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CONTENTS
2 | www.globalfundmedia.com GUERNSEY GFM Special Report Jul 2018
In this issue…
03 Guernsey: A laboratory of innovation
By James Williams
04 Providing stability, security and
substance
By Paul Smith, Guernsey Investment Fund Association
06 Emerging fund managers – the benefits
of Guernsey
By Andrew Maiden, Intertrust
09 Global distribution – overcoming the
myth of the passport
By Martin Scott, International Administration Group (Guernsey)
11 Guernsey highlights the positive
over Brexit
By Dr Andy Sloan, Guernsey Finance
12 Hitting the sweet spot
By Andrew Harding, Appleby
14 The extra dimension
By Fiona Le Poidevin, The International Stock Exchange Group
17 Why Guernsey is the alternative choice
By Dominic Wheatley, Guernsey Finance
19 Diversity on boards – a fund
perspective
By Amit Taylor & Mel Torode, Estera
20 GDPR priorities
By Craig Cordle, Ogier
22 The green ‘emerging global contender’
By Dr Andy Sloan, Guernsey Finance
23 Guernsey – embracing innovation
By Andrew Carey, Locate Guernsey
GUERNSEY GFM Special Report Jul 2018 www.globalfundmedia.com | 3
The funds sector has matured and developed
into a more sophisticated market than it was
10 years ago. Technology advances and
product innovation in new asset classes has
deepened the funds industry, creating more
complexity as a result. At the same time, over
the last decade, demands on jurisdictions
have risen in terms of the level of support
that needs to be provided, in terms of
substance and effective oversight. Guernsey
has always been cognisant of this and has
evolved in step with those changing times.
“One of the requirements has been to
innovate and to develop new products in
new markets,” says Dr Andy Sloan, Acting
Director of Strategy, Guernsey Finance.
“We are at a global pivot point right now.
For Guernsey, I see it as being a catalyst not
just for UK/EU issues but potentially having
an impact on the way global trade evolves
in the 21st century. It is in our best interests
to orientate ourselves to where the global
capital pools are growing most, such as
China and other growing economies.
“Whatever we do as a jurisdiction, it
always harks back to the stability and
security we provide, which enables us to
service the requirements of global investors
and provide a point from which they can
pivot to global capital markets.”
From a global macro perspective, it is
not inconceivable to suggest that as global
trading patterns change there are going to
be nodal points, such as Guernsey, which,
because of its stability, substance and
sophistication, will be well positioned to
support global distribution activities. If fund
managers want to reach new markets, new
parts of the globe, they will be able to do it
through a trusted jurisdiction like Guernsey.
OVERVIEW
Guernsey: A laboratory
of innovation
By James Williams
10
GUERNSEY INVESTMENT FUND ASSOCIATION
Providing stability,
security and
substance
By Paul Smith
experience and knowledge of how this
could work for the UK post-Brexit and there
have been numerous meetings between
industry bodies, government officials and
government ministers of Guernsey and the
UK since the referendum in June 2016. These
meetings are ongoing and will continue
throughout the negotiation and withdrawal
process.
A key concern for everyone these days is
security, and that encompasses both physical
security and cyber security. Guernsey
is fortunate as an island in that physical
security is a natural by-product of island life.
Guernsey is a lovely, safe place to bring
up children and to enjoy an environment in
which crime levels are very low.
The digital economy and cyber security
are also high on Guernsey’s agenda and
the island is uniquely placed to be able to
provide significant redundancy and security
of internet connectivity. Guernsey is a key
intersection for the provision of data flows
between the UK, Europe and the United
States with multiple cables carrying data
into, through and out of its data hub. The
e-gaming industry that established itself
in the Bailiwick was highly dependent
upon internet access and the security
and contingency of that connection.
Considerable investment was made by
Guernsey to develop that network, which is
now used for other industries, such as the
fund sector.
The fund industry has been thriving
in Guernsey for more than 50 years
and, during that time, Guernsey has
In an era when uncertainty and the
unexpected can be relied upon to spoil
the best-laid plans, Guernsey is one
jurisdiction able to provide a stable, secure
base from which to operate, and has the
infrastructure and resources to ensure the
highest levels of service quality while also
being able to provide businesses with true
substance.
With 50 years’ experience behind us,
Guernsey is still a popular destination for
investment managers seeking a jurisdiction
in which they can establish an office, and
which is able to offer them the luxury
of a dual regulatory regime, whereby
they can launch funds under AIFMD-
compliant regulations or Guernsey’s own
regulations. We have nearly 1,000 funds
under management or administration and
increasing numbers of fund managers
are establishing a physical presence
in Guernsey.
As a Crown Dependency, Guernsey
operates under a constitutional arrangement
with the UK, and this relationship provides
Guernsey with the authority and autonomy
to create and enforce its own laws and
regulations through its own government, the
States of Guernsey. Guernsey is therefore
able to provide a level of political and fiscal
stability that is the envy of many other
jurisdictions around the world.
Guernsey is not a member of the
European Union and has effectively carried
on its business with the EU as a third
country ever since the EU came into being.
It is well placed to assist the UK with its
Paul Smith, chairman,
Guernsey Investment Fund
Association
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www.globalfundmedia.com | 5GUERNSEY GFM Special Report Jul 2018
GUERNSEY INVESTMENT FUND ASSOCIATION
Paul Smith on…
His journey
I started in the industry as a junior
administrator. The industry itself was still quite
young and was growing rapidly. Those were
the days before regulation and it was very
different in terms of working methods. You
worked on one fund – they were generally
unit trusts – and did everything on that fund
and your relationship was directly with the
client. It gave you a very broad foundation.
The changing face of funds in Guernsey
The industry has changed in terms of the
products that we have, and the way we
work has also changed, led, in part, by the
growth of digital and fintech. That change
offers an opportunity for Guernsey – we
have outsourced labour-intensive back-
office functions in the past, but with the
use of technology some of that work could
effectively come back to Guernsey.
With the pioneering use of blockchain now
being seen in the island, I do see a future
where we can take back those outsourced
administration functions, with corresponding
benefits in terms of revenues and greater
control. The fund industry faces an ever-
changing regulatory environment and in
Guernsey we have consistently adapted to the
demands placed upon us. In an environment
of increasing regulation, monitoring and
scrutiny, Guernsey can hold its head high as a
good global citizen helping to ensure the free
flow of capital around the world.
Guernsey’s confidence
The innovation we have always seen and
continue to see in our industry and Guernsey’s
adaptability is a key element of our success.
We have always been prepared to listen to
new ideas and explore new ways of achieving
our clients’ goals, which is crucial in this era of
technological advancement.
