bl magazine issue 41 november/december 2015

2 july/august 2015 www.blglobal.co.uk

Xxxxx

18Geographic locations

INSTITUTIONAL CLIENT SERVICES | PRIVATE CLIENT SERVICES

Argentina • Brazil • BVI • Cayman Islands • Guernsey • Hong Kong • Jersey • Labuan • Luxembourg Malaysia • Malta • Mauritius • New Zealand • Singapore • South Africa • Switzerland • UK • USA

The entities within JTC Group, carrying on the regulated business of JTC Group, are duly regulated as appropriate by the British Virgin Islands Financial Services Commission; the Cayman Islands Monetary Authority; the Guernsey Financial Services Commission; the Jersey Financial Services Commission; the Commission de Surveillance du Secteur Financier and the Ordre des Experts-Comptables in Luxembourg; the Malta Financial Services Authority; the Financial Services Commission in Mauritius; the South African Financial Services Board as an authorised financial services provider; as a member of l’Association Romande des Intermédiaires Financiers in Switzerland; and is authorised and regulated by the Financial Conduct Authority in the UK. For more information about JTC Group, its offices and alliances please visit: www.jtcgroup.com. For JTC Group’s full terms of business, please visit: www.jtcgroup.com/terms-of-business.

*Monterey Guernsey & Jersey Fund Reports 2014, combined number of funds administered by JTC and Kleinwort Benson as at 30 June 2014. Compared to fund administrators with funds in both Guernsey and Jersey.

www.jtcgroup.com

“PRIVATE EQUITY FROM A DIFFERENT PERSPECTIVE”

STUART PINNINGTONGroup Head of Institutional

Client Services

To share yourperspective contact

Stuart

[email protected]

+44 1534 816 231

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JTC PRIVATE EQUITY SERVICES CAN SUPPORT YOUR FUND THROUGH ITS ENTIRE LIFECYCLE AND THE GROWTH OF YOUR BUSINESS.

We provide a comprehensive range of private equity solutions delivered from key onshore and offshore jurisdictions to leading companies investing in a broad range of industries.

The JTC Private Equity team has a proven track record in providing outsourced third party private equity administration services in addition to managing investors and regulatory requirements.

Our technology, systems and operating platform are efficient, accurate and reliable. We use the market leading SunGard Investran, a fully integrated portfolio and partnership accounting, investor relationship management and reporting solution designed for private equity.

We don’t do one size fits all. We handpick the best team to look after each client’s needs, creating effective and tailored solutions consistently delivered to high standards. All our people understand the importance of private equity, as we operate around the simple but successful principle that if our people have a stake in the business, they will do a better job for our clients. YOUR FUTURE IS OUR FUTURE

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www.blglobal.co.uk november/december 2015 3

Welcome

The third-country passport has created considerable comment as well as some excitement about the future of the funds industries in both islands and the opportunities that are now on the horizon

OK, so ‘fascinating’ and ‘funds’ aren’t necessarily two words that you would expect to find in the same sentence – and we probably wouldn’t have imagined

writing them six months ago. But it’s interesting how certain events can change your perception of things.

One year on from our last funds edition, there are many things that are reassuringly familiar about the Channel Islands’ funds industries – with figures of funds under management in both islands remaining steady. Indeed, Jersey figures actually reached a seven-year high at the end of last year before pulling back slightly come the end of June.

The number of funds in both islands has also remained at a steady level in the past year. So why all of a sudden the fascination?

The key development that perked up our funds radar came at the end of July, when the European Securities and Markets Authority (ESMA) announced that Guernsey and Jersey were the only two (from six assessed) jurisdictions that were being recommended for the third-country ‘passport’.

Theoretically, this means that when (or if) the current national private placement regime (NPPR) is ‘turned off’ only the Channel Islands, of all the jurisdictions using an NPPR, will be able to continue to market their wares in the EU.

Of course, things are never that simple – and what makes it all the more fascinating is that: only six from 22 jurisdictions have been assessed by ESMA so far; Switzerland only has to make some minor modifications to its regime to become the third recommended jurisdiction; and the whole ‘switchover’

The fascinating world of funds

may be delayed indefinitely until more jurisdictions are deemed compliant.

On the surface it’s a bit of a ‘bugger’s muddle’, as one commentator so aptly put it. But on the other hand, it does put the Channel Islands in a very strong position going forward. As it stands, they can continue to use the NPPR, with the certainty that they have the passport when things move forward.

It’s a situation that has created considerable comment, as well as some excitement about the future of the funds industries in both islands, and the opportunities that are now on the horizon. As such, it’s a theme that was picked up at the most recent Channel Islands Funds Forum, run by BL Events (see page 38), and one that runs through many of the articles in this special funds edition of BL.

Needless to say, there are plenty of non-legislative funds articles for you to enjoy as well!

The BL team

Outstanding HR support.Blossoming business.

Guernsey | Jersey | Isle of Man | Malta | Cypruswww.activeo� shore.com

Active HR are a professional team who undertake the role of an internal HR department in a pragmatic and cost e� ective manner. � e service enables companies to concentrate on their daily business whilst we manage their HR functions. To � nd out more contact Wendy McHugh or David McCloskey on 01481 711822 or email wendy.mchugh@activeo� shore.com or david.mccloskey@activeo� shore.com

HR ConsultancyEmployee RelationsHR SupportRecruitment and Selection

Active Services (Guernsey) Limited and Active Fund Services Limited are licenced in Guernsey by the Guernsey Financial Services Commission.

HumanResources

With unrivalled local knowledge and experience, no-one understands the needs of the local market like we do.

To speak to our Channel Islands team, call (01534) 282076.

WE HAVE EXPERTS IN YOUR AREA, IN YOUR AREA.

The Royal Bank of Scotland International Limited trades in Jersey and Guernsey as Coutts & Co Channel Islands and as Coutts.

The Royal Bank of Scotland International Limited. Registered Office: P.O. Box 64, Royal Bank House, 71 Bath Street, St. Helier, Jersey JE4 8PJ. Business address: 23-25 Broad Street, St. Helier, Jersey JE4 8ND. Regulated by the Jersey Financial Services Commission.

Guernsey business address: P.O. Box 62, Royal Bank Place, 1 Glategny Esplanade, St. Peter Port, Guernsey GY1 4BQ. Regulated by the Guernsey Financial Services Commission and licensed under the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002 and the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended.

Calls may be recorded.

C001318_In_your_area_(B_Life_Mag)_203x276_V2.indd 1 21/04/2015 11:31


Contents

INSIDE

© Chameleon Group Limited, all rights reserved. Reproduction in whole or in part without written permission is prohibited. Views expressed by our contributors are their own and do not necessarily represent the views or policies of Chameleon Group. While every effort is made to achieve total accuracy, Chameleon Group cannot be held responsible for any errors or omissions.

Office: Floor One, Liberation Station, Esplanade, St Helier, Jersey JE2 3AS

BL is published six times a year by Chameleon Group

+44 1534 615886www.blglobal.co.uk

The BL Global Discussion Forum

Follow us @blglobalnews

CEO, CHAMELEON GROUPCarl Methven

[email protected]

EDITOR-IN-CHIEFNick Kirby

[email protected]

ART DIRECTORAngela Lyons

SUB EDITORKate Wheal

BUSINESS DEVELOPMENT CONSULTANTJane Gregory

[email protected]

[email protected]

NEWS AND [email protected]

GENERAL [email protected]

BLMAGAZINE

DAVID BURROWSInvestment writer David

looks at a possible bubble in the biotech

sector and weighs up the implications for

investors, before examining what the Channel Islands are

doing in Islamic finance.

HARRY McRANDLEWhen he wasn’t getting

to grips with ESMA’s announcement on third-

country passporting, Harry’s been juggling Jersey’s charities law

and reviewing BL’s Channel Islands Funds Forum. Very skillfully!

KIRSTEN MORELBL’s Technology Editor helps to make sense of disruption in tech and how predicting what

comes next is tricky. He also gets to the bottom of a skills gap in finance

and what needs to be done to fix it.

DAVE WALLERBL regular Dave whizzes Stateside to check out

US fund managers, and takes a good hard look at

infrastructure funds, before weighing up the

damage done to the Channel Islands from blacklists. Busy boy!

contributors

9 NewsA round-up of the latest business news from the Channel Islands and beyond

14 AppointmentsRecent key hires for Guernsey and Jersey businesses

FUNDS16 AIFMDHow ESMA’s ruling on third-country passports could open doors for Guernsey and Jersey

22 interviewAndrew Whittaker from Ipes and the BVCA’s Channel Islands Working Group gives his view on the state of play in funds

26 brexitWould the UK leaving the EU lead to a mass exodus of fund managers?

30 private equityTraditionally an option for institutions, private equity is gaining favour with family offices

38 funds in focusA review of BL’s recent Channel Islands Funds Forum event

45 INTERVIEWInvest Europe’s Michael Collins outlines changes at the former EVCA

49 infrastructureHow the Channel Islands are capitalising on this funds sector

52 biotechIs biotech ripe for the picking or a bubble about to burst?

56 US fund managersWill changes to EU legislation bring more US managers’ business to the Channel Islands?

61 interest ratesWhy investors may bail out of funds once interest rates rise

Finance64 islamic financeA look at Guernsey and Jersey’s Sharia-compliant offerings

70 blacklistsThe islands are put on blacklists too often, but does it really matter?

75 skills shortagesHow a finance staff shortage could be a problem, and what needs to be done

business 80 angels and VCsWhen putting their money where their mouths are, do angels and VCs differ?

84 networkingWords of wisdom for serial networkers

technology89 wearablesSnazzy, yes, but is wearable tech really worth the hype?

94 disruptive techHow do you adapt to the unpredictable?

98 digital detoxTime to get away from digital overload – we show you how

103 bl guernseyThe latest financial and business news and views from the bailiwick

107 bl JerseyHow changes to Jersey law might affect charities, and other island news

The AgendaFrom Bentley SUVs and Burberry bags to Cartier smellies, we’ve got it all!

