Maitland, the global advisory and fund administration firm, points to the advantages for both fund managers and end investors of having a jurisdiction-agnostic service provider in the hedge and alternative space – especially post-Brexit.
Hedge funds have been increasingly boxed in by regulation over the past few years. This has made the choice of jurisdiction for the fund structure more important than ever before. Where should you choose to locate your fund in order to maximise tax efficiency, optimise access to your target investors and raise capital without running foul of local or regional laws?
Luke Spencer-Wilson, Business Development Alternative Investments at Maitland, says it’s time for managers to realise the strategic importance of their service provider, be it the management company and/or administrator, in the decision of where to domicile their fund.
“After all, the service provider is the link between manager and investors and is in effect an extension of the manager. Those providers which are invested with adequate capability in multiple jurisdictions and can assist wherever the manager wants to raise capital are likely to be the leaders in this ‘brave new world’ where flexibility and passporting are the keywords,” he says.
Maitland has two AIFMD-compliant mancos, in the UK and Luxembourg respectively, and current hedge fund administrative capability in Cayman, Richmond (USA), Ireland, Luxembourg, the United Kingdom, Isle of Man, the British Virgin Islands and Mauritius. The latter is for funds wishing to market into the growing African market.
The power of this global network means that the administrator is able to accommodate most requests from managers as to domicile choice. Through its in-house legal expertise, Maitland can also advise on location, draw up the structure and do the necessary set-up.
Spencer-Wilson says that Cayman retains its highly investible status but that Luxembourg is growing in popularity, especially since the arrival of the RAIF with its advantageous time-to-market.
The ICAV is also more than holding its own in Dublin.
Not many administrators have ‘Supermanco’ status, which Maitland has through acting as manco to AIFs as well as to UCITS funds. The fact that the firm has an AIFM in the UK and in Luxembourg is of great interest to many managers wishing to redomicile their funds post-Brexit, says Spencer-Wilson.
“The fund can simply be shifted from our UK AIFM to our Luxembourg AIFM, which of course also avails them of the EU passport. Alternatively, if the manager wants to redomicile to Ireland, Maitland can leverage its Luxembourg CSSF permissions to bring in the EU passporting ability for the Irish-domiciled fund.”
Looking ten, 20 years down the line, Spencer-Wilson says the world will be smaller than ever, with technology dictating the pace. Managers will be well accustomed to the tighter regulatory framework and hedge funds are likely to have mainstreamed even further.
In such an environment, he thinks it will be inconceivable that managers were once restricted in the choice of where to domicile and where to raise capital as a new breed of service provider will have enabled this years ago.
©2016 funds europe