We are a stable, secure jurisdiction, with a
responsible attitude towards our international
obligations, and an experienced, flexible and
efficient industry. Guernsey is still a great
place to live and work and once people
come here they are often “blown away”
when they see the way that we work, the
accessibility of all participants in the industry,
and the level of interaction between industry,
regulator and government.
built a comprehensive infrastructure of
professional firms capable of providing
all the services normally required by an
investment manager. Guernsey’s law firms
are consistently recognised in legal industry
awards lists and all the top four accountancy
practices have a significant presence in
the island.
This provides a strong pool from which
businesses new to the island can draw
resources, expertise and experience
to develop and sustain their service
provision. Recent changes to the population
management regime have also made it much
more straightforward to recruit key staff from
outside the island.
Combined with Guernsey’s reputation
for flexible regulation, innovation and
entrepreneurialism, the jurisdiction is a prime
location for the establishment of funds and
investment managers. With the impending
introduction of BEPS (Base Erosion and Profit
Shifting) controls and the further scrutiny
of the work carried out compared to the
revenue earned in a jurisdiction and the
unintended consequences that this is having
on the funds sector, Guernsey is well placed
to be able to demonstrate true substance
on island and to provide the added
value required to ensure that businesses
located here are not seen as part of a
BEPS network.
Guernsey is a leading jurisdiction in
providing tax transparency and is fully
compliant with international co-operation
and reporting regimes, which enables it
to provide a tax neutral environment that
results in taxes being paid in the appropriate
jurisdiction, and prevents the double or even
triple taxation of investment businesses.
With more than 50 years’ experience
behind us, Guernsey is one of the leading
international finance centres in the world,
facilitating investment in businesses by
investors from countries worldwide. n
The Guernsey Investment Fund Association
was established 30 years ago as a trade
association for the island’s fund management
industry. It has almost 200 members,
including fund managers, administrators,
custodians, law firms, accountants,
non-executive directors and other
professional firms.
INTERTRUST
While well-established fund managers are
continuing to grow with the launch of larger
and larger funds, there has also been a
steady flow of first-time, spin-off and emerging
managers setting up their own firms.
This new wave of fund managers has
been partly driven by investor demand for
the niche, tactical, added-value investment
opportunities that the larger funds may
pass over or simply not be aware of.
The opportunities and rewards for both
approaches continue to fuel interest and
demand, and there is therefore a need to
make sure that emerging fund managers get
it right first time.
As of September 2017, there were more
than 590 first-time or spin-off venture capital
fund managers raising capital worldwide,
up from 470 in 2016. More than 31% of the
venture capital funds that reached a final
close in 2017 were first-time funds, compared
to 25% in 2016. One of the key drivers of
this growth was performance as, when
comparing the returns generated by 2006-
2014 vintage venture capital funds, first-time
managers generally outperformed the pool of
experienced venture capital managers*.
Investors and managers from the more
mature markets of the UK, Europe and the
US have a long history of using Guernsey
to domicile their funds, especially for
private equity, real estate and infrastructure
asset classes. The island’s track record
and enviable reach have also made it well
suited to provide managers with a platform
to access the Middle and Far East, which
are attracting investment because of the
emergence of investor demand for yield and
higher returns.
Through Guernsey, fund managers can
currently reach more than 80% of global
wealth so, no matter where investors are
based, a Guernsey-domiciled fund allows
money to be raised in a large proportion of
the global market.
The key areas emerging fund managers
need to consider when setting up their first
fund are:
• Fund structuring: The basis of a
successful fund is an appropriate
structure which requires a sophisticated
understanding and analysis of the options.
It is important for emerging managers to
consult professional service providers at
an early stage to determine what issues
may impact on the structure of the fund.
• Fundraising: Fundraising can be a very
time-consuming process so it is important
not to underestimate this alongside the
effort and cost involved.
• Fund administration: Having the right day-
to-day administrative processes, procedures
and infrastructure in place is something
that many emerging fund managers do
not consider as much as other aspects of
launching a fund, which can be a crucial
oversight. With regard to administration,
having a range of related services
underpinning the fund can considerably
help minimise the risks and maximise
success. One strategy frequently adopted
by emerging fund managers is to outsource
the administration to a trusted third party.
• Fund financing: Emerging fund managers
need to consider whether they will need
to use any financial products as part of
their strategy and which provider would be
best placed to provide these. It is not just
Emerging fund
managers – the
benefits of Guernsey
By Andrew Maiden
Andrew Maiden, director of
fund services, Intertrust
6 | www.globalfundmedia.com GUERNSEY GFM Special Report Jul 2018
www.globalfundmedia.com | 7GUERNSEY GFM Special Report Jul 2018
on the number of offers that can be made.
• Application Process – A PIF can be
registered and processed by the GFSC
within one business day.
The route to launching a new fund for an
emerging fund manager is challenging and
while many new managers will likely be
established in their field and have a good
degree of relevant experience and insight,
choosing Guernsey to domicile a fund can
provide comfort throughout the process –
from a concept to the launch and ongoing
operations of a fund. With expert advisers
and quality service providers, new fund
managers are in good hands in Guernsey. n
*Data from a report published by Preqin in
November 2017 – Up & Away: Launching A
First-Time Venture Capital Fund
Intertrust offers a full range of tailored
and holistic fund services, from setup
to administration, for private capital
funds including: private equity, debt, real
estate, fund of funds, infrastructure and
venture capital. They have a dedicated,
knowledgeable and global team of
specialists, with a significant presence in
key financial centres including the Channel
Islands, Luxembourg, Ireland, Hong Kong,
Cayman and the US. Intertrust’s funds client
list comprises of some of the largest and
most experienced fund managers in the
world, as well as some of the most dynamic
and skilful venture capital groups.
If you would like further information on
the services provided by Intertrust, please
contact Andrew Maiden – Andrew.maiden@
intertrustgroup.com
the financing itself that needs qualifying,
but also the range of other financial
considerations such as insurance and
escrow banking solutions. The financial
aspects of running a fund are significant
and working with the right partners can help
simplify this aspect and free up managers
to focus on running a fund.
• Fund governance: Investors are
increasingly requiring independent
oversight of the affairs of their funds,
which has driven an increased demand
for directors unaffiliated with the manager
on private equity and real estate funds.
The diversity of directors’ skills and
experience is of utmost importance.
With this growth in emerging fund managers,
Guernsey, with its established regulatory
regime and expert fund services providers,
can offer emerging fund managers the
foundation to set up funds in an efficient,
quality way. In safe hands, managers are
able to concentrate on the business of
managing portfolios and selecting assets.
To allow emerging fund managers to
launch new funds in Guernsey, the Guernsey
Financial Services Commission has a Private
Investment Fund (PIF) classification which
is designed to provide fund managers with
greater flexibility and simplicity.