56 8922

113

Legal services in British Virgin IslandsCayman IslandsGuernseyHong KongJerseyLuxembourgShanghaiTokyo

ogier.com

To the p int.

We get straight to the point, managing complexity to get to the essentials. It is a collaborative approach. We listen actively, asking the right questions, focused on what really matters. We deliver targeted, pragmatic advice with absolute clarity.


in the NEWS

BL EVENTS HAS released its events diary for 2016. The company behind some of the most successful and high-profile financial services conferences to be held in the Channel Islands will be running the following four events next year:● NED Forum – Wednesday 16 March – Pomme d’Or, Jersey● Jersey Trusts Conference – Wednesday 25 May – Pomme d’Or, Jersey● BL Funds Forum Jersey – Wednesday 28 September – Radisson Blu, Jersey● Guernsey Trusts Conference – Wednesday 16 November – Duke of

Richmond, Guernsey

BL Events has also scheduled its BL Funds Forum Guernsey for a date to be confirmed in March 2017.

Commenting on the conferences for 2016, Carl Methven, CEO of BL Events, said: “This year has been our most successful events year to date. We’ve had our best-ever delegate numbers, secured speakers of the highest calibre, and feedback has been better than we could have hoped for. We’re very excited to announce these dates for 2016 as we build on the reputation that we’ve worked hard to establish in recent years.”

To register interest in any of the 2016 events, and to be notified when delegate places become available, please email [email protected] stating which event you’re interested in.

Sponsorship and exhibitor packages are also available for all events – you can contact Carl Methven on 01534 615886, 07797 796377 or via email at [email protected] for more information. n

BL Events announces 2016 conference diary

Firms gain Luxembourg licences

ELIAN FUND SERVICES has been authorised to provide professional depositary services in Luxembourg. Authorisation, by the Commission de Surveillance du Secteur Financier (CSSF), enables the firm to be appointed a depositary by managers of Alternative Investment Funds.

Under the the Alternative Investment Fund Management Directive (AIFMD), fund managers must appoint a depositary to market their funds in certain jurisdictions. Elian launched its UK depositary service in July 2014.

Crestbridge in Luxembourg has been approved through the CSSF to act as a manager under the European Venture Capital Funds (EuVECA) regulation. Already an authorised provider of UCITS and AIFM services in Luxembourg, the licence means Crestbridge can provide management services to venture capital funds through its Management Company (ManCo) framework.

EuVECA, applicable in EU states from 22 July 2013, the same day as AIFMD, provides for a common EU framework for fund managers of certain venture capital funds that place a percentage of investments into supporting young and innovative companies in Europe below the threshold of €500 million. n

Sign up for email updates at www.blglobal.co.ukFollow us @blglobalnews

10 november/december 2015 www.blglobal.co.uk

Cayman Islands top offshore centre in GFCI

THE LATEST GLOBAL FINANCIAL Centres Index (GFCI 18) sees the Cayman Islands retake their position as the leading offshore centre from the British Virgin Islands. The Caymans feature at number 34 in GFCI 18, which was released in September, rising from number 39 in the March edition, with the BVIs slipping to number 43 (from 34).

Jersey and Guernsey both improve their ratings by one place, with Jersey at 53 and Guernsey at 54.

The GFCI provides profiles, ratings and rankings for financial centres, drawing on two separate sources of data – instrumental factors and responses to an online survey. The GFCI was created in 2005 and first published by Z/Yen Group in March 2007. It is updated and republished each September and March. A total of 98 financial centres are researched, of which 84 appear in GFCI 18. The remaining 14 ‘associate centres’ may join the index when they receive sufficient assessments.

Reflecting the way in which the global financial landscape is changing, the GFCI has not carried an official ‘offshore’ section since GFCI 17. The Caymans and BVIs now fall under ‘Latin America and the Caribbean’, with Guernsey and Jersey under ‘Western Europe’. n

Barclays creates 65 jobs in JerseyBARCLAYS INTENDS TO add 65 new jobs to its operations in Jersey. Exact details haven’t been announced, but the new jobs are expected to be primarily customer service roles, dealing with Jersey-based customers, at a wide range of levels.

Paul Savery, Managing Director, Offshore, Barclays, said: “This is a major investment from Barclays. Jersey is an important and valuable jurisdiction for us as a bank, and one where we are confident of further growth. The investment will see us further improve the range of services delivered by locally based colleagues.”

The roles are already starting to be advertised, and there will be more in the following months. n

HARBOURVEST GLOBAL Private Equity (HVPE), a Guernsey-incorporated investment company, has moved from listing on the Specialist Fund Market (SFM) to the Main Market of the London Stock Exchange.

HVPE is managed by HarbourVest Advisers, an affiliate of Boston-based HarbourVest Partners – a private equity firm launched in 1982, which has investments of more than $30bn.

Currently giving investors exposure to more than 700 private equity funds and partnerships, HVPE chose to list on the LSE Main Market to tap into one of the world’s deepest pools of global capital and provide shareholders with long-term growth prospects.

The move now gives HVPE dual listing status as it is already listed on the Euronext exchange in Amsterdam.

JTC Group provided specialist administrative support to HVPE in facilitating the move to the LSE Main Market. n

HarbourVest lists on LSE Main Market

Ravenscroft passes £2bn Assets under administration milestoneASSETS UNDER ADMINISTRATION (AUA) at independent stockbroking and investment management company Ravenscroft have reached more than £2bn for the first time. In its interim report, published in October, the company reported that AuA had reached £2.06bn, a 42 per cent increase on its 30 June 2014 figure of £1.45bn.

A number of factors contributed to this strong performance. In March, the company completed its acquisition of Vartan, purchasing a 75 per cent stake in the Peterborough-based independent stockbroking and investment management company, which now trades as Vartan Ravenscroft. As investment manager to Bailiwick Investments and the Channel Islands Property Fund, Ravenscroft has also been involved in a number of significant transactions during the year. n



News

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CHANNEL ISLANDS LAW firm Carey Olsen has opened its Singapore office following the granting of its licence by the Attorney-General’s Chambers.

The office is led by Managing Partner Linda Lee, formerly a Partner in Allen & Overy’s Singapore and Hong Kong corporate practices. She is joined by Senior Associates Elizabeth Killeen and Alan Hughes from Carey Olsen’s BVI corporate team.

The Singapore office will initially focus on corporate and commercial transactions, including capital markets, mergers and acquisitions, banking and finance, and investment funds.

Meanwhile, independent fund and corporate services provider Crestbridge plans to expand to the Cayman Islands. Subject to regulatory approval from the Cayman Islands Monetary Authority, it will open its office by the end of the year to offer governance services to the international funds community.

The new operation will be led by three directors who have extensive experience in the Cayman Islands working with fund and corporate structures. n

New offices for Carey Olsen and Crestbridge

done deals

Ogier Jersey has acted for VTB in arranging a US$5.49bn acquisition facility provided to Sacturino for its proposed takeover offer for Polyus Gold International. Polyus Gold, a Jersey company listed on the Main Market of the London Stock Exchange, is the largest gold producer in Russia. The takeover offer values the entire issued and to-be-issued share capital of Polyus Gold at about US$9bn (£5.95bn).

Ogier in Jersey has also advised cancer treatment company Novocure on its IPO on NASDAQ. The IPO raised US$165 million for Novocure through the sale of 7,500,000 shares at a price of $22 per share. Incorporated in Jersey, Novocure is a commercial-stage oncology company developing a therapy called Tumor Treating Fields, which destroys cancer cells in tumours using alternating electric fields.

Ogier and Appleby have acted for Barclays Bank and Tritax Big Box REIT, respectively, in connection with the £500 million group restructuring and subsequent refinancing of existing debt of the latter’s UK Big Box real estate portfolio. Tritax consolidated about £250 million of existing debt into one facility agreement, before undergoing a restructuring that introduced two further Jersey holding companies into the group. Tritax Big Box operates in UK Big Box real estate investment, and is the first listed entity to give pure exposure to the Big Box asset class in the UK.

Appleby acted as Jersey counsel to the co-ordinating committee of senior lenders (comprising Barclays Bank, Commerzbank and EQT Credit) and SVPGlobal in relation to a £353 million senior debt for equity swap in relation to UK waste management firm Cory Environmental. The latter owns nine landfill sites across the UK and has contracts for recycling, street cleaning and waste collection across the country.

Walkers Jersey office has provided legal advice to a subsidiary of Harbert European Real Estate Fund IV LP – which is advised by Harbert European Fund Advisors – on the acquisition and financing of Eastgate Shopping Centre in Inverness, Scotland.

Carey Olsen’s investment funds practice in Guernsey has advised in respect of the launch of GLI Alternative Finance (GLAF), which closed on 23 September having raised £52.66 million. GLAF is a closed-ended fund trading on the London Stock Exchange’s Specialist Fund Market, with a loan portfolio diversified by geography, size of loan, type of lending and duration. The fund’s largest exposures come from four different segments of the alternative finance space: peer-to-peer business lending, trade finance, commercial property finance and balance sheet lending.

