Panellists at Guernsey’s Funds Forum 2024 praised Guernsey’s supportive environment for innovation, flexibility of company law, and excellent reputation as a domicile for institutional investors.
Discussions at the flagship funds event highlighted fundraising methods in a challenging environment, the rise of secondary markets, and the emergence of tokenisation and digital assets.
Speakers provided insight into ‘Navigating the Future’, explored through an engaging keynote speech, two trend-focused panel sessions, and two educational masterclasses exploring why ‘there’s no place like Guernsey’ for fund domiciliation.
Miles Celic, Chief Executive Officer of TheCityUK, delivered an opening keynote speech on Guernsey’s symbiotic relationship with the United Kingdom economy.
“Guernsey – one of the most integral parts of the British family of crown dependencies and overseas territories – is an added string in the bow of the UK’s financial services offer. While small in geography, Guernsey punches well above its weight in influence and in terms of its contribution to the wider ecosystem, both within the British Family and globally.
“Guernsey’s proficiency in carving out its place as a high-quality and agile service provider – one of those elements that improves the ‘whole’ UK offer – is a model that we would do well to apply to our broader thinking on the UK’s post-Brexit regulatory framework.
“It is clear that Guernsey’s contribution to driving growth across the economy cannot be understated. The island’s investment also helps to bolster UK competitiveness, fostering innovation, particularly in areas like green and sustainable finance and FinTech.”
Panellists agreed that the British Isles must retain that competitiveness in order to continue to thrive as a financial services hub, particularly in light of the current hurdles for capital raising in today’s economic environment.
On the implications of economic and political hurdles on capital raising, Naoshir Vachha, Partner at Anthemis, said: “We have these headwinds, but we are better at dealing with them and we have better tools at our disposal.
“We’re spoilt for choice at the moment, there are still great investments to be made at the early stage, but managers are taking a lot more of a cautious approach.
“It’s going to continue to be challenging, but we’re in a creative environment to deploy capital, so there’s a lot to be optimistic about.”
Discussions then shifted to the approach taken by regulators to these challenges.
Eve Ellis, Partner at Ropes & Gray, said: “We’ve had an avalanche of regulatory changes over the last decade, so sponsors trying to manage that regulatory change has been super challenging.”
With ESG now an integral part of fundraising, Eve stressed the need to consider ESG holistically, both in terms of the regulatory regimes, but also across organisations.
Emma Silcocks, Group ESG Manager at Bluefield Partners LLP, an early adopter of the Guernsey Green Fund regime, shed more light on investor appetite in relation to sustainable assets.
“Fund managers in the sustainable investment space have to keep raising their game in ESG in order to meet the levels of engagement required by investors.”
Emma also highlighted the importance of sustainability credentials: “Financial markets are subject to a massive amount of ESG regulation at the moment. If we want to attract capital into sustainable investments, we have to make it really clear to investors what the sustainability credentials of different financial products are.”
She finished by marking natural capital as a ‘great opportunity’ and an emerging area of sustainable investment, with the next challenge being consolidating and reporting on natural capital.
In terms of jurisdiction, Eve noted changing attitudes towards fund domiciliation.
“Guernsey has been a prime funds jurisdiction for many years, we are seeing desire from sponsors to look at alternatives to the AIMFD Passport such as the National Private Placement Regime.”
Naoshir agreed, adding that fund managers were becoming more comfortable with Guernsey as a well-established funds jurisdiction, particularly in using SPVs for single investments.
Technology and secondary markets prevailed as core themes in panel two, with Matt Ong, CEO and Founder of Ctrl Alt, a B2B infrastructure provider focusing on enabling fractional investments in alternative asset classes.
Matt described tokenisation, the representation of any kind of asset via blockchain, as an ‘efficiency tool.’
He said as a result, funds could access a larger number of investors, and therefore tap into more capital.
He said: “Tokenisation is what we see as the next generation of funds structuring or accessing alternative assets.”
Ctrl Alt is in the process of launching its first tokenised fund in Guernsey, and Matt praised the island’s supportive environment for innovation, flexibility of company law, and reputation as a domicile for institutional investors.
He added: “From a business perspective, the innovative structures like the ICC and PCC, are really supportive for innovation and tech, so we take full advantage of that.”
The current market has also seen a need for creativity, and continuation funds have stepped in, according to Lavanya Raghavan, Partner at White & Case LLP.
She said: “There's been a confluence of factors that has given rise to a proliferation of continuation funds in the market.
“In an industry that has always been fairly wedded to conventional terms and structures, we have seen a lot of innovation in this area where GPs see value in assets and don’t think it is the right time to exit them.”
In light of the current market, Panellist Sarah de Ste Croix, Partner at Stephenson Harwood, said investors are turning to different solutions to create DPI and hold onto assets.
She added the uncertainty in trade winds means that people are increasingly ‘jurisdiction shopping’ to suit their personal needs, supported by a ‘truly global’ funds industry.
To close the second panel, Kobus Cronje, Managing Director at JTC Group Guernsey, discussed the need to increase ancillary funds offerings in light of emerging digital assets and sustainability considerations.
He said: “The pace of change will continue and will accelerate in years to come. ESG credentials are often the first questions that are asked when funds are launched. The positive thing is that Guernsey is ideally positioned to support that.”
Guernsey is weathering these macroeconomic storms, and Kobus cited three key differentiators that set the island apart.
He praised the ‘pragmatic and engaging regulator that is forward looking, always willing to engage with the industry and new market needs,” citing the island’s fast-track authorisation scheme as an example of the regulator recognising the value of speed to market.
He also commended the island’s ‘reputational strength and certainty enshrined in our overall legal framework,’ ‘strength and calibre of service provider community,’ and ‘strong protection of investor rights.’
To close, Kobus said: “This community is driving innovation and will ensure that Guernsey not only survives but thrives in the years to come."