Some of the PIF benefits to emerging fund
managers are:
• No prescribed disclosures – No need
for a Prospectus or Private Placement
Memorandum, which minimises costs and
reduces processing time during launch.
• Maximum 50 investors – a PIF can be
closed or open-ended and, while there
can only be 50 investors, there is no limit
INTERTRUST
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Overcoming the myth
of the passport
By Martin Scott
Two years ago, almost to the day, Guernsey
was set to receive the Alternative Investment
Fund Managers Directive (AIFMD) passport
to allow marketing of Guernsey funds across
Europe. Then Brexit and politics took over,
and the likelihood of the European Union
extending the AIFMD passport to third
countries now appears remote until the UK
and EU have reached a trade agreement
with respect to financial services. It therefore
appears probable that National Private
Placement Regimes (NPPRs) will remain in
place for the foreseeable future.
This has actually turned out to be a
significant benefit to a jurisdiction such
as Guernsey. NPPR has historically made
Guernsey popular with asset managers, and
the island has continued to attract funds
advised by some of the biggest names in
the industry, even following the introduction
of AIFMD. Using NPPR in key investor
jurisdictions, including the UK, Netherlands
and Luxembourg, has been viewed by these
asset managers as the quicker and simpler
option to fundraise.
It is also worth noting that only 3% of
alternative investment funds are registered for
sale in more than three EU Member States.
The indefinite delay in extending the passport
has potentially created a real opportunity
for fund raising to a jurisdiction such as
Guernsey. The uncertainty created by Brexit is
making UK asset managers in particular look
at ways to future-proof their fund structures –
and Guernsey offers an answer.
Asset managers who have funds
domiciled in the UK, and are therefore in
the firing line, are reviewing their options
and considering the benefits of using a
Guernsey fund structure. This is of most
interest to those who have no requirement to
market on a pan-EEA basis, as NPPR means
they can continue to target their primary
markets in the region on an individual basis,
making marketing simpler, and reducing
the subsequent costs and disclosure
requirements applicable under the directive.
When it comes to AIFMD, asset managers
have to consider how to bear the additional
costs associated with being a fully AIFMD-
compliant fund and even more importantly,
who should bear these costs. For example,
if the AIFMD reporting costs are apportioned
solely to a fund’s EEA investors, then
they are incurring higher costs than their
fellow investors from outside the region.
As reporting requirements are lower under
NPPR, the associated costs will be less and
should result in greater parity in the costs
borne by investors across the fund.
At IAG, we have recently seen new
business enquiries from both existing and
new clients who are assessing their options
in light of Brexit. Many are considering
Guernsey as the potential domicile for their
next structure, in the light of its proven,
smarter, faster distribution capability. n
Martin Scott, Director,
International Administration
Group (Guernsey) Ltd
IAG FUND SERVICES
OVERVIEW
and other aspects of impact investing is
how you provide a product that people
can put their money in, knowing that the
impact income they are expecting from
the investment is part of the regulatory
oversight,” says Wheatley.
“Then you might start to see pension funds
investing more heavily, as they know the fund
is regulated and includes the assurance that it
meets green investing criteria. At the moment,
a lot of green and impact investments are ‘we
do no bad’, but that doesn’t mean to say they
are doing any good.”
The GGF is designed to go a step further
and for managers to demonstrate that they
are indeed making a difference; investing in
wind farms, for example.
Ultimately, the raison d’etre of a small
niche jurisdiction is to do things better than
anyone else. To achieve that, it needs to
create a business environment where the fire
of innovation can burn bright. Over the years,
Guernsey has proven its capability at pulling
together the right level of regulation and skill
sets among industry practitioners to foster a
competitive, compact business ecosystem;
one where everyone works together and
knows each other.
It is possible to walk from one end of the
financial district in Guernsey’s main centre,
St Peter Port, to the other in approximately
15 minutes. A pleasant coastal environs,
along the way you will find the likes of Ogier
and other international law firms located
cheek by jowl alongside the GFSC, The
International Stock Exchange, Guernsey
Finance and numerous accounting,
administration and trust firms.
Anyone who visits the island can easily
spend a day meeting with the GFSC, or the
Economic Development Department of the
States of Guernsey, while its service provider
community are more than willing to open up
their diaries.
Moreover, there is a fine selection of
coffee houses, which is very much in
keeping with the innovation theme. After all,
Jonathan’s Coffee House, which opened in
Change Alley in London in 1680 was the
original site of the London Stock Exchange,
and Lloyd’s of London was established from
the site of Edward Lloyd’s coffee house in
Tower Street in the same period.
“My background is in insurance and
“Going forward, as a jurisdiction I think
we will see more of an alignment of key
pivot points such as the Far East, the US
and the UK. We want to position ourselves
to give investors the products they are
demanding,” says Sloan. “In light of global
initiatives such as the Paris Accord, one area
we’ve focused on, with respect to product
innovation, is green investing in the financial
services industry. We have developed
policies in response to expected demand
for green investment products over the next
two or three decades; what I mean here is
verifiable, certifiable green products.
“Our strategy has been to utilise our
regulatory autonomy to create the world’s
first green fund product; the Guernsey Green
Fund (GGF). We intend to build on this and
develop more ESG products. It’s necessary to
anticipate what fund managers will want, going
forward, and be able to provide them with the
product capabilities and wrap-around services.”
The consultation process for the GGF
closed at the start of June, incorporating
feedback from industry players, and the
Guernsey Green Fund was launched earlier
this month. This is effectively an entirely new
asset class for the jurisdiction where the
underlying assets will need to conform to
green credentials and will need to be verified
by a third party or a licensee.
Sloan explains that an overlay of rules and
regulations will be put in place to ensure that
the “green” credentials have been verified and
accredited. The GGF is applicable to all types
of fund, can be compliant with AIFMD, and
will be a fully regulated fund product, subject
to the rules and regulations of the GFSC.
“Green investing is a trend that fund
managers and investors have been pursuing
for some time now. We’ve worked with
UK policy makers, we are in dialogue with
London Green Finance Initiative, we’ve had
discussions with the United Nations and the
OECD. It is a pretty substantial initiative for
us,” adds Sloan.
Dominic Wheatley is Chief Executive of
Guernsey Finance. Discussing the drivers of
green finance, he points out that when one
considers the amount of money one needs to
attract into new investment areas, managers
have got to find a way to create products that
marry up investors with the assets.
“I think the issue around green investing
3
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www.globalfundmedia.com | 11GUERNSEY GFM Special Report Jul 2018
Guernsey highlights
the positive
over Brexit
By Dr Andy Sloan
Two years on from the UK’s Brexit
referendum vote and with the recent
publication of the UK’s White Paper, it is
useful to take stock of the potential impact
of Brexit on global financial services and
Guernsey’s trading relationships.