Offshore law firm Mourant Ozannes has acted for China Cinda Finance (2014) II in its groundbreaking listing on the Channel Islands Securities Exchange (CISE). It’s the first time the CISE has listed an issuer with an ultimate parent company domiciled in China. The listing comprises three series of notes with an aggregate principal amount of US$500 million, issued by China Cinda Finance (2014) II. The notes were sold to investors including life insurance companies, securities firms and asset managers. n


News

‘THE KINGS OF

FUNDPRACTICE’

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEYCAPE TOWN LONDON SINGAPORE

OFFSHORE LAW SPECIALISTS CAREYOLSEN.COM

CHAMBERS AND PARTNERS

Our Channel Islands funds team comprises over 50 lawyers. Our credentials speak for themselves:

· We are legal adviser to over 1,200 funds across the Channel Islands,morethananyotheroffshorelawfirm(MontereyInsight)

· We advise more LSE listed companies and funds than any other offshorelawfirm(CorporateAdvisersRankings)

39482_FP_King_Of_Funds_Ad_276x203.indd 1 27/10/2015 09:48

Mergers & AcquisitionsPraxisIFM Group has expanded its pensions division, Trireme Pension Services, with the acquisition of Guernsey business Confiance Pension Services. The acquisition means Trireme will now have a fully staffed office in Guernsey, as well as its existing base in Malta. Confiance Pension Services will operate as Trireme Pension Services (Guernsey). PraxisIFM is one of the largest independent and owner-managed financial services groups headquartered in the Channel Islands, with assets under administration in excess of $30bn and revenues of more than £23 million. The group employs 200 staff across 10 jurisdictions.

JTC Group, a provider of institutional and private client services, has expanded its operations in the Cayman Islands after acquiring GAM’s fund administration business. Under the deal, which is subject to regulatory approvals, all 14 GAM staff in Cayman will transfer to JTC. Completion of the transaction is expected late this year.

JTC has also increased its presence and offering in Luxembourg through the acquisition of Signes, a Luxembourg-based ‘Expert Comptable’ business that provides accounting, administration and tax compliance services to institutional investors. The firm has been renamed JTC Signes. It operates as a sister company to JTC’s Luxembourg operation, which was set up in 2009, is regulated by the CSSF and specialises in fund administration, corporate and real estate services.

Channel Islands IT services company Logicalis has acquired networking and collaboration specialists, Lekscom. Lekscom’s expertise lies in the design, delivery and management of communications infrastructure for international companies, primarily in

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the legal and finance sector. Logicalis’ acquisition of Lekscom supports the firm’s growth in managed services and provides strength and depth for the communications function in the group.

Boal & Co has acquired Zurich Insurance Group’s Jersey-based Trust business, Zurich Trust. The deal has been approved by the Jersey Financial Services Commission. The purchase of Zurich Trust marks the expansion of Boal & Co’s pension trustee services into Jersey following a recent expansion of its operations in Gibraltar. The Trust company will be renamed Boal & Co Pensions (Jersey).

Bedell Trust has expanded its international presence through the acquisition of a majority stake in Singapore Trust Company Pte (STC), an established fiduciary and corporate services business in Singapore. STC, which was incorporated in 1996, was the first trust company in Singapore to be licensed under the Trust Companies Act in 2006. Michael Richardson, Executive Chairman of Bedell Trust, will (subject to Monetary Authority of Singapore consent) be appointed as the new Chairman of STC, while Nick Cawley, CEO of Bedell Trust, will join the board.

Elian has agreed terms to buy SFM Europe, a provider of corporate services with more than €1trn of assets under administration. The purchase of SFM Europe will increase Elian’s head count by 115 to 640 employees across 16 jurisdictions, significantly expanding the company’s European footprint and enhancing its corporate services and structured finance offering. On completion of the deal, which is subject to regulatory approvals, SFM Europe will operate as a separate division of Elian. n

VinaCapital fund heads to GuernseyThe VinaCapital Vietnam Opportunity Fund is to re-domicile from the Cayman Islands to Guernsey. It will also switch from listing on AIM to the Main Market of the London Stock Exchange.

The closed-ended investment company focuses its investment strategy in Vietnam’s key growth sectors. At the end of August, net assets stood at US$681 million.

Directors said the fund’s place of domicile and its quotation on AIM were proving to be barriers to new investors. Among their reasons for choosing Guernsey were its infrastructure for closed-ended funds listed on the LSE and its robust regulatory and compliance regime.

A move to the LSE Main Market would raise the fund’s profile, while benefiting its trading liquidity and providing access to more institutional investors. Shareholders would also gain from the more rigorous regulatory and reporting requirements imposed on Main Market companies. n

ABN AMRO to close Jersey operationABN AMRO BANK has announced that it will be ‘integrating’ its private banking activities in Jersey and Guernsey, subject to regulatory approval. In effect, the Dutch bank will close its Jersey function, moving all operations to Guernsey.

Brigitte Seegers, Senior Press Officer at ABN AMRO in Amsterdam, told BL: “After the consolidation, there will be no presence of ABN AMRO on the ground in Jersey.” The integration is expected to complete in 2016.

ABN AMRO currently employs 63 staff in Jersey and 92 in Guernsey. Seegers told BL: “We will engage now with employees about future employment within the new ABN AMRO Channel Islands.”

ABN AMRO’s Jersey clients have been given the option to continue their banking services with the firm in Guernsey. n


‘THE KINGS OF

FUNDPRACTICE’

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEYCAPE TOWN LONDON SINGAPORE

OFFSHORE LAW SPECIALISTS CAREYOLSEN.COM

CHAMBERS AND PARTNERS

Our Channel Islands funds team comprises over 50 lawyers. Our credentials speak for themselves:

· We are legal adviser to over 1,200 funds across the Channel Islands,morethananyotheroffshorelawfirm(MontereyInsight)

· We advise more LSE listed companies and funds than any other offshorelawfirm(CorporateAdvisersRankings)

39482_FP_King_Of_Funds_Ad_276x203.indd 1 27/10/2015 09:48


Appointments

Following the retirement of Mark Thompson as Chairman for KPMG

in the Channel Islands (CI), Jason Laity (pictured) in Jersey takes

over as CI Chairman, with Neale Jehan in Guernsey becoming Managing Director.

Jason is well known as a tax adviser, most recently as IoD Chairman and as one of

the leaders of the firm’s digital initiatives in Jersey. Neale, who will also continue to head the CI Audit practice, has been noted

for his work on threats facing the fund sector, particularly AIFMD, where he was

integral to the Guernsey response.

Peter Shirreffs has joined the Qi board as Non-Executive Chairman. As former Regional Director of the Royal Bank of Scotland International and

Natwest International, he has considerable corporate and retail banking

experience and is also a Non-Executive Chairman and a Director of several local

and international companies. He is Past President of the Chartered Institute

of Bankers and is registered as a Principle Person with the Jersey Financial Services Commission. He joins Kiri Cavill and Mike

Scragg on the Board for Qi Group.

Guernsey Finance has named Zoë Cousens as its first Middle East

representative, based in Dubai. In her new role, she will promote Guernsey financial

services in the region on a part-time basis. Alongside this, she will run Castellet

Consulting DWC – a financial consultancy she has established in one of Dubai’s

economic freezones to promote the range of Guernsey-based financial services

available to Middle Eastern clients. Zoë has spent more than 30 years working in

the financial services industry in Guernsey, London and Hong Kong.

Ogier has appointed Bryon Rees as a Partner in its funds and corporate practice

in Guernsey. Bryon joined Ogier in 2005 and has a broad practice, focusing on

investment funds, corporate, regulatory and finance-related work. A Guernsey advocate, South African attorney and English solicitor, he has expertise in

closed-ended private equity funds and the related corporate, banking and finance

needs of such structures. Bryon’s appointment, which took effect on

1 October, brings Ogier’s total partnership to 51, with seven in Guernsey.

Mourant Ozannes has appointed Caroline Chan as a Partner in its Guernsey corporate practice. Caroline qualified as an English solicitor in 1991 with Allen &

Overy, and as a Hong Kong solicitor in 1994 in Allen & Overy’s office there. Returning to Guernsey in

1998, she spent nine years at Mourant Ozannes, qualifying as an advocate in 2003 before joining Ogier in

2007, where she became Partner. As a member of the technical committee for the Guernsey Investment Funds Association, Caroline helped implement the Alternative

Investment Fund Managers Directive.


News

KPMG in the Channel Islands has apponted Paul Beale and Sinéad Leddy

(pictured) as Senior Tax Managers in Guernsey. Sinéad was Technical Manager at Guernsey Finance, where she assessed

the impact of global developments on Guernsey’s financial services. Her new role

focuses on fund structuring, investor reporting and international corporate tax.

Paul, a Chartered Accountant and Tax Adviser with experience in expatriate and

private client tax, will manage personal and high-net-worth clients, leading the

department’s private client business.

C5 Alliance has promoted Aonghus Fraser to Group Chief Technology Officer. He will develop opportunities in the firm’s

Professional Services Division in Jersey and Guernsey. His responsibilities will

involve working more closely with clients, helping them to understand how the firm can help them reach their business goals.

Aonghus joined C5 Alliance in 2011 as Head of Process and Platforms and was promoted to Director in January 2014. Before this, he was Chief Technology

Officer at UniTech in Edinburgh, leading on UK SharePoint deployments.

Jonathan Peake has become Chief Financial Officer at Standard

Bank, with responsibility for the Finance and Treasury teams across the group’s offshore business in Jersey, Isle of Man

and Mauritius. He replaces Will Thorp and has been promoted from the position of

Head of Risk, which he has held since joining Standard Bank in July 2013.

Jonathan joined the bank from Deutsche Bank International, where he was Head of Risk Management.

Before that he was with KPMG’s London forensic team.

Nancy Chien has been appointed Partner at Bedell Cristin in Jersey. A

member of the international private client team, she joined Bedell in 2012 from

Ashurst in London, where she was Senior Associate. She worked in trust law in

Jersey and New Zealand and has qualified as an advocate in Jersey, a solicitor in

England and Wales and a barrister in New Zealand. Most recently a solicitor in the British Virgin Islands, Nancy has helped the firm push into Asian markets. She is

also a founding committee member of the Jersey Pensions Association.

Digital Jersey has appointed Tony Moretta as its CEO. Tony brings more than 20 years of digital experience to the

role, including in mobile, online, broadcast, payments, advertising and data analytics. He has recently delivered

several projects in the digital space for the UK Government and major private sector companies. He was also one of the founders of Weve, a joint venture between EE, O2 and Vodafone in mobile marketing, payments and data analytics. Tony has also served as Chief Executive of

Digital Radio UK, Board Director of digital TV platform Freeview, and General Manager of National Grid Wireless.

