvili – chief executive, Channel Islands Stock Exchange
The CISX, one of the few examples of collaboration between Jersey and Guernsey, has been operating since 1998. An active exchange is always helpful in generating liquidity for any prospective financial centre. Listings passed the 4,000 mark in June 2011 and include more than 200 international issuers from 22 countries. Prior to her appointment as chief executive of the exchange, Menteshvili was a deputy director of investment business at the Guernsey Financial Services Commission.
Brendan McMahon – partner, PwC
McMahon heads up PwC’s private equity practice and is widely considered to be one of the most authoritative voices on the impact of the Alternative Investment Fund Managers Directive (Aifmd) on the Channel Islands’ funds industry. The directive may no longer be as threatening to the industry as when it was first proposed. Nevertheless, the Aifmd issue remains a concern for fund managers and the work of advisers such as McMahon will be critical to encouraging new fund launches and attracting new business to the Islands.
Jon Moulton – chairman, Better Capital
One of the most positive developments for Guernsey’s private equity industry is the number of high-profile private equity houses that have established a physical presence there rather than a shell. In recent years, Permira and Apax have established operations in Guernsey, while Terra Firma chairman, Guy Hands, has even moved his own residence to the Island as well as his firm. Another well-known private equity player resident in Guernsey is Jon Moulton, former founder of Alchemy and current chairman of Better Capital. Moulton continues to promote the island as an attractive domicile through regular appearances at industry events. In addition to the endorsement of private equity personalities like Moulton and Hands, the Channel Islands have also benefited from the work of Nordic Capital partner Andrew Bennett, who chairs the Channel Islands Private Equity and Venture Capital Association.
©2012 funds europe