Speaking in Guernsey, Shanker Singham,
Director of the International Trade and
Competition Unit at the Institute of Economic
Affairs (IEA), and the author of the report
Improving Global Financial Services
Regulation, published in May by the IEA,
suggested there was a positive role for
Guernsey to play in supporting London to
successfully orientate itself towards growing
capital pools in Asia and catalyse growth
and trade.
The IEA report also suggested that the
UK look to partnerships with the Crown
Dependencies, in addition to working with
global centres such as Switzerland, the US
and Hong Kong. It is perhaps no accident
that this approach is ingrained in the UK
government’s thinking – partnerships being
a theme of the Chancellor’s most recent
Mansion House speech and embedded in
the UK White Paper.
Singham’s comments validated a key
pillar of Guernsey’s strategy towards Brexit
and financial services – that strategy being
to position ourselves with UK policymakers
as partners to the City’s post-Brexit trading
strategy to the rest of the world.
The focus of efforts has been on
reminding policymakers of our economic
role – routing billions of pounds into the
City of London – and convincing them
of our complementarity in boosting the
City’s competitiveness in the post-Brexit
environment.
A high priority is afforded to commercially-
focused messaging, promoting the stability
and certainty of our position with respect
to the UK and EU. Our global distribution
capabilities remain impressive, and our route
into the UK and EU27 remain the same.
For Guernsey, objectives for financial
services and Brexit are all about the upside.
It has become almost a cliché – though it
does not stop it being true – that Guernsey’s
baseline position with respect to the UK and
EU remains unchanged through the process.
Our efforts in financial services are
aimed at improved terms of market access,
deepening partnerships, and exploiting future
trading relationships. n
Dr Andy Sloan, Deputy Chief
Executive, Strategy, Guernsey
Finance
GUERNSEY FINANCE
12 | www.globalfundmedia.com GUERNSEY GFM Special Report Jul 2018
Hitting the sweet spot
By Andrew Harding
Ahead of the World Cup The Economist ran
an article entitled “What makes a country good
at football?” The journal explored the various
components of a successful national side,
taking account of GDP, population size and the
popularity of the game in each country.
Wealth, size and popularity of the game
were all found to be correlated with success,
but these elements made up less than half
the story. Centralised schemes to promote
the game were found to significantly improve
performance, and were much easier to
establish in smaller countries such as
Uruguay and Iceland. To thrive at the World
Cup a country also needed to be able to tap
a pool of creative talent (both local and global)
that was properly prepared for the tournament.
It follows that one joy of the World Cup
is that while size and wealth are significant
factors, smaller countries can also be very
successful. In similar fashion, the offshore
world has long punched above its weight
when it comes to acting as a conduit for
international investment. So what makes a
smaller jurisdiction like Guernsey so good
at funds?
It goes almost without saying that the
regulatory framework, distribution channels,
fund infrastructure and taxation regime are
all key considerations for promoters and
LPs. Guernsey has GBP263 billion of funds
under management and administration
which speaks for itself. However, that is not
the whole story. In terms of a centralised
agency, Guernsey Finance is a joint industry
and government initiative that is constantly
working to find ways to innovate and
encourage new products tailored to fund
promoters’ requirements.
One initiative that demonstrates
Guernsey’s responsiveness is the Private
Investment Fund (PIF), launched in
November 2016. The PIF is the perfect
solution to those investment projects where
the manager and investors are known to
each other and all know what they want to
achieve, but where the participants would
draw comfort from a relatively low-cost
regulatory solution which requires oversight
from a regulated third-party administrator and
an independent annual audit.
Originally designed for start-up managers
and club deals, the PIF has also gained a
following with large private equity managers
who appreciate the reduced requirements for
marketing documentation and the speed to
market allowed by the fast-track Guernsey
Financial Services Commission (GFSC)
registration process, taking one business day.
The PIF is limited to no more
than 50 investors, but the number of
potential investors it can be marketed
to is not restricted. Every PIF must
appoint a Guernsey licensed manager
who is responsible for making certain
representations with respect to the ability
of investors to suffer losses. If there is no
existing manager, then the licence for the
manager can be dealt with by the GFSC at
the same time as the PIF’s registration.
To set up a PIF it will be necessary
to engage with specialist fund services
providers in Guernsey. In terms of a pool
of creative talent, there is real expertise in
the concentration of investment advisers,
managers, administrators, legal advisers
and tax and audit firms in Guernsey. Many
Guernsey firms are international and able
to draw on an international pool of talent
if needed. For example, Appleby is a law
firm based in Guernsey, but also has offices
in the other Crown Dependencies, plus
Bermuda, Cayman Islands, BVI, Hong Kong,
Shanghai, Mauritius and Seychelles, thereby
providing legal expertise around the clock.
With the development of the PIF, Guernsey
has adopted the right tactics and arguably
hit the sweet spot for private investment
funds. This desire to innovate has given rise
to further initiatives such as the Guernsey
Green Fund (GGF) designation. In building on
Guernsey’s existing reputation, the PIF and
the GGF will enhance the island’s offering on
the world stage. n
Andrew Harding, Group
Partner, Appleby (Guernsey)
LLP
APPLEBY
Appleby has a powerful Guernsey team of investment fund specialists that possess
the commercial aptitude, industry knowledge and legal skills necessary to ensure
that all our clients’ fund and transaction structures are optimally designed to meet
their needs, and the needs of their target investors. We advise on a wide range
of services in relation to public and private funds, other collective investment
schemes and investment services.
To learn more about our legal expertise, please contact:
Anthony Williams
Partner
Dispute Resolution
| Fund Disputes
Jeremy Berchem
Group Partner
Corporate | Fund Finance
Andrew Harding
Group Partner
Corporate | Funds &
Investment Services
Appleby (Guernsey) LLP
+44 (0)1481 755600
guernsey@applebyglobal.com
14 | www.globalfundmedia.com GUERNSEY GFM Special Report Jul 2018
The extra dimension
By Fiona Le Poidevin
There were 705 new listings on The
International Stock Exchange (TISE) during
2017, which was an increase of 40% on the
previous year. In the first quarter of 2018,
there was a 16.5% rise year on year in new
business, which took the total number of
listed securities on the Exchange to 2,606
at the end of March 2018. These listings
comprise a mix of equity and debt being
issued by operating companies and nearly
400 securities issued by investment vehicles,
including open and closed-ended funds and
more than a quarter of all HMRC approved
Real Estate Investment Trusts (REITs).
Asset managers often cite us as being
cost-effective and convenient, but a listing
on TISE also enables greater distribution
of a product and demonstrates additional
substance for the structure.
International initiatives such as AIFMD and
BEPS have placed increased focus on the
substance of investment structures.
Asset management groups with vehicles
listed on TISE are able to demonstrate
additional substance in Guernsey by utilising
this element of the local infrastructure.