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Funds

While Guernsey and Jersey welcomed ESMA’s news that they had been recommended for AIFMD ‘passports’, it’s still not quite clear when the new regime will begin

Words: Harry McRandle

for actionready


Funds

▼

for action

THE FUTURE OF the vital Channel Islands’ funds industries seems secure after the positive outcome of an assessment that judged Jersey and Guernsey to have more EU-compliant regulatory regimes than places such as the US and Hong Kong.

Local regulators could be forgiven if they had a smug smile on their faces when they found out the final results of work conducted by the regulatory arm of the EU. The European Securities Market Authority (ESMA) published its results in July of assessments of six non-EU states that operate substantial funds sectors.

During their work, ESMA had to decide if the countries met a required standard that would allow them to qualify for a new EU passporting scheme due to replace the current market access model.

Having completed the work, ESMA surprised many by announcing that the only two jurisdictions that would meet the standards right now would be Jersey and Guernsey. Among the other territories assessed were the US, Hong Kong and Singapore. ESMA also said Switzerland would only have to make some minor changes to its current arrangements to allow funds based there access to EU markets.

The theory is that at some point between now and the end of the second quarter of next year the main European political bodies should grant Jersey and Guernsey (and Switzerland) their passports.

PLAYING THE LONG GAMEBut a warning shot has been fired by a Jersey fund manager who believes it might not be so straightforward.

Mark Hodgson, Managing Director of Carne Group Channel Islands, which acts as an independent alternative investment fund manager (AIFM) to offshore funds, said that there were concerns that the EU authorities may seek to delay the extension of the passport until a sufficient number of third countries had achieved a positive assessment from ESMA.

“I’ve spoken to lawyers who have said that it could be as late as 2018. People are apparently raising concerns and asking ‘What about the other major fund centres, including the US?’,” Hodgson says.

Those fears are echoed by Fiona Le Poidevin, Chief Executive of the Channel Islands Securities Exchange. She notes: “ESMA has made a recommendation to the European Commission but the world isn’t always straightforward when it comes to politics.”

Concerns aside for a moment, the ESMA findings are described as “very important” by the Acting Director of Policy and Strategy at the Jersey Financial Services Commission, Mike Jones. “For a European body to give a glowing endorsement of two offshore centres over the likes of the US is a

big shift,” he says. “I haven’t seen anything like that in my 15 years in regulation.”

It’s a sentiment echoed by Paul Duquemin, JTC Group’s Managing Director in Guernsey, who says: “The recommendation by ESMA is a big endorsement of Jersey and Guernsey,” and shows that the islands’ are “co-operative and transparent”.

He says the ESMA conclusions weren’t a surprise given the amount of collaborative work that went into meeting the required international standards.

When news of the proposed introduction by the EU of the Alternative Investment Fund Managers Directive (AIFMD) first broke in 2012, it wasn’t well received in offshore circles. There was fear that the EU would be unwilling to accept that offshore jurisdictions could be sufficiently well regulated to allow access to European markets.

That was worrying as, in Jersey alone, it’s estimated that more than 4,000 jobs are dependent on the funds sector. And the numbers are considerable – the value of the 1,298 funds administered in Jersey at the end of June 2015 was £218.7bn, the third highest level since 2009 and nine per cent higher than in June 2014.

Jones explains that Jersey decided to respond to AIFMD by boldly devising a new regime where if a manager was targeting European investors, they followed European rules, while managers only targeting the rest of the world would be able to carry on as before.

When ESMA came calling, Jersey and Guernsey both underwent thorough and detailed assessments that looked at more than the respective AIFMD regimes. ESMA examined the supervisory, regulatory and enforcement regimes. As Jones says: “We took them through hundreds of pages of documents.”

ESMA itself has limited resources and needed help – the Channel Islands were examined by specialists from EU member states. And that could be a major help going forward as, in effect, EU capitals should be fighting the islands’ corner when it comes to getting the passports confirmed.

The positive outcome has helped maintain the islands’ attraction as a centre for major fund managers. “We’ve already attracted many UK managers, some of whom have moved from Switzerland,” says Jones. “And US managers also know that if they need a European presence, then Jersey and Guernsey are the places to be.”

TALE OF TWO REGIMESAlthough all major industry players welcomed the news that passports are likely to be granted, some have concerns that their worth may be limited. As far as Oliver Morris, Advisory Director at KPMG in the Channel Islands, is concerned, the

The Channel Islands have done very well to be first out of the blocks, especially when others aren’t up to speed. We have the potential to have first-mover advantage


Funds

key issue will be how

other major jurisdictions such

as the US respond to being required to meet

standards set by Europe.“The Channel Islands have

done very well to be first out of the blocks, especially when others aren’t

up to speed,” he says. “We have the potential to have first-mover advantage.” But he also notes that the passport would have limited use if major international jurisdictions decided not to participate.

Morris believes that the likes of the US and Hong Kong have their own regulatory regimes and common ground will need to be found if they are to participate. “It will be a question of whether there is any willingness to transport regulation from Europe into their regimes,” he explains.

Channel Islands-based managers are currently in the enviable position of being able to choose to operate inside or outside of Europe. “If the passporting regime isn’t rolled out particularly widely, do we really need it?” Morris asks.

Currently Channel Island-based funds are marketed into Europe through what is known as the national private placement regime (NPPR). This is a scheme where individual countries decide if funds can be marketed in their territory. Many in the industry believe that NPPRs have worked well and that there is a need to be careful so as not to throw the baby out with the bathwater in moving to the new passport arrangements.

Le Poidevin says that compliance with AIFMD was a factor in new funds being listed on the Channel Islands exchange. “We are seeing new funds, especially property funds and investment companies,” she says, pointing out that managers view the islands as a one-stop shop that allows access to all markets and provides high standards of administration and custody services.

She does flag up, however, that it’s important the islands continue to be in a position to promote the non-EU route. “Some fund managers are avoiding Europe. The last time I was in the US I spoke to managers who saw it as ‘Fortress Europe’ and had categorised the regime as in the ‘too hard’ box.”

One thing is clear: the Channel Islands can currently market through the NPPR and when that ends and the passport comes into effect, they can market through that. This certainty will be very attractive to fund managers around the globe.

It will also be settling for the industry and for staff, says Paul Duquemin. “We’ve come a long way from when AIFMD first raised what had the potential to be a very ugly head to get to this point where we’re getting endorsement from ESMA.”

Now we have to wait and see just how it all plays out. n

HARRY MCRANDLE is a freelance finance and business writer

We’ve come a long way from when AIFMD first raised what had the potential to be a very ugly head, to getting endorsement from ESMA

THE PROFESSIONAL VIEW

“ESMA’s decision to approve the extension of the AIFMD passport to both Guernsey and Jersey is extremely good news for the Channel Islands’ fund industry. The fact that the islands are the only two jurisdictions where absolutely no obstacles exist to the extension of the AIFMD passport puts us in a very strong position as the ESMA recommendation is passed to the European Commission, Parliament and Council for their consideration. The regulators in Guernsey and Jersey should be commended for their hard work and the development of excellent relationships ensuring that the Channel Islands’ funds industry is well understood in Europe.”Fiona Le Poidevin, Chief Executive Officer, Channel Islands Securities Exchange

“The selection of Jersey and Guernsey in the list of jurisdictions for priority assessment is testament to their international importance as fund domiciles and of their standing as internationally cooperative and transparent jurisdictions. They offer fund managers and promoters the greatest flexibility and ‘future-proofing’, with three options for any fund: to stay outside AIFMD entirely for funds that aren’t marketed in the EU; to access European markets through national private placement regimes; or, when ESMA’s recommendations are implemented, to have full EU passport access.”Dan O’Connor, Partner, Carey Olsen


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4. THE REGULATORY RISKS OF TECHNOLOGY AND OPERATIONSWhile we focus here on regulatory risks, the dependencies that exist between regulatory, IT and operational aspects are many. A careful assessment of dependencies must be undertaken to lay the foundations for an effective compliance infrastructure. Key areas for consideration: ● Have common operational and IT

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Interview

GIVE US YOUR VIEW on how the islands’ funds industries are performing.I think that both islands are actually doing very well. The figures for funds look healthy and stable, which is positive. The main issue that they both face are the changes in regulation and tax legislation that are ongoing – and we’ve been working very hard within the islands to make sure we fit in the best possible way into that regulation. We need to be sure the islands map their way sensibly though the new challenges that are coming through.

I suspect you mean AIFMD and BEPS?Exactly – and both are still works in progress. Under AIFMD [the Alternative Investment Fund Managers Directive], funds have traditionally used national private placement regimes [NPPRs] in jurisdictions to market their wares to potential investors in the EU. AIFMD is setting a timescale for that to be ‘turned off’ and replaced by third-country passports.

Thankfully, the Channel Islands are the only two jurisdictions recommended by ESMA for a passport. Both islands worked hard together to make sure that happened. That includes having a recognised regulatory regime that met AIFMD rules, having appropriate AML laws and being OECD-compliant for tax transparency.

As for BEPS [Base Erosion and Profit Shifting] and tax transparency, the Channel Islands have placed themselves as tax transparent jurisdictions with tax neutral structures, so they’re not tax havens – their information is widely shared.

From that perspective, we’ve made sure we’ve implemented all the OECD rules

Words: Nick KirbyPictures: Chris George

and regulations that have come along. And we’ve also got confirmation from the OECD that the Channel Islands are part of the UK’s full membership of the OECD. This is important, because when you look at BEPS, there are 44 countries that are working as a unit to make sure that everything is tax transparent – we want to make sure that we are part of this regime.

Is it difficult that the timelines for regulation such as this are always shifting? And that there often seems to be a lack of clarity around the requirements?The reality is that regulation such as this is going to change over time, but that’s in part due to the consultation that is involved. We can’t do anything about BEPS or AIFMD – they’re coming – but we can help shape how they’re put into practice.

