Gibraltar’s fund services industry is a relatively young but robust industry.
Gibraltar’s fund services industry is a relatively young but robust industry. Although Gibraltar fund legislation dates back years, it was the introduction of ‘Experienced Investor Fund’ legislation in August 2005, designed for experienced, high net worth, sophisticated investors that truly made Gibraltar a serious, attractive and competitive jurisdiction. Since then, the market has gathered momentum and Gibraltar has experienced a substantial increase in the volume of fund business.
The single biggest challenge Gibraltar currently faces in order to further grow its fund services industry is to become a household name within the fund industry. Whilst the jurisdiction has a lot to offer, there is a need to undertake significant marketing to increase its exposure and consequently its market share of business
The jurisdiction’s current aim is to place itself in a position to compete with longer established jurisdictions when promoters consider domiciling new or existing funds. To achieve this, the Government of Gibraltar, with the assistance of the Gibraltar fund services industry, has been organising seminars throughout European finance centers to promote Gibraltar as an alternative jurisdiction.
There are many reasons to choose Gibraltar as a fund centre. Firstly, it is part of the European Union by virtue of its relationship with the United Kingdom and is therefore obliged to enact all EU Directives some of which are beneficial to fund structures, such as the parent subsidiary directive. Gibraltar has also obtained the right to passport investment services into Europe and this gives certain funds a broader scope for marketing their product.
Another advantage is the ability to set up a fund quickly and effectively given that the jurisdiction operates a pre-authorisation system that allows funds to launch following some pre-requisite steps. This is enhanced by a strong professional environment operating within the jurisdiction which allows counterparties and the Gibraltar Financial Services Commission to meet and discuss urgent matters at short notice. Set-up costs are also an important factor, especially for smaller funds, and here Gibraltar proves to be a very cost effective jurisdiction.
A substantial part of recent growth relates to smaller start-up funds which often find their size a barrier to choosing one of the larger jurisdictions, however Capita has also managed to attract larger funds as a direct result of its operating model that uses UK as a back office and allows the necessary scalability to provide the additional resources to service larger funds.
We are also beginning to see some fund re-domiciliation where fund promoters are finding that they can improve the level of service received and at the same time reduce their servicing costs by moving their fund administration to Gibraltar from other major centers in the Caribbean, Dublin and the Channel Islands.
In Capita we believe 2008 will see further significant growth in Gibraltar funds. Our line of enquiries is lengthy and we are confident that Gibraltar will continue to attract the industry’s attention.
David Wahnon, Capita Financial Group