Furthermore, greater value is provided
through the activity undertaken locally to
ensure both initial and continued adherence
to the listing rules.
These requirements drive transparency
and good corporate governance, which in
themselves create value within the structure
as important factors for investors. Indeed,
it is precisely for these reasons that many
investors are mandated to only invest, or
invest a certain proportion of their allocation,
into listed products.
The definition of ‘listed’ can vary but
importantly for us, especially in the context
on the UK market, HMRC deems TISE to be
a recognised stock exchange. This enables
investment into TISE-listed products by Self-
Invested Personal Pensions (SIPPs) and
Individual Savings Accounts (ISAs), which
is key for many institutions who invest on
behalf of their clients.
Additionally, it means that TISE is
considered a recognised stock exchange
and listing venue under HMRC’s REIT
regime. We have a cost-effective and
pragmatic admissions process, including an
exemption for REITs from the 25% free float
rule. Today, more than a quarter of all UK
REITs are listed on TISE.
HMRC’s recognition also means that
products listed on the Exchange may be able
to avail of the Quoted Eurobond Exemption
(QEE). Its utilisation includes those fund
groups, such as private equity managers,
who establish listed debt vehicles to finance
acquisitions. Listing these special purpose
vehicles on TISE also demonstrates further
use of the local infrastructure and therefore
adds additional substance to the overall
arrangements.
TISE has a number of other recognitions,
including from the German regulator, BaFin.
This means that TISE-listed products are
automatically eligible assets as part of the
‘listed’ investment allocation of German
insurers and German UCITS funds.
Indeed, TISE-listed products are already
eligible ‘listed’ assets for UCITS funds
established in not just Germany but also
Finland, Iceland, Poland and Spain. UCITS
funds from another 19 EEA jurisdictions,
including France, Ireland, Luxembourg and
the UK, can treat TISE-listed products as
eligible listed assets by disclosing TISE
within the fund documentation as a potential
source of investable assets.
A TISE listing can help provide additional
substance to an investment structure and at
the same time, increase the distribution by
helping to expand the allocation of potential
investors from different jurisdictions.
Fund managers can – and do – use TISE to
help them raise money from investors based
around the globe so that they can invest
into a variety of types of projects in different
parts of the world. This demonstrates the role
which TISE plays in helping to facilitate the
flow of capital across global markets. n
Fiona Le Poidevin, CEO, The
International Stock Exchange
Group
THE INTERNATIONAL STOCK EXCHANGE
The International Stock Exchange provides a responsive and innovative listing
and trading facility for a wide range of investment vehicles. TISE is home to
nearly 400 investment securities, including open and closed ended funds
investing across a variety of asset classes, as well as a quarter of all HMRC
approved Real Estate Investment Trusts (REITs).
TISE is a registered trademark of The International Stock Exchange Group Limited (Guernsey registered company number 57524). It wholly owns The International Stock Exchange Authority Limited (Guernsey registered
company number 57527), which is licensed by the Guernsey Financial Services Commission to operate an investment exchange under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended.
The registered office of The International Stock Exchange Group Limited and The International Stock Exchange Authority Limited is at Helvetia Court, Block B, Third Floor, Les Echelons, St Peter Port, Guernsey, GY1 1AR.
Products
» Trading companies
» Specialist debt
» Investment vehicles
» SPACs
» Extractive industries
Key Credentials
» Market capitalisation: > £300bn
» Listed securities: > 2,000
» International marketplace
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» Growing product range
Why TISE?
» Responsive approach
» Competitive pricing
» Global standards
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» Premier location
Contact us
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TPA7338-TISE GFM GSY & JSY A4 ADVERTS JUNE 2018.indd 1 11/06/2018 16:35
was home to a large number of open-ended
funds, which were fairly labour intensive.
Guernsey, like other jurisdictions, went
through an era where it had to outsource a
lot of back-office functions because it didn’t
have the human resources on the island to
carry out that work.
“Now, I believe there is an opportunity
for Guernsey to bring back some of those
back-office operations because of the
digital revolution. It is something that we
as a jurisdiction, both as industry bodies
and with the government’s support, need
to focus on so as to encourage people to
come to the island. There are a number of
exciting fintech projects that I am aware of
but cannot reveal at this stage; suffice to say
that I hope to see them get up and running
soon so that we can start talking about them
to the wider financial community.”
In his view, the potential myriad
applications that one might apply using DLT
and other digital technologies could lead us
into the next Industrial Revolution. A lot of
this is about democratising the investment
process and making it more accessible to
people, who may not regard themselves as
typical investors. Mobile wealth management
applications, robo-advisers, crypto strategies;
these are all springing up and changing the
way people think about investing, and where
the next investment return opportunity may lie.
“Guernsey is a very important node in the
global Internet, in terms of being a junction
between the UK, Europe and the US. The
e-gaming industry that we set up, which
has been highly successful, relies on good
connectivity, back-ups and capacity; all of
that is in place. We just need to build on it
to further support fintech entrepreneurs and
fund managers alike,” adds Smith.
If blockchain technology improves the way
PE/RE funds are administered, Guernsey
could find itself well positioned to attract
global PE/RE managers and sources of
investment capital from emerging markets in
the Far East, Latin America, etc.
Guernsey has a wealth of expertise in the
PE and VC sectors and Smith believes that
fintech could enhance business activity in
those two sectors.
“It should make transactions easier to
execute and make them more transparent as
they will have the electronic audit trail that is
I always think coffee houses are great
places for talking business,” says Wheatley.
“There are four or five coffee houses where,
depending on which industry I’m interested
in, I know I will find various people there. I
believe innovation comes from sharing ideas
and having access to different people with
different skills. We also have close links
back to the City of London. Our lawyers
and accountants have access to additional
expertise through their networks of contacts
and that, combined with our ability to create
the business environment and regulatory
infrastructure, is a key advantage.”
Digital technology is also high on
Guernsey’s agenda as it seeks to evolve and
expand its value proposition. According to
Paul Smith, Chairman, Guernsey Investment
Fund Association (GIFA), it is crucial to the
island’s future. “As we see the industry
evolving, technological developments will
become vital,” remarks Smith. “I think
Guernsey has already demonstrated its
innovation and is a test bed, as it were, for
new fintech ideas and tools.”
A good example of this is Northern Trust,
who recently introduced a blockchain solution
for one of their private equity fund managers.
To construct the blockchain record keeping
solution, Northern Trust selected IBM to
provide the cloud infrastructure. That they
regarded Guernsey as the best place to
test the waters, is testament to the island’s
reputation. Since then, Northern Trust has
extended the blockchain solution so that
audit firms can now carry out audits of
private equity lifecycle events directly from the
blockchain. Northern Trust, working with PwC
and other audit firms in Guernsey, has proved
that auditors can now access fund data held
on the private equity blockchain to audit
specific events.
