Ahead of the Guernsey Funds Forum event in London, Craig Cordle, a partner at law firm Ogier, reflects on how the domicile is adapting for the future.
Guernsey has been fortunate during the pandemic – with its natural barriers making controlling the spread of Covid-19 easier than in other locations, and with over 90% of adults now fully vaccinated (as of September 8). It’s a great endorsement that Guernsey is open for business.
It’s fair to say that from a funds and private-equity perspective, the pandemic has not unfolded as we might have initially predicted – and save for a short-lived dip at the time of the first lockdown, the markets remain extremely active, including far more activity in previously underrepresented areas such as ESG and impact funds. Indeed, the pandemic has been an important catalyst, instigating discussion around environmental sustainability and the need for the recovery to be green.
A green recovery calls for funds and managers to look carefully at their governance procedures. Thinking of tomorrow is something businesses in Guernsey do a lot – recognising that we all have our part to play in operating our businesses sustainably and looking at the wider indirect environmental impact of private equity vehicles from cradle to grave.
In particular, Guernsey is leading the way with its Green Fund regime, providing a credible regulatory framework to protect against greenwashing, a key investor concern. The Green Private Equity Principles – which provide a pragmatic and proportionate guide to best practice – are framed around giving general partners of PE funds the tools to build sustainability considerations into their businesses and operations.
Guernsey remains extraordinarily supportive of new managers and funds – accepting that managers and the entities they manage come in all shapes and sizes – and that regulation should not be on a one-size-fits-all basis. The launch of Guernsey’s Private Investment Fund (PIF) in 2016 was designed to provide a regulatory-pragmatic entry point for new and existing managers and investors. This has now been refined to add two further routes to becoming a PIF: the Qualifying Private Investor PIF and the Family Relationship PIF, in addition to the already successful Licensed Manager PIF – providing two fund products which reflect the increasing crossover of private capital and family offices into the funds arena.
In addition to new routes to be becoming a PIF, further developments such as the fast-track licensing of managers of overseas collective investment schemes highlight Guernsey’s attractiveness to existing and new PE managers looking to launch new funds or migrate the management of their funds, whether for substance issues or otherwise.
Finally, remember Brexit? Guernsey’s position as a leading finance sector remained unaffected, as it is not part of the United Kingdom or the European Union. Private placement has remained at the core of Guernsey’s fund offering since the inception of AIFMD – and the ability for managers to market on such a basis is a key strength of the jurisdiction. Overall it remains the most cost-effective and easy way to market to those jurisdictions which we see habitually investing into funds.
The 2021 Guernsey Funds Forum, Building Tomorrow, takes place in London on November 29 (see here).
© 2021 funds europe