We set out a strategy showing where we want to get to, what input we want to give and how we want to shape the regulation. We’ve worked very closely with the States of both islands, the UK government and the Channel Islands Brussels Office.

When you say the timelines are constantly changing, we’ve been lobbying very hard with the UK’s help to try and shape it so that it works for us, because the funds industry in the Channel Islands has a major stakeholder in the form of the City of London – and in order for those businesses to ply their trade, they need a tax-neutral jurisdiction that’s well-regulated and respected and has a stable currency.

Is that why the Channel Islands Working Group of the BVCA was formed – to help create this joined-up approach?It was part of the reason. The BVCA were very keen to get input from the Channel Islands, because a lot of their members have funds that are domiciled here. So it was very important for the BVCA to actually represent the whole of the industry, particularly because this was a European position. It gives us input into the wider group, so we can all make sure that we’re talking and coordinating. ▼

As Managing Director at Ipes in Guernsey and Chairman of the BVCA’s Channel Islands Working Group, Andrew Whittaker has seen monumental change in the funds industry. And while there’s still plenty of work to be done, he’s confident the Islands can reap rewards from the upheaval


Interview

The

interviewAndrew Whittaker


Interview

You mentioned that Guernsey and Jersey are currently the only two jurisdictions recommended for third-party passporting. How significant is that?The key point is, when the third-country passport is introduced – whenever that may be – the NPPR is turned off. If you want to do business with European fund managers or people who have European investors, you have to be able to market into Europe. When the third-country passport is brought in, the NPPR will be removed, so if you aren’t on the list of the countries that are able to make use of the passport the moment it’s turned on, you won’t have a product, because you won’t be able to market any more.

It’s all about certainty. We know that people who come and set up their fund structures here need certainty – that they will be able to market to European investors in the future. And by being the first two on the list means we have that certainty, so the people that are using the Channel Islands can still market to Europe.

If you’re not part of that first wave, you’re going to have a gap where you can’t market to European investors. And if your strategy is to include those investors, then you’re in trouble.

Some in the industry have suggested that there might be a delay to passporting being enacted while a few more jurisdictions are recommended.I understand that point, but in a way it’s not the most important thing. If ESMA does delay passporting, then the NPPRs will stay in place for the time being, so we will be able to market as we already do. In a way, it’s the best of both worlds.

AIFMD hasn’t been implemented consistently across the EU, so it’s a bit difficult to use, but it will become more user-friendly moving forward. And having certainty is a key part of that.

How important were the regulators in all of this? Both Guernsey and Jersey’s Financial Services Commissions worked really closely with ESMA to make sure they fully understood we were compliant. In truth, I think the regulators have been excellent and have really listened to industry.

I’ve been less involved in the Jersey side – Ben Robins [Chair of the Jersey Funds Association] has done quite a lot of talking to the regulator there – but the feedback I’ve had from him has been very positive.

In Guernsey, we sat down and explained what we felt as an industry needed to be achieved, what the products that came out of it would be, and they took that on board and went and worked hard to get it

delivered. So I’ve been very impressed, to be honest. I doubt that without the hard work of the regulators on both islands we would be where we are now.

One question we’ve asked many a time in previous interviews is whether the funds industry would benefit from a joint regulator or if it’s better to work together when required?The latter is a better way of working. The islands’ economies, while similar, do also have differences. And they have different political masters who are pulling in different directions.

So where there’s common ground, we need to work together because we’re small jurisdictions and we need to be heard. On other issues, it’s important that we have our own agendas because there are differences in opinion.

Looking at the islands individually, what do you think are the standout issues at the moment with regard to funds?The islands have slightly different core markets, but they complement each other – you can do certain types of business in both islands, but one of the islands will have a lead in one particular sector.

So, for instance, Guernsey has done a lot better on listed funds and Jersey has

done better in hedge funds. Having said that, so many companies have a presence in both islands. So if someone approaches them, they can direct them to the jurisdiction that’s best placed to deliver what they need.

More specifically, real estate is a particular standout, and that’s one of Jersey’s really strong areas. The JPUT [Jersey Property Unit Trust] was a fantastic product that brought lots of real estate expertise onto the islands, and lots of people look to do that in Jersey.

Are there any new products or services in the pipeline, or ones you think the islands should be looking at to protect the future?We’ve spent a lot of time talking about what the future holds and how big the markets are – insurance-linked securities has been a nice addition, but it’s only a small market. One of the reasons we were so active on AIFMD and BEPS is because we can see a good product coming out of that. We’re trying to be a bit circumspect about how we approach it because we don’t want to advertise it to the world and lose the opportunity.

In other areas, we saw depositaries arising out of AIFMD, and when the third-country passport is activated, there will be more business there. I think there


Interview

FACT FILE

Name: Andrew Whittaker Age: 42Position: Managing Director, Ipes, GuernseyMarried to: SarahChildren: Two boys and a girlHobbies: Rugby, boating, golf and skiing Interesting fact: I personally know Alexey Leonov, the first person to walk in space

There is a problem with attracting people in lower levels of management, because there’s a tipping point as to when it’s economically attractive living in the Channel Islands

will be a demand for a lot more finance industry jobs in the Channel Islands – and we’d be well placed to fulfil those from the skillsets that we have in the islands.

So just where do you see the biggest opportunities coming in the next few years?Sorry to be covering the same ground, but AIFMD and the third-country passport, and tax transparency as part of BEPS are the biggest opportunities we’ve got coming. If we map our way through them successfully, we should have sustainable jobs in the future because we will be well placed to provide services to cover both of those product ranges.

Could this be a poacher’s opportunity, if other jurisdictions don’t get it right? Absolutely. We can see the jurisdictions that aren’t getting it right at the moment, and that will open doors for us. I think there’s an opportunity to attract US managers, for instance, who wouldn’t necessarily want to go to a Continental destination but who like the fact that we’re English speaking with sterling currency. There are definitely some larger attractions – if we get it right, it could make our offering even stronger.

Let’s imagine that everything goes exceptionally well and there’s a flood of business – both organically and through the opportunities we’ve discussed. Is recruiting skilled talent to fill the roles going to be a problem?Skills and recruitment are always difficult areas. We want to attract high-net-worth jobs to the islands, because theoretically that means they will pay taxes that support the essential workers and services with decent wages – so everyone benefits. Of course, firms have to be willing to pay those higher wages in the first place.

The reality is we do have something of a ‘closed pool’ of talent. That’s good in that it keeps the jurisdiction ‘clean’ and the levels of expertise are exceptional.

There is a problem, however, with attracting people in lower levels of management, because there’s a tipping point as to when it’s economically attractive living in the Channel Islands. For some, it’s better to be in the UK, where your cost of living is cheaper – so attracting people in that middle bracket is virtually impossible, unless we were to change the tax structure of the islands.

We’re also restricted by the fact that we can only sustain a number of people on the islands, so that needs to be managed quite carefully. Certainly, if you want to get people coming to the islands, then the high-net-worth ones are the ones you want to attract, because they pay the

highest amount of tax and bring with them the most of the benefits. I also suspect that it means the States have to be far more flexible than they have been – and I think they realise that. We have had lots of conversations around population control and transport links. The States do realise how intrinsically linked they are to how business succeeds or fails.

If we were to have this conversation in 12 months’ time, what would you expect to be different?I would hope that we would have moved on and that we would have a date for the implementation of the third-country passport, that we were successfully winning business from jurisdictions who hadn’t made headway with that, and we were getting more traction out of the fact that we were ahead on the OECD tax transparency pathway.

When you look at the way the world is shaping up, you have the onshore jurisdictions that are tax transparent but not tax neutral, then the offshore jurisdictions that are tax havens – and then somewhere in the middle you have well-regulated, tax-neutral, transparent jurisdictions.

The Channel Islands sit firmly in the latter category and they look set to reap the rewards of doing so. n

NICK KIRBY is Editor-in-Chief of BL

where there’s common ground, we need to work together because we’re small jurisdictions and we need to be heard. on other issues it’s important we have our own agendas

Funds

the greatThere has been speculation that fund managers will leave the City in their droves if the UK votes to exit the EU. But how real is the threat and what is the likely fallout?

THE UK IS due to hold an in/out referendum on its membership of the EU by 2017. According to a number of recent polls of UK businesses, if a vote were held tomorrow, a majority of owners would choose to stay in Europe.

However, the lead over those who would choose to quit the EU – in a so-called Brexit – is slim and further complicated by many of those in favour of staying declaring that their opinion is largely dependent on what concessions Prime Minister David Cameron can wrestle from the EU before the referendum takes place.

Words: David Craik

Businesses say that they want to see changes over EU red tape – such as employee holiday legislation. It’s a confused, uncertain and febrile situation that’s only going to become more intense over the next year and a half.

In this climate, the UK’s leading fund managers are already believed to be preparing for the possibility of Britain leaving the EU. According to recent media reports, several large asset managers based in London are looking to quit their UK bases and set up headquarters in Europe. It’s reported that these managers have

already set up committees to prepare for a move. Ireland and Luxembourg are among the favoured destinations, as a result of the European Alternative Investment Fund Managers Directive (AIFMD), which generally requires companies to be based in an EU state if they wish to sell investment products to the region.

Richard Metcalfe, Director of Regulatory Affairs at the Investment Association, is reported to have said: "If Britain left the EU, fund management companies would have to convince European regulators to allow them to access the market. It's


Funds

exodus


▼

funds

likely that funds will move their operations to the likes of Dublin and Luxembourg, which could mean the loss of thousands of City jobs.”

BL magazine contacted the Investment Association, but it chose not to comment. It also contacted five UK fund giants, including Jupiter and Kames, to find out whether they had such plans in place, but again could not solicit any comments.

The only UK fund manager willing to publicly nail his colours – definitely British – to the flag is Peter Hargreaves, Founder of Hargreaves Lansdown. He says he intends to be “at the forefront” of the ‘out’ campaign. “I voted for a free trade area in 1975. That’s what we should be in. It is absolutely crazy we are in the EU,” he says.