“With respect to blockchain, the GFSC
needed to understand how to perform
the necessary oversight and monitoring,
and satisfy themselves of the governance
structures being put in place. It just required
a change of regulatory process and there are
now guidelines in place,” confirms Wheatley.
There are wider implications as to what
these DLT-based solutions being developed
for complex, closed-ended funds, could
mean for the wider industry. As Smith points
out: “If you go back a few years Guernsey
OVERVIEW
10
24
16 | www.globalfundmedia.com GUERNSEY GFM Special Report Jul 2018
www.globalfundmedia.com | 17GUERNSEY GFM Special Report Jul 2018
Why Guernsey is the
alternative choice
By Dominic Wheatley
Development Goals. There are more than 25
infrastructure funds domiciled in Guernsey,
valued together at more than GBP16 billion,
managed by some of the world’s best-known
managers, including Aberdeen, EQT and
Macquarie.
Real Estate Investment Trusts
Real Estate Investment Trusts have surged
in popularity for real estate investment. REITs
offer tax advantages and may prove more
attractive to investors as they provide easier
access to property than direct investment,
offer diversification of holdings, and the
benefits of a professional investment manager.
A REIT must be tax resident in the UK, but
the island’s experience and expertise in the
administration of alternative assets, including
real estate, makes Guernsey an excellent
base to operate from. The International Stock
Exchange, based in Guernsey, is now listing
a quarter of all UK REITs, though Guernsey-
based structures to date have been
commonly listed in London.
Alternative finance
Opportunities for alternative finance have risen
significantly in the decade since the global
financial crisis as traditional lenders have
contracted under regulation or risk appetite.
Over that time, Guernsey’s investment funds
industry has seen growth in various types
of financing arrangements including P2P,
distressed debt, loan refinancing, social and
student housing, collateralised debt, property,
litigation and trade financing.
Guernsey has received a growing number
of enquiries in the fintech arena, especially
peer-to-peer lending, which is allowed under
the island’s flexible yet robust regulatory
regime. The island has more than 60
debt funds, both closed- and open-ended,
collectively valued at nearly GBP10 billion. n
Guernsey’s funds sector has developed over
the past 50 years, since the first funds were
formed in the island in the 1960s, and is now
recognised as a leading centre of excellence
for a range of alternatives. This process
has been accelerated in recent years as
shrinking returns from traditional investment
fund strategies are making the alternatives
sector more attractive to investors. Guernsey
has built up and is now recognised for its
expertise in alternatives, particularly private
equity but also in infrastructure, Real Estate
Investment Trusts, and alternative finance.
Private equity
Some two-thirds of the GBP260 billion of
funds under management and administration
in the island are private equity assets. Major
private equity promoters who have established
operations in Guernsey include Apax Partners,
BC Partners, Mid Europa, Permira and
Terra Firma, and Guernsey has long been
recognised as a preferred destination for
private equity outsourcing. In 2016 Permira
raised EUR7.5 billion with its Guernsey-
domiciled global fund Permira VI, the largest
buyout fundraising in Europe in 2016. Other
significant launches have followed.
Infrastructure
In recent years, the island’s investment funds
industry has helped both institutional and
private investors deploy capital into a range
of infrastructure projects across the globe,
including education and health, ports and
shipping, communications, electrical generation
and transition, airports, roads bridges and
tunnels, wind and solar power, and water.
The need for investment into infrastructure
in both developed and developing countries
continues to grow, with an estimated GBP12
trillion required for investment between now
and 2030 just to meet the UN’s Sustainable
Dominic Wheatley, Chief
Executive, Guernsey Finance
GUERNSEY FINANCE
Our multi-jurisdictional team
of experts provide a full range
of services for both open and
closed ended funds.
With over 500 people in 12
jurisdictions onshore and offshore,
we deliver flexible fund solutions
that demonstrate technical expertise,
in-depth regulatory knowledge
and support your needs.
Call 01481 231 100 or 01481 742 742
to find out more.
estera.com
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GUERNSEY
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A global leader
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Information about our regulators is available at estera.com
CORPORATE FUNDS TRUST ACCOUNTING
www.globalfundmedia.com | 19GUERNSEY GFM Special Report Jul 2018
Diversity on boards –
a fund perspective
By Amit Taylor & Mel Torode
The argument for greater diversity on boards
has grabbed many headlines in recent years,
as companies and organisations across the
globe increasingly realise the benefits offered
in terms of fresh ideas and insight.
Much of the early focus was on the
impact that women can have in the
boardroom. Yet diversity is a very broad
church – covering everything from gender,
race, sexuality, and disability, to social
demographics, different ways of thinking,
age, professional expertise and much more.
It is now widely accepted – and numerous
studies have demonstrated – that diversity
brings a different perspective and challenges
the norm. It helps drive innovation and
improves results, and brings different and
positive traits to the table.
But how is the drive for diversity met
when the board concerned is in a market
such as the fund industry?
From Estera’s own experience – with
directors serving on fund boards as well as
in the private equity, CLO, insurance and
reinsurance, and shipping spaces – there can
be large disparities in board composition.
Some are very diverse, while others consist
of people with similar backgrounds.
In many instances, board selection on
funds is more about experience and different
skillsets than gender and ethnic background.
Board members can bring experiences seen
from other industries to the table when
discussing best practices, board efficiencies,
how to deal with new regulation and so on.
The situation is entirely different to that
of a global plc, which has a huge pool of
international talent to draw on – both within
and outside the group. This is even more
true when considering the pool of available
board members with the right experience
and skills in comparatively smaller
jurisdictions such as, for example, Guernsey,
Jersey, the Cayman Islands and Bermuda.
This does not mean there cannot be
progress. From our own experience at
Estera, there was a time when our clients’
boards were very traditional. But that is
changing, albeit slowly – and it seems to be
being built from the ground up.
For instance, the financial services sector
itself is now far more inclusive and diverse,
with management and leadership programmes
showing a broad range of people that there is
a pathway to the most senior roles.
Investing in and developing talent is
the key point here and will prove pivotal
in improved diversity at boardroom level in
future years. This should result in younger
people with fresh ideas coming onto
boards at an earlier age. And the more
diverse a board becomes over time, the
more comfortable companies become in
appointing people from different backgrounds
in future succession planning.
Ultimately, it is hard evidence in the
shape of performance and results that will
encourage companies to see the bigger
picture. If there is a track record of diversity
on a board and performance is strong, then
people are going to take notice. n
Estera is a world leading global provider of
fund and administration services. We pride
ourselves on being inclusive and understand
the need for acceptance and diversity. Please
contact us to see how we can help diversify
your board.
