Guernsey offers an excellent infrastructure in terms of the services it can bring to private equity fund promoters, stretching from its legal framework to the providers of legal, accounting and adm
Guernsey offers an excellent infrastructure in terms of the services it can bring to private equity fund promoters, stretching from its legal framework to the providers of legal, accounting and administrative services. Fund services have been established in the island for nearly 20 years and form an integral part of its economy, and the global private equity industry values the intellect these professionals can bring to their clients’ structures.
The island offers a tax-neutral environment, which is very important but other jurisdictions can claim the same. But being in the same time zone as London, where many international private equity houses operate, coupled with a legal framework taken from the English partnership law and a proactive regulatory regime within which to operate, the jurisdiction has built up a roster of big industry names, including Alchemy Partners, Terra Firma, BC Partners and Permira, which have all been doing business in Guernsey for quite some time.
The development of the sector has created a repository of expertise and experience that continues to bring existing users back to Guernsey as well as offering a track record for new entrants into the market, offering an established and reputable template for the structuring of a fund and its ongoing operation.
Today the island enjoys a degree of critical mass that gives it an edge over its competitors. Once the individuals here on the ground have the relevant expertise, it becomes more likely that a provider will launch a new fund from the same jurisdiction. Unless there is a particular competitive advantage somewhere else, why should they look elsewhere if they can find everything they want and need in Guernsey?
In Jersey, Guernsey and Cayman, Mourant du Feu & Jeune offers legal advice on the formation and structuring of private equity partnership interests and advises lawyers in London or New York on the structuring of particular transactions. Once the entities are set up, the firm continues to provide advice on the structure to individual principals and London lawyers, and maintains a long-term relationship with teams responsible for administration of the structure.
The Mourant Group took a strategic decision several years ago to put down a larger jurisdictional footprint, driving its expansion from a professional services firm principally located in Jersey to one that can now offer fund services in nine jurisdictions.
This enables Mourant to carry out servicing work in the most appropriate jurisdiction. For the same client, onshore work may be carried out in the firm’s London office alongside other work on the same structure in Jersey, Guernsey or Cayman, while a special-purpose vehicle or investment holding company may be serviced from the Luxembourg office and US tax and compliance servicing work carried out in New York.
An important part of Mourant’s strategy is to be able to service clients in the jurisdiction that they choose, rather than simply trying to direct work to Guernsey, but the outlook is buoyant for the island’s private equity sector. The group has been active in the Guernsey funds market for four years, and around 80 per cent of the work carried out by its 42-strong administration team consists of private equity business.
Despite the recent market turbulence, the island’s future as a domicile and servicing centre for the private equity industry remains bright, with a tremendous opportunity to increase the jurisdiction’s range of service offerings to a market already convinced of its expertise.
Iain Stokes is head of European private equity with Mourant International Finance Administration and Darren Bacon is a partner at Mourant du Feu & Jeune