INS AND OUTSSome of the major banks have also gone public on the possibility of them leaving the UK following a Brexit. Deutsche Bank has set up a working group to assess the impact, with Wall Street banks such as Bank of America, Citigroup and Morgan Stanley all eyeing up Ireland for some of their European businesses.

Barry McClay, Chief Operating Officer at fund administrator Ipes in Guernsey, isn’t aware of, and hasn’t heard of, any plans regarding UK fund managers leaving the country following a possible Brexit.

He believes the UK will continue to be an attractive destination for both British and European fund managers no matter what decision is made regarding EU membership. “Under


Funds

the extension of the Alternative Investment Fund Managers Directive passport to non-EU jurisdictions, you would be able to stay in the UK and still market into the EU, if they applied and were accepted,” says McClay. “Already we are seeing many fund managers leave EU jurisdictions to go to the UK because there is political stability, a supportive business environment and a strong currency there.”

McClay also doubts whether European jurisdictions would make a good destination for exiting British fund managers – again because of changing tax structures, particularly the Base Erosion and Profit Shifting (BEPS) project.

In essence, the new rules, devised by the OECD and discussed heartily at G20 Finance Meetings, give governments more opportunity to stop corporate profits disappearing or being artificially shifted to low- or zero-tax environments ‘where little or no economic activity takes place’.

According to the OECD, revenue losses from BEPS are estimated to be between $100bn and $240bn a year – or between four and 10 per cent of global corporate income tax revenues.

Under the new structures, European jurisdictions will have to publish all their tax information and agreements. Therefore, the tax benefits and advantages of moving a company’s operations to certain European destinations would decrease.

EVERY CLOUD…What then of the impact on the Channel Islands of a UK exit from the EU? “I don’t see it being a negative,” says McClay. “We

have very close links with the UK from a currency point of view and could

benefit from the UK becoming the biggest offshore jurisdiction in the world. The UK could have

the AIFMD legislation to take advantage of,

be able to avoid EU legislation

and take advantage of the strength of sterling.”

One danger for the UK could

be the emergence of

a new financial centre to truly

challenge London, such as Frankfurt.

A danger for the Channel Islands is that if the UK leaves, we lose a voice in Europe. Already people look at a map and don’t understand where Guernsey is

“The EU could put up barriers of entry to the UK, put a protectionist wall up to block them out,” says McClay. “Another potential danger for the Channel Islands is that if the UK leaves, we potentially lose a voice in Europe. Already people look at a map and don’t understand where Guernsey is, or have a misunderstanding of our relationship with the UK. It could make these problems even more difficult.”

Richard Corrigan, Deputy Chief Executive of Jersey Finance, raises some of the same hopes and fears for his island. “The Channel Islands will remain hugely attractive to fund managers even if the UK leaves the EU. The European Securities and Markets Authority has advised that there are no obstacles which exist in extending the AIFMD passport to Jersey and Guernsey,” he says.

“Some of the advantages of the islands are our quality of life, the proximity to the UK financial centre and zero corporate tax rates. I don’t think an exit would affect the quality part, but there’s a risk that London’s influence might wane, which could affect us.”

Corrigan believes that the legislative and regulatory radars of fund managers will be “buzzing” at the moment. “You have Brexit, AIFMD and the changes to MiFID II that they have to assess. It’s quite a complex picture,” he says. “Our reputation as a stable jurisdiction could, of course, benefit from that uncertainty.”

Another factor to be considered is that British fund managers may be more focused on personal issues rather than industry implications when it comes to casting their vote in the referendum.

“I wouldn’t expect UK fund managers who have a vote wearing their business hat to vote for an EU exit,” says Bradley Phillips, Director, Investment Management Tax Practice at PwC. “The issue more likely to cause fund managers to quit the UK would be the recent tax changes affecting them as individuals. By that I mean the new UK tax rules for carried interest and the proposal that non-domiciles become deemed domiciles after April 2017.”

All businesses forward plan and stress-test their operations against future scenarios. That means it’s almost certain that fund managers, either from a personal or business perspective, are already sizing up the effects of continued or broken EU membership.

We don’t have long to wait to find out what those final decisions will be. n

DAVID CRAIK is a freelance financial writer

Portfolio Management Banking and Treasury

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Private equity:

The use of private equity as an alternative investment class might well be on the rise, but what may come as a surprise is the number of families who are attracted to it

Words: Chris Wheal

from families to institutions

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IN A WORLD of low interest rates, poor bond returns and unexciting equity markets, it’s no surprise that investors have turned to alternative asset classes. And the favourite for some time, for those with deeper pockets at least, has been private equity (PE). The fact that it’s also appealing to family offices, however, might seem slightly more unusual.

It’s a class that sits comfortably with family offices because the family may well have made its money through business, so the entrepreneurial spirit burns deeply. However, ask 10 people about family offices’ involvement in PE and you’ll get 10 different answers.

Christina Pamberg, Leader of Invest Europe’s Single Family Office Roundtable and Director at Alcyon Holding, says: “Family offices come in all shapes and sizes and have lots of different objectives. Generalisations are difficult to make. Some very large family offices, such as the Brenninkmeijer family, have hundreds of family member beneficiaries. They have different objectives to a family office with just two or three beneficiaries.”

Measuring the extent of family offices’ involvement in PE is difficult too. Private equity online marketplace Palico suggests family offices account for eight per cent of the world’s $4trn in private equity assets under management – double that of five years ago. And according to Palico, the proportion of family offices wealth allocated to PE has also grown by more than half – from 19 per cent to 29 per cent.

Invest Europe (formerly the European Private Equity and Venture Capital Association) says family offices contributed 4.8 per cent of PE funds in 2014, up from 3.6 per cent the previous year, although that figure has been as high as 9.2 per cent in 2010.

Pamberg, however, warns that growth could be exaggerated. “It may be a labelling thing. Family offices have been investing in businesses for years, but are only now starting to call it PE. I’m sure it’s growing, but I think some of it is re-labelling.”

Research from PwC suggests that investing in PE will grow enormously. Alternative asset management 2020: Fast forward to centre stage suggests the $3.7trn in PE in 2013 could grow to $7.4trn by 2020 – predominantly due to an increase in wealthy individuals, mainly in the Far East. And this may mean even more family money heading that way.

As Mike Byrne, Partner in PwC in Jersey, says: “There are the Zuckerbergs and the guys from Google, but most US millionaires and billionaires are second and third generation, whereas in the Far East it’s new money, and new money behaves differently to old money.”

FAMILY BUSINESSThere’s good reason to suspect that a decent chunk of this new wealth will flow to PE. Pamberg says many families have an industrial or entrepreneurial background. A lot have been feeding and developing other businesses, either to support their main business or to diversify away from it. “It’s a DNA within these family offices,” she says.

Another attraction is that PE isn’t necessarily affected by political decisions or by interest rates – it’s not directly correlated. When equities go down, PE can still go up.

Richard Joynt, Director at Bedell’s Family Office in Jersey, reckons PE is the only way to create ‘super-wealth’ in a short time. “Property development or a portfolio of stocks and shares are


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normally going to make you maybe three per cent, on risk-averse stocks, to 15 per cent on a particularly racy property project. If, however, you’re looking to have five times your money over a four-year period, investing in private companies is still the most sure-fire way to get that kind of money.”

As the world changes, families are changing too, with many taking a new, more sophisticated approach to their investments.

“Where the old man might’ve made money banging widgets together, the next generation have worked in investment banking or become lawyers or accountants or worked in PE themselves,” says Tom Carey, Partner at Carey Olsen in Guernsey. “When they come in to run the family office, they’re already familiar with the asset class. They’re much more institutional in their outlook, more process-driven.

“The further you go up the family office chain, the more lawyers are employed and the more processes are employed to do due diligence.”

KEY FUNDING SOURCEIndeed, family offices are no longer considered an additional source of capital for PE but an integral funding channel. “Family offices are becoming a strategic source of capital for PE firms, due to the ever-increasing number of PE firms setting up and looking to attract capital, and a slowing of traditional institutional investment appetite for PE,” says Andrew Maiden, Director at Moore Management.

It’s a view shared by Joanne Gill, Director at Private Equity Administrators in Guernsey, who says that while family offices still

only represent five to 10 per cent of funds’ capital, fund managers increasingly see them as a source for capital. Placement agents are getting to know family offices that are PE-minded and are looking for opportunities for them and referring them to fund managers. In Gill’s experience, buy-out funds tend to attract family offices – and they have generated good returns.

“Because family offices have that personal concern for the wealth, they tend to ask more and tougher questions of fund managers. They are more likely to invest if they have a good relationship with the fund manager,” Gill says.

Helen Gale, Partner at Deloitte, Jersey, says she’s been asked to help funds communicate with family office investors, creating a portal that gives them access to up-to-date information precisely because they ask more questions and want regular reports.

Carey believes size matters. “The larger $3bn funds will pick up the big institutional investors and perhaps the largest family offices in the Middle East, who can cut you a larger cheque,” he says. “Whereas those raising $200 million to $300 million may spend more time going to more family offices, looking to raise money that way.”

Some family offices may not put money into a fund until they’ve seen that others have, adds Carey, but he warns: “You don’t get such a good price later, as you get an early bird discount.”

Cutting it right down to the basics, there are three main ways that family offices invest in PE – through PE funds; by co-investing alongside PE funds; or directly in

FAMILY OFFICES AND PE – GOING DIRECTRichard Joynt (pictured) set up a family office in 2002 for a single family of a wealthy entrepreneur. He ran that for 10 years and grew it to five people. Three years ago he moved the business to Bedell and established Bedell’s Family Office, which services several families from a variety of jurisdictions – British, American and African. He shared his insights with BL.

“Variety is the name of the game with family offices and PE. Deals vary from a minimum of £1 million, with the maximum I’ve seen in an individual deal being €15 million [£11 million].