Amit Taylor, Managing Director
at Estera
Mel Torode, Operations
Director at Estera
ESTERA
“Investing in and developing
talent is the key point here and
will prove pivotal in improved
diversity at boardroom level in
future years.”
Legal services in
British Virgin Islands
Cayman Islands
Guernsey
Hong Kong
Jersey
London
Luxembourg
Shanghai
Tokyo
Inn vative
Let’s get to the point: we understand funds.
Ogier’s specialists have been at the forefront of
fund set-up, structuring and nance since the
inception of the industry with many actively
involved in drafting the key laws that underpin
fund structures across our international
jurisdictions. We act for banks, nancial
institutions, funds and promoters, working with
blue chip clients with established track records
and the most innovative and entrepreneurial
new sponsors entering the market. We pride
ourselves on providing responsive and
practical advice, while our hands-on, partner-led
teams ensure a consistent approach.
ogier.com
20 | www.globalfundmedia.com GUERNSEY GFM Special Report Jul 2018
GDPR priorities
By Craig Cordle
Data protection and privacy laws have been
reformed across Europe by Regulation (EU)
2016/679, commonly known as the General
Data Protection Regulation (GDPR) which
came into force on 25 May 2018. The GDPR
builds on existing legislation and seeks to
harmonise and enhance data protection and
privacy laws across the EU. It also introduces
significant fines in respect of breaches.
Guernsey’s Data Protection (Bailiwick of
Guernsey) Law 2017, which mostly mirrors
the requirements of the GDPR, came into
force on the same day. The DP Laws
apply the requirements of the GDPR on a
global basis (that is, not only in respect of
data relating to EU-resident individuals).
Importantly, this means that Guernsey is
likely to continue to be classed by the
European Commission as an adequate third
country to which data can be transferred,
which can only be good news for Guernsey
service providers.
The GDPR has immediate effect in EU
Member States and, therefore, automatically
applies to organisations which are established
in the EU. However, it also has extra-
territorial scope, and applies to third country
organisations which have an establishment in
the EU or where the processing of personal
data relates to: a) the offering of goods or
services to EU residents; or b) the monitoring
of the behaviour of EU residents where the
behaviour takes place in the EU.
In the context of investment funds, the
offering of interests in a fund is generally
considered to be an “offer of goods or
services”, thereby bringing funds within the
scope of the GDPR.
Personal data is any information in respect
of which a natural person can be identified,
such as their name, address, identification
number, as well as online identifiers
(including cookies). This type of data is
typically collected from investors during the
subscription process.
However, the GDPR imposes a higher
compliance burden in respect of “special
category data” which includes data revealing
racial origin, political opinions or religious
beliefs. The latter category is unlikely to be
relevant for most funds, though sharia funds,
socially responsible or ethical investing funds
could find that they hold special category
data. In addition, political affiliations of PEPs
may result in such data being held.
The following action points should assist
funds and service providers set their priorities:
• Carry out a full mapping of the types
and sources of personal data collected,
identify who might potentially control and/
or process the data, for what purposes
and how the data moves between the
fund and its service providers.
• Consider the legal basis on which the data
is processed. Under pre-GDPR regimes,
investor consent was typically used as the
legal basis for processing personal data.
This may still be appropriate, particularly
where a vehicle is very closely held or
where the consent of investors is easy to
obtain (and update, if necessary).
• Prepare a notification to investors
(commonly referred to as a Privacy Notice)
which complies with the prescribed
disclosures set out in the GDPR. Privacy
Notices are quite lengthy documents
as they must detail clearly and in plain
language specific information including the
purposes for which data is to be used,
the legal basis for each such use, an
explanation of the rights of investors as
data subjects and how to exercise them.
• Amend the fund documents. It is likely
that offering documents will contain data
protection language requiring updating.
The expectation is that reliance will be
placed on fund administrators to provide
the resources and infrastructure required
for these activities, though it is important to
note that data controllers retain responsibility
for damage caused by processing data
in contravention of the GDPR. Fund and
management boards should also, therefore,
be trained in the requirements of the GDPR. n
Craig Cordle, Group Partner,
Ogier
OGIER
Legal services in
British Virgin Islands
Cayman Islands
Guernsey
Hong Kong
Jersey
London
Luxembourg
Shanghai
Tokyo
Inn vative
Let’s get to the point: we understand funds.
Ogier’s specialists have been at the forefront of
fund set-up, structuring and nance since the
inception of the industry with many actively
involved in drafting the key laws that underpin
fund structures across our international
jurisdictions. We act for banks, nancial
institutions, funds and promoters, working with
blue chip clients with established track records
and the most innovative and entrepreneurial
new sponsors entering the market. We pride
ourselves on providing responsive and
practical advice, while our hands-on, partner-led
teams ensure a consistent approach.
ogier.com
22 | www.globalfundmedia.com GUERNSEY GFM Special Report Jul 2018
The green ‘emerging
global contender’
By Dr Andy Sloan
Guernsey has been identified as an ‘emerging
global contender’ in green finance. In a climate
currently led by the global commitments made
at the United Nations COP 21 conference in
2015, Guernsey has identified green issues as
a key strategic objective.
The island is rapidly becoming the “go
to” international finance centre for green
finance. The introduction by the regulator, the
Guernsey Financial Services Commission,
of the world’s first regulated green fund
product, the “Guernsey Green Fund”
puts us at the forefront of green finance
development.
The objective of the GGF is to provide
a platform upon which investments into
various green initiatives can be made. The
GGF will enhance investor access to the
green investment space by providing a
trusted and transparent product contributing
to the internationally-agreed objectives of
COP21, the 2015 United Nations Climate
Change Conference, and provides certainty,
consistency and simplicity for investors.
Investors in a GGF will be able to rely
on the GGF designation, provided through
compliance with GGF rules, to represent a
scheme that meets strict eligibility criteria of
green investing and will have the objective of
a net positive outcome on the planet.
The island already has a number of
cleantech funds established, and although
the sector is growing, green funds are still
at an embryonic stage. Investors are often
hesitant to invest in funds which may not
ring true to their green label, or do not want
to sacrifice a good return for the sake of
their environment.
The GGF rules use standards developed
by international financial institutions with the
appropriate scientific background to ensure
that the various assets held in a GGF are
green within the true meaning of the word.
Any type of fund can apply to be a
Guernsey Green Fund, and under the
guiding rules and principles, will have to
invest in themes such as renewable energy,
lower carbon and efficient energy generation,
energy efficiency, agriculture and forestry,
waste and waste water and transport.
Guernsey’s trend-setting progress so far
has been welcomed by Michael Mainelli,
chairman and co-founder of the think tank
Z/Yen, which has listed Guernsey as an
‘emerging global contender’ in its inaugural
Green Global Finance Centres Index.
