Across the globe, and for various reasons, many fund managers are looking to redomicile their funds. Giving an off-island view, JTC Head of Group Client Services Wouter Plantenga, based in Miami, discusses why US private equity fund mangers might want to migrate their funds to Guernsey…
Thinking of taking your fundraising abroad? Here’s why Guernsey may be worth considering.
Drivers for global expansion
Alongside growing overseas interest in US investments, we’ve seen more and more US-based private equity fund managers looking for opportunities abroad. There are two potential angles to global expansion — international fundraising (for instance, seeking capital from European investors) and global capital deployment (taking advantage of investment opportunities in different markets around the world).
For private equity firms looking to attract foreign investment, the process usually involves setting up a foreign-domiciled fund, which feeds back into a US ‘master’ fund or strategy. Depending on a firm’s goals and the investor base being targeted, there are various locations used to establish these funds, and each can offer specialised advantages.
Guernsey is one such option. For US fund managers thinking of targeting foreign investment, Guernsey may be worth considering for a few key reasons.
Guernsey’s appeal for US-based firms
First, amid increased greylisting of other jurisdictions, Guernsey remains a comparably lower-risk area (according to the Financial Action Task Force). Some firms, which previously established funds in higher-risk areas, are now migrating their operations to Guernsey — and Guernsey has made this sort of migration as easy as possible, implementing a fast-track system for manager and/or fund migrations.
Second, for those wishing to market in just a single jurisdiction (or in a limited number of jurisdictions), Guernsey offers options that allow firms to avoid acquiring a full AIFMD passport. One route to market, commonly used for Guernsey feeder funds, is the National Private Placement Regime (NPPR). This provides more limited access to European investors than a full passport, but it can be faster and easier to obtain.
Third, and perhaps most importantly, Guernsey has a solid track record of success. The regulatory environment and legal system have evolved, alongside the growing financial industry, to be quite accommodating to foreign investment firms, and U.S.-based firms have successfully operated there for decades.
Further reading
White paper, The road to global growth
Case study, JTC Americas helps large US investment firm take its business global
Learn more about investment funds in Guernsey at the 2022 Guernsey Funds Forum in London on 12 May.