“I see a great variety in terms of the age of the business, too. I’ve seen stakes taken in an established profitable business – so although there wasn’t much room to grow, the client was able to negotiate a very good annual dividend. I’ve also seen two clients fund startups.

“Family offices can be more flexible than institutional investors. They can invest in something that doesn’t look quite corporate yet – but because the family office is generally run by the principal of the family who has expertise, they can take that company to where it has legal agreements in place and a corporate structure. They can get a business ready for later investment by a PE fund.

“It’s very unlikely a PE house would ever look at a startup. But if you get it right and the startup meets or exceeds its target, you can have super-returns. We had a startup where the family invested £850,000. They’d committed more, but the business ended up not needing it. The business was sold four years later for £25 million to a PE house that still saw potential growth. They earned 17 times their money. Families, once they invest, take it very personally. None has ever written a cheque and said ‘come back in five years and tell me how it’s going’. They take an active interest.

“I have a client who’s opened a retail business in Spain using only family money, and it’s taken up about 60 per cent of his time in the past 12 months. He appointed all the senior management and dealt with leasing premises.

“Quite often the family office will be in charge of the finance – we’ll pull the purse strings. In the early days of a startup, I or one of my team will provide the CFO function until we decide it’s going in the right direction and is of a size that warrants having its own finance director. The family normally takes a non-exec role on the board but demands regular information. Deciding whether to continue the investment is almost a weekly decision. If things are going badly they need to know early, but if things are going well they want to look at how they can get more of the same.”▼


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companies. No matter how deep a family’s pockets may be, there are plenty of factors they are going to take into account before cutting a cheque. And one issue has been liquidity. The market isn’t always ready for disposal of assets bought with PE money, and many funds have had to extend beyond their 10-year lifespan. Gale says the average life of a PE fund is now 13 years, with Pamberg saying that some have had to

extend to 15 or 16 years. This has bolstered a

secondary market in PE funds as banks have looked for liquidity due to regulatory requirements, and institutions have sought access to their cash to rebalance their portfolios. Specialist secondary funds, such as Hollyport Capital, have been created for this purpose.

Family offices then get an opportunity to buy into secondary funds that snap up these deals. “The secondary market can be attractive because it has a shorter lifespan,” explains Gale.

The larger family offices also get to co-invest alongside a PE fund. They might have some money in the fund but also separately co-invest alongside it, getting a better deal on that slice of their investment. “We’ve seen $50m deals, $200m deals and $1bn deals,” says Carey. “It depends on the size of the family office and how much they’re prepared to put in.”

Multi-family offices are also opening doors to co-investment deals, with two or three families pooling resources to negotiate a good deal co-investing with a fund. “If they club together they can drive a better price, share the costs of due diligence and have wider access to more experienced staff,” says Gill. “I’ve seen clubs of two or three families.”

As far as Pamberg in concerned, co-investing is a no-brainer for many family offices. “Partnering with a private equity firm, relying on their due diligence and structure, is one way to go,” she says. “Co-investment addresses some of the shortcomings in your skill or bandwidth. Family offices tend to be smaller structures and don’t have hundreds of analysts. A PE fund might be able to input that level of research. If your main point is to diversify away from your main business, you don’t mind sharing with someone else.”

The alternative is to invest directly in a company, taking a controlling stake, handpicking management teams and driving business plans – a very different beast to the hands-off investment in a PE fund.

Joynt says families choosing this route tend to stick to the industries they know. “If they’ve been investing for years in mass market retail, you won’t find them now investing in digital radio. You mitigate your risks against finding out afterwards that there were barriers to entry you didn’t know about or a competitor already doing the same thing,” he says.

The return on direct investment can be much faster. Joynt says families expect to exit within five years,

Co-investment addresses some of the shortcomings in your skill or bandwidth

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with most preferring to sell within three. Opportunities to invest come from investor networks such as Envestnet, from lawyers and other contacts, and from direct approaches. Investments in this area run the full gamut from startups to established businesses.

And there’s another reason why family offices like direct investing. “They’re almost doing it for fun,” says Gill. “They enjoy getting involved in the management of those portfolio companies. And they can hold them for a longer-term and be involved in the day-to-day management.”

So what does this all mean for the Channel Islands, if anything? Although Far East investors may well prefer the Cayman Islands for historic reasons, Guernsey and Jersey remain a global focus for PE and family offices, as the jurisdiction and regulatory framework is well established and understood.

“The Channel Islands have historically been, and continue to be, a key jurisdiction for structuring and providing ongoing services to family offices,” explains Maiden. “With increased investment in PE, and the Channel Islands a world renowned jurisdiction for offshore PE vehicles, family offices are increasingly looking for ‘complete service packages’, which the Channel Islands are perfectly suited to provide.”

One might assume, then, that a continued increase in global family wealth bodes well for Guernsey and Jersey. n

CHRIS WHEAL is a freelance financial writer

THE BIGGER PICTURE Despite the interest from family offices in the private equity sector, institutions remain the big players in the PE market, with Palico saying that public pensions are the biggest investors, providing 26 per cent of the funding. Sovereign wealth funds come in at 16 per cent, with private pension funds on 12 per cent and insurance companies 10 per cent.

Tom Carey, Partner at Carey Olsen in Guernsey, says anecdotally a good 70 per cent chunk of PE fund business is still institutions and pensions funds. Interest definitely remains, but they are getting more picky about which funds they get involved with and those they swerve to avoid.

“Over the past 10 to 20 years, institutions have moved away from traditional equities and bonds to hedge funds and PE. Then there was a move away from hedge funds because of the crisis – there wasn’t the guaranteed return, they thought – so there was an over-allocation to PE. Now it’s getting more laser-focused,” Carey says.

“Institutions may have over-invested in PE at the expense of hedge funds, so instead of sticking money with any PE fund, they’ve realised there are good PE managers and bad PE managers. Big institutions are going with the fund manager they can trust. So trying to raise money with a poor record now means you might as well whistle, because the guys that have good track records will continue to raise funds.”

Joanne Gill, Director at Private Equity Administrators in Guernsey, explains why institutions are making more sober choices. “Institutions have more regulation and disclosure requirements and have to have a balance of risk across the portfolio, so will be looking for all sorts of asset classes and geographical spread.”

As a result, PE funds are increasingly specialising in niche sectors and geographic locations, which allows investors to pick and choose in order to diversify their portfolios.

Christina Pamberg, Director at Alcyon Holding, says institutional investors’ policies and procedures sometimes mean institutions have to pull out of PE funds early, especially if the funds are extending to 15 or 16 years from their original 10-year plan. “There are various reason why people sell. Banks had to sell because of reserve requirements under Basel II and III. It’s a portfolio management tool or a way to respond to regulations. For buyers it’s an opportunity to invest,” she says.

This creates a secondary market, which can also be attractive to an institution’s need to tweak the balance of their portfolio. “The trading in fund positions as a derivative is a demonstration of how big the market is. There are more market makers who are these secondary funds,” Pamberg explains.

Even thought the bigger institutions may outnumber the family offices by some considerable way, that landscape is constantly evolving, as they keep looking for the best deals.

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funds in

The recent Channel Islands Funds Forum brought together senior figures from jersey and guernsey’s funds industries, the City and Europe. The result? A thought-provoking and fascinating day of insight from those at the coal face

THE AUTHORITIES IN the Channel Islands have been praised for their efforts in securing ongoing access to key global markets for leading players in the international funds industry. This successful work in keeping the doors to Europe open was highlighted as a vital development at the recent ‘Channel Islands Funds Forum: Stepping into the Light’.

The event, held on 1 October at the Radisson Blu Waterfront Hotel in Jersey, was attended by 140 key funds industry delegates and staged by BL Events, the sister company of BL magazine. It was held in partnership with PwC in the Channel Islands, sponsored by Appleby and Ashburton, and supported by Altair, Puritas and Rossborough.

The funds sector has been the major growth area for the finance industries in both islands in recent years. And much of that growth has come about because managers can choose whether they want to market into Europe or to offer products and services to non-European investors.

Most recently, the findings of the European Securities and Markets Authority (ESMA) were that Guernsey and Jersey were the only places it would immediately recommend for approval under a proposed new passporting regime that will allow non-EU states access to EU markets.

FUNDS – THE NEXT 12 MONTHSAccess to markets was one of a number of subjects raised during an opening panel session that was moderated by Jersey Funds Association Chairman Ben Robins, a Partner at Mourant Ozannes,

Words: Harry McRandle and Nick KirbyPictures:Matt Porteous Photography

and addressed what was coming in the next 12 months. His fellow panellists were Mike Byrne, Partner, PwC Channel Islands; Mark Hodgson, Managing Director of Carne Group (Channel Islands); Fiona Le Poidevin, CEO, Channel Islands Securities Exchange; and Paul Smith, Vice Chairman, Guernsey Investment Funds Association.

Robins noted: “ESMA’s assessment on third-country passports is very good news for the islands. It’s good to get a clean bill of health from such a respected body.”

In theory, ESMA’s findings should lead to passports being issued before the end of the second quarter of next year. But

there were warnings that this might not happen so quickly due to potential political interference. Hodgson commented: “I’ve spoken to lawyers who said it could be as late as 2018, as some major jurisdictions may not be able to comply quickly enough, including the US.”

Currently, Channel Islands-based fund managers are able to access European markets through what is known as the national private placement regime (NPPR). Hodgson noted: “The NPPR has worked very well and we don’t want to throw the baby out with the bathwater.”

Byrne highlighted that Jersey Finance had recently announced that 200 funds had been located in the island through the private placement regime.

Throughout the conference, delegates were able to vote live on a number of questions posed by speakers and panels. At this juncture, the audience was questioned on the amount of money invested in Guernsey Finance and Jersey Finance. Fifty-one per cent responded it was ‘about right’, 44 per cent said it was ‘too low’ and only five per cent judged it ‘too high’.