“I am extremely encouraged to hear
about Guernsey bringing out green fund
regulation,” he said on the pro-sustainability
podcast Planet Pod.
“We are seeing regulators begin to pay
attention and I hope that’s picked up.” n
GUERNSEY FINANCE
Dr Andy Sloan, Deputy Chief
Executive, Strategy, Guernsey
Finance
www.globalfundmedia.com | 23GUERNSEY GFM Special Report Jul 2018
Guernsey –
embracing innovation
By Andrew Carey
Guernsey makes no excuses for wanting
to attract fund managers to the island and
evolve into more than simply an alternative
funds jurisdiction. It is an explicit position for
us, as opposed to a “nice to have”.
Guernsey does have high-quality
managers already operating from the island,
with names including Cinven, Permira and
Terra Firma, and is also working closely with
the Guernsey Investment Fund Association
to try to increase that number. The size of
the manager community is already quite
significant, with funds one of the best
performing sectors in the island’s well-
rounded industry, but there is always room
for more managers. Those who choose to
come to Guernsey will find an environment
that works very well for them.
Government-funded Locate Guernsey pulls
as many levers as possible to make the
relocation process as easy as it can. Those
setting up businesses in Guernsey will find
that the government wants to assist with the
awarding of long-term employment permits
as a show of faith.
Guernsey’s housing stock also includes
a proportion that is classified as the “Open
Market”. This section of the market – some
1,500 properties – enables occupants to
reside in the island in a way that is free
of the employment permit system that is
required for everybody else. Both “routes in”
are positive for the newcomer, and positive
indeed for Guernsey.
On the personal side of things, quality
of life is excellent, allowing managers to
enjoy the best of both worlds – access to
a professional fund servicing community,
combined with beautiful surroundings.
We think Guernsey appeals to those
looking for a location that is conducive
to growing their business without having
to make any personal sacrifices. It is a
wonderful place to bring up a family.
At Locate Guernsey, we are keen to make
the landing as smooth as possible. We act
as the manager’s single point of contact with
the government. If an incoming manager
wants to establish an office we will help
source locations, as well as other things they
might need help with during the course of
the relocation process.
I would encourage people to talk to the
regulator. They are very approachable. The
Guernsey Financial Services Commission
encourages dialogue and is always willing
to engage with managers to discuss their
business requirements. Earlier this year it
unveiled the Innovation SoundBox for those
considering new start-ups to interact with
the GFSC prior to the licensing process.
This demonstrates that Guernsey is open to
innovative approaches to doing business.
And earlier this year the States
of Guernsey launched the Guernsey
Investment Fund, which uses public money,
supplemented by private sector money, to
invest in technology and digital start-ups.
That is indicative of a jurisdiction that wants
to embrace the new and is not prepared to
rest on its laurels.
Locate Guernsey wants to ensure that
incoming entities’ visits to Guernsey are
productive. And once conversations with
the regulator and the authorities are under
way, getting the business up and running is
not hard. Everything can be done relatively
quickly. I see a funds sector with a real buzz
about it right now and we are an island of
opportunity. n
Andrew Carey, Head of Locate
Guernsey
LOCATE GUERNSEY
most secure, robust legislative environment
for electronic agency to provide a supportive
environment for the application of AI and
machine learning in finance and other services.
“The application of DLT will make the
onboarding of investors and AML/KYC
processes unrecognisable in three or four
years’ time, and we want to be one of the
first movers into that space.”
Conclusion
The way for Guernsey to facilitate future
growth is to keep doing what it does best,
which is to look at things objectively, think
laterally, and embrace innovation for the
future well being of the jurisdiction.
“As a jurisdiction, to be successful you
need to have a dominant position in any
given market,” says Sloan. “We are looking
to move forward to create new leadership
positions in new markets and that involves
leveraging our current expertise to move
into green finance. We think there is an
opportunity for us to create a leadership
position in that market.”
Given the breadth and depth of its finance
industry, Guernsey has all the tools in its
toolbox needed to help businesses get up and
running, and succeed. In many way, it is the
ideal test bed for new technologies, new ideas.
“We combine innovation with niche
expertise, providing services better, quicker,
more cost-effectively and in a sustainable
way. After London, there are more listed PE
funds in Guernsey than anywhere else in the
world. We have lawyers who, quite simply,
are extremely good at doing the work.
“In the end, one of our key functions is
to provide a laboratory-like environment for
people to come up with ideas and test them
in the market,” says Wheatley.
With Brexit still to be finalised, this is
when the stability of a jurisdiction like
Guernsey comes into its own.
“Long-term secular forces are such that
global financial centres should be invigorated
by a Brexit process, where the UK rediscovers
its internationalist DNA and moves away
from merely looking at, and servicing, the EU
single market. The UK will need to look for a
growth strategy post-2019 and that plays to
our traditional economic role, providing routes
for capital into London’s financial market,”
concludes Sloan. n
a key feature of blockchain technology. I think
it’s going to be crucial for all alternative fund
managers – not just PE managers but RE and
Infrastructure managers,” states Smith.
Changes in Guernsey’s population
management law introduced last year have
made it easier for people to come and base
themselves in Guernsey. “We have excellent
cybersecurity as well as physical security
on the island,” adds Smith. “It is a very safe
place to live. I’m not suggesting we need
tens of thousands of people, but we could
accommodate a few thousand more people
quite easily. It’s a question of attracting key
people who are able to take advantage of
our flexible entrepreneurial environment.”
Crucially, as well as attracting talent,
Guernsey also has a good number of people
living on the island who are able and willing
to invest in fintech start-ups.
“The one thing that excites me about this
whole era at present is that it reminds of
the early stages of the financial industry, in
the sense that there is so much opportunity.
There’s a new sense of excitement coming
back, a sense that anything is possible.
Guernsey as a jurisdiction has always
been very entrepreneurial. If you look back
at industry changes over the last couple
of decades, Guernsey has always been
flexible and looked for the next best thing.
When it sees an opportunity, it goes for it,”
asserts Smith.
In terms of technology application, Sloan
says that Guernsey has been deliberately
keeping its powder dry with respect to things
like crypto currencies, ICOs, etc.
“We have a mature risk appetite and
sophisticated understanding of the issues
associated with these new asset classes,”
he says. “We’ve been deliberate, to date,
as a jurisdiction. Our approach is being
‘technology neutral’ in terms of the application
of technology, not withstanding that we have
established leadership in this space. Northern
Trust has its private equity project under way
and in the ILS space, secondary listings have
been done using the application of DLT.
“As a jurisdiction, we’re now building on
that, exploiting our key strengths and our
legal autonomy, to develop our electronic
transactions law, itself a far-sighted primary
legislation introduced in the early 2000s, to
look to build something quite special – the
OVERVIEW
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