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Joe Truelove, Kleinwort Benson

Guernsey fund industry targets opportunities in India

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Guernsey’s fund industry is seeking a foothold in India by providing services not available locally, following a weeklong visit to the country by representatives of the island’s financial services sector.

A number of Indian-based fund promoters are in the process of launching Guernsey-domiciled, London-listed closed-ended investment funds, according to Joe Truelove (pictured), head of Channel Islands business development for Kleinwort Benson’s corporate fiduciary division and chairman of the marketing committee of the Guernsey Investment Funds Association.

“Mauritius and Singapore both benefit from having double taxation treaties with India, which is why one of these jurisdictions is nearly always used for investment into India,” Truelove says. “Guernsey doesn’t aim to compete with them.

“But where we feel we can add some value is by providing a Guernsey-domiciled feeder fund into a closed-ended listed product, which would then invest into India via one of those treaty jurisdictions.

“Closed-ended listed vehicles have been very popular among UK investors for many years. Guernsey-domiciled investment companies dominate this niche sector and Guernsey-based service providers have long experience of servicing this kind of investment vehicle.”

Peter Niven, chief executive of industry promotional body Guernsey Finance, says the island also sees opportunities in India in wealth management and possibly captive insurance.

“If we are to reap fully the benefits of the contacts we’ve made and the relationships we’ve built, it is important we move a number of initiatives forward in the coming weeks and months,” he says.

According to Truelove, in the wealth management field Indian residents and non-residents can use Guernsey-domiciled trusts to hold assets for various purposes, including estate planning and asset protection.

“The lawyers we met were very familiar with Anglo-Saxon trust concepts and keen to use our expertise in this area,” he says. “There are very few professional trustee firms in India so this is a real opportunity for Guernsey, since it will inevitably lead to banking and investment management business associated with the trusts.”

Emerging markets like India and China are increasingly important to Guernsey, Truelove adds. “Practitioners have identified India and China as two of the emerging powerhouses of the global economy and are keen to explore opportunities to develop future business relationships which will be mutually beneficial for the long term.

“Guernsey Finance has set up a representative office in Shanghai and it would seem a logical step to open an office in Mumbai in the next couple of years.”

The delegation was led by the island’s minister for commerce and employment, Carla McNulty Bauer, and also included Paul Christopher from Mourant Ozannes, Stuart Platt-Ransom of Legis Group, State Street’s Gerald Hough and Robin Fuller from Dominion Fund Management.

Delegates met with the India Venture Capital Association, Bharti Enterprises and the country’s financial regulator, the Securities and Exchange Board of India, as well as legal and accounting firms in Delhi and Mumbai.

Niven, who also visited Switzerland recently at the head of a Guernsey delegation, notes that there is already a strong relationship between the two jurisdictions with a number of prominent Swiss institutions having set up operations in Guernsey over the past 20 years.

“More recently, a number of Guernsey fiduciary firms have opened trust and company administration businesses in Geneva or Zurich to service international clients,” he says.

The delegation met with key business introducers to learn what they thought of Guernsey’s offering. Says Niven: “The existing users were complimentary about the island but provided some food for thought about our fund regime. We also found strong interest from other promoters about the opportunities offered by Guernsey structures.”

Representatives of Guernsey’s financial services industry will make two more visits to India, one to China, and one to Hong Kong before the end of the year.

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