The panellists also praised the local authorities for the work done to have Guernsey’s name removed from a tax blacklist of uncooperative jurisdictions, which also included territories in the Caribbean, Liechtenstein, Liberia, Montserrat and Panama.

“You don’t want to be lumped in with such places. Investors will make a choice and, quite frankly, you need to be off these lists,” said Hodgson. “There needs to be constant engagement with the European

ESMA’s assessment on third-country passports is very good news for the islands. It’s good to get a clean bill of health from such a respected body

▼

the spotlight


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▼


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What we’re really establishing are investment structures. ‘Funds’, as a term, no longer covers what we do

Union and others who make these decisions.” Smith added that Guernsey had worked

very quickly to get off the list, while Le Poidevin said the OECD had also come out strongly in support of Guernsey.

Meanwhile, Robins said that changing demands placed on the sector meant that the term ‘funds’, as a description, was no longer adequate. “What we’re really establishing are investment structures. ‘Funds’, as a term, no longer covers what we do,” he said.

His view was supported by Smith, who said lots of new alternative asset classes were coming through. Le Poidevin commented that while some in the industry have said that fintech is no more than another asset class, she believes it has the potential to radically change the funds industry.

Hodgson said that one of the main growth areas was where managers are filling funding gaps left by banks. “Where the banks are retrenching, managers are starting to fill those gaps. We are seeing this in areas such as trade finance, where investors are chasing high-end yield.”

AFRICAN PRIVATE EQUITYHaving set the tone for the day, the conference moved on to address the potential of Africa as a new market, in a presentation from Richard Corrigan, Deputy CEO at Jersey Finance, and Andrew Weaver, a Partner at Appleby in Jersey.

Corrigan kicked off by highlighting the fact that there was a predicted funding gap in Africa of US$11.4trn by 2040. He said that as countries in East and West Africa were focusing on Europe as their likely best source of funding for the next 12 months, “there is good reason for optimism for the Channel Islands”.

Weaver highlighted the more significant challenges – not least that Mauritius already has 16 tax treaties in place, whereas Jersey currently only has two.

However, on the issue of corruption in the continent, he noted that only nine African countries rank lower than Russia, which has been actively courted by many offshore jurisdictions.

“Africa is a slow burn,” he said. “However, that will change, and change fast… Remember China 10 years ago?”

Interestingly, though, when asked where the States of both islands should concentrate their double tax agreement initiatives, the audience voted Africa only in third place, with 14 per cent, behind Asia (42 per cent) and Europe (28 per cent).

THE RISE OF TECHNOLOGYThe potential effects of technological change on future development were outlined in an entertaining and informative presentation from Dan Hare, Director of technology firm Continuum. He talked about emergent trends in technology,

such as artificial intelligence, big data and robotics, and their current and future application in business, focusing on the funds industry.

He started by looking at some of the jobs that might be replaced by automation – the audience certainly pricked up their ears at ‘legal secretary’ being third out of 365, with ‘accountants’ and ‘taxation experts’ only marginally safer at 25th.

Hare noted that some of the major developments in funds in the next few years would be the application of ‘deep learning’, where more and more customer interactions are handled by artificial intelligence and robots.

He also pointed to the fact that improved technology would benefit the Channel Islands funds industry by increasing the focus on building long-term relationships and innovation, traditional strengths of the local industry.

Hare also predicted that it was only a matter of time before companies such as Google and Apple moved into the funds world, saying: “Apple and Google are already moving into payment systems and will inevitably move into fund management.”

INFRASTRUCTURE AND NATURAL RESOURCESThe second half of the morning kicked off with a panel on infrastructure and natural resources, with the former identified as a major opportunity. BL Editor-in-Chief Nick Kirby moderated the panel, which comprised Tom Amy, Managing Director at Elian Guernsey; Gavin Wilkins, Client Relationship Director at Minerva; and Matthew Wrigley, Partner at MJ Hudson.

The panellists all agreed that there were ▼

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Africa is a slow burn. However, that will change, and change fast… Remember China 10 years ago?

some excellent long-term opportunities for investment. However, Amy believed the repayment period could be as long as 50 years if you looked at projects such as bridge-building – “But it is money in the bank,” he said.

Wrigley agreed there were long-term pay-offs. “You have to understand traffic forecasting for a toll road. Get interested and the deal is going to be there,” he said.

Gavin Wilkins pointed to the fact that 3i Infrastructure was a Jersey-based fund and a market leader with holdings in the likes of Anglian Water and Cross London Trains. “Infrastructure isn’t a new asset class for us,” he pointed out. “This is something that we already do.”

Following the panel discussion, the audience were asked to take part in another vote, in answer to the question: considering the opportunities that exist and the resources available, do the Channel Islands do enough to actively target infrastructure and natural resources fund managers?

With 25 per cent responding ‘not enough, resources need to be reallocated to these sectors’ and 64 per cent responding ‘not enough, but resources are limited and the balance across other sectors is appropriate’, this is clearly an area of interest and opportunity.

FUND ADMINISTRATION AND THE LEGAL LANDSCAPE Delegates were then able to choose between two breakout sessions, on either fund administration or the legal landscape.

The legal session was run by David Crosland, Partner at Carey Olsen; Mark Rawlins, Partner at Collas Crill; and Simon Schilder, Group Partner at Ogier.

During the session, the speakers touched on a range of important legal issues affecting both islands. Crosland highlighted a key challenge in that law firms were

being asked to “take more and more risk” in dealing with funds business. “But the authorities are also saying that you can’t incorporate to mitigate that risk,” he said.

Rawlins noted that Jersey had a capital regime that was very attractive to sophisticated investors, while Schilder said clients expected lawyers to deeply understand the issues. “We now speak AIFMD,” he said.

In the fund administration breakout session, the speakers – Mike Newton, Managing Director at State Street in Jersey, and Stuart Pinnington, Group Head of Institutional Services at JTC Group – surprised their delegates with some audience participation.

Having grouped the delegates together to discuss a number of scenarios that could potentially face board members, a representative of each team was then invited up to the stage to take part in

a mock board meeting. The session highlighted the challenges faced by both administrators and non-exec fund board members in responding to what Pinnington described as “a deluge of regulation and legislation”.

ALTERNATIVES TO THE ‘BLIND POOL’After lunch, delegates enjoyed a detailed session on ‘The rise of the LP: the ‘blind pool’ fund and its alternatives’ from Tim Morgan, a Partner at Mourant Ozannes.

In his presentation, Morgan examined ‘funds of one’, managed accounts and club deals, and went into some depth on pledge funds and co-investment structures.

On the latter, he noted that co-investment structures were becoming increasingly popular. “It seems everyone is going down the co-invest route,” he said.

FUND LIQUIDATION AND RESTRUCTURINGIssues relating to the liquidation and restructuring of funds were examined in a joint presentation from Nick Vermeulen, Partner at PwC Guernsey, and Martin Paul, Head of the Funds Group at Bedell.

Setting the scene, Vermeulen examined how the nature of fund restructuring and liquidation has changed since the turn of the century. Where there was once a focus on split caps and retail funds, that has shifted into funds of funds, property and private equity.

When it comes to a liquidation, he said, it’s important to be prepared to take steps to establish what an asset is worth. “In one instance we got a higher price at auction than we had been offered by a prospective buyer,” he recalled.

Vermeulen then handed over to Paul, who recalled some of the particular issues that he had faced in his practice – from the complex nature of some deals through to whether insolvency or consensual solution ▼


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is the best choice for all parties involved. He did highlight, however, that in Jersey,

in particular, the insolvency options were not great. “There’s no administration process in Jersey and I don’t think we are going to get one,” he stated.

GUERNSEY V JERSEY – IS THERE REALLY ANY DIFFERENCE?The closing panel of the day was one that set out to address the thorny questions of whether there were any real differences between Jersey and Guernsey as funds jurisdictions, and whether working together was going to become increasingly necessary.

A high-profile list of speakers comprised Emma Bailey, Director of Investment Supervision and Policy Division at the Guernsey Financial Services Commission; Lisa Cawley, Partner at Kirkland & Ellis, who moderated the session; Michael Collins, Deputy Chief Executive at Invest Europe (formerly the EVCA); Nigel Farr, Partner at Herbert Smith Freehills; and John Harris, Director General at the Jersey Financial Services Commission.

The session began with an audience question: do you think funds professionals in the UK, Europe and beyond really understand the differences between Jersey and Guernsey’s funds offerings? The response was as follows:● Definitely: 0%● To some degree: 30%● No: 68%● Don’t know: 3%

(rounded + or -1)

Michael Collins, Deputy Chief Executive of Invest Europe, who spent 15 years working in the UK Treasury and at one point was responsible for the constitutional relationship between the UK and the Channel Islands, was surprised that the ‘No’ vote wasn’t even higher, commenting: “Even I didn’t understand [the differences] and had to be briefed.”

He added that most people in Brussels didn’t know either. “When you get a sense of how many people are out there trying to get their voices heard, you don’t want to be doing anything to make it more difficult,” Collins commented.

Harris argued that the islands needed to carry on doing what they do very well, and had no choice but to set the highest of standards. “I think we have to show we are better than some of our very big country equivalents just to stay in the game. That’s not fair, but such is life,” he said.

Both Harris and his Guernsey counterpart, Emma Bailey, agreed that the two jurisdictions were working closely together in many areas. Bailey said that representatives of both islands had been in Brussels the previous day talking to key European players at meetings arranged by the Channel Islands Brussels Office.

The conference heard that as far as fund managers were concerned, the choice of locating a structure in either Jersey or Guernsey could come down to something as simple as historical connections.

Farr noted that if a manager had previously dealt with one island rather than the other, they were likely to choose the one they already worked with.

“I expect most tend to associate the Channel Islands funds regime with Jersey and there is a perception there is greater private wealth and real estate capability in that jurisdiction,” he said. But, if pressed, Farr said his firm would probably go to Guernsey first when making a choice.

It was