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Figures from the Guernsey Financial Services Commission (GFSC) show that, as at 31 July 2014, a total of 34 Guernsey Alternative Investment Fund Managers (AIFMs) have utilised Guernsey’s National Private Placement (NPP) regime to market Alternative Investment Funds (AIFs) into Europe. The figures, which solely reflect marketing into Europe by Guernsey AIFMs and not that by European Economic Area (EEA) AIFMs, reveal that the 34 managers promote investment funds into one or more EEA Member States. These cover 15 of the 27 jurisdictions with whom Guernsey signed bilateral cooperation agreements in July 2013 ahead of the Alternative Investment Fund Managers Directive (AIFMD) coming into force. The UK remains a key market for Guernsey managers with 56 AIFs being marketed there. Managers also market AIFs into other key markets such as Germany, France, Ireland, the Netherlands, Sweden, Norway and Finland. Other EEA jurisdictions being marketed into comprise Belgium, Denmark, Austria, Luxembourg, Estonia, Portugal, Switzerland and Romania. Fiona Le Poidevin, Chief Executive of Guernsey Finance, the promotional agency for the Island’s finance industry, said: “It comes as no surprise to see that Guernsey’s NPP regime is working well and proving to be an attractive option for fund managers. The figures support what we have been hearing directly from fund lawyers and other advisors, who have been extremely complimentary about the functionality of Guernsey’s dual regulatory regime. Furthermore, unlike other national regulators who are dealing with application backlogs and are consequently delaying some managers taking their products to market, there are no such delays at the GFSC. “What is also pleasing is that the figures demonstrate the reach of our funds industry with AIFs being marketed for distribution into 15 of the 27 countries that we signed agreements with, in particular, all of our key markets including the UK.” In response to AIFMD, Guernsey introduced a dual regulatory regime whereby it is possible to continue to distribute Guernsey funds into both EU and non-EU countries: the existing regime remains for those investors and managers not requiring an AIFMD fund, including those using EU NPP regimes and those marketing to non-EU investors; as well as an opt-in regime which is fully AIFMD compliant for those who require it. It remains that the commercial rationale for seeking an AIFMD structure should be carefully considered and the extent of the compliance requirements and the associated costs understood, as well as the likely ultimate impact on investors determined at the outset. Managers should establish what proportion of business will be EU focussed and consider a parallel structure for EU business as one possible option, with the main platform based in Guernsey. Miss Le Poidevin added: “We have now passed the 22 July 2014 deadline which marked the end of the transitional period for EU countries to implement AIFMD, and while concerns persist that marketing funds into Europe has been made more challenging by AIFMD and the scope that individual regulators have in the application of the directive, Guernsey is actually proving to be a robust solution. “Guernsey provides a European platform but one which is not actually in the EU and therefore is not required to implement AIFMD. Indeed, while there is an opt-in regime which is fully AIFMD compliant, should this be required, feedback is telling us that our NPP route is actually being favoured by many as it often means little change to how things were done previously.” As a domicile for alternative and particularly private equity funds, Guernsey offers a variety of potential fund structures with differing levels of flexibility and regulatory requirements depending on the appropriate vehicle for a particular project.
The figures, which solely reflect marketing into Europe by Guernsey AIFMs and not that by European Economic Area (EEA) AIFMs, reveal that the 34 managers promote investment funds into one or more EEA Member States. These cover 15 of the 27 jurisdictions with whom Guernsey signed bilateral cooperation agreements in July 2013 ahead of the Alternative Investment Fund Managers Directive (AIFMD) coming into force. The UK remains a key market for Guernsey managers with 56 AIFs being marketed there.
Managers also market AIFs into other key markets such as Germany, France, Ireland, the Netherlands, Sweden, Norway and Finland. Other EEA jurisdictions being marketed into comprise Belgium, Denmark, Austria, Luxembourg, Estonia, Portugal, Switzerland and Romania.
Fiona Le Poidevin, Chief Executive of Guernsey Finance, the promotional agency for the Island’s finance industry, said: “It comes as no surprise to see that Guernsey’s NPP regime is working well and proving to be an attractive option for fund managers. The figures support what we have been hearing directly from fund lawyers and other advisors, who have been extremely complimentary about the functionality of Guernsey’s dual regulatory regime. Furthermore, unlike other national regulators who are dealing with application backlogs and are consequently delaying some managers taking their products to market, there are no such delays at the GFSC.
“What is also pleasing is that the figures demonstrate the reach of our funds industry with AIFs being marketed for distribution into 15 of the 27 countries that we signed agreements with, in particular, all of our key markets including the UK.”
In response to AIFMD, Guernsey introduced a dual regulatory regime whereby it is possible to continue to distribute Guernsey funds into both EU and non-EU countries: the existing regime remains for those investors and managers not requiring an AIFMD fund, including those using EU NPP regimes and those marketing to non-EU investors; as well as an opt-in regime which is fully AIFMD compliant for those who require it.
It remains that the commercial rationale for seeking an AIFMD structure should be carefully considered and the extent of the compliance requirements and the associated costs understood, as well as the likely ultimate impact on investors determined at the outset. Managers should establish what proportion of business will be EU focussed and consider a parallel structure for EU business as one possible option, with the main platform based in Guernsey.
Miss Le Poidevin added: “We have now passed the 22 July 2014 deadline which marked the end of the transitional period for EU countries to implement AIFMD, and while concerns persist that marketing funds into Europe has been made more challenging by AIFMD and the scope that individual regulators have in the application of the directive, Guernsey is actually proving to be a robust solution.
“Guernsey provides a European platform but one which is not actually in the EU and therefore is not required to implement AIFMD. Indeed, while there is an opt-in regime which is fully AIFMD compliant, should this be required, feedback is telling us that our NPP route is actually being favoured by many as it often means little change to how things were done previously.”
As a domicile for alternative and particularly private equity funds, Guernsey offers a variety of potential fund structures with differing levels of flexibility and regulatory requirements depending on the appropriate vehicle for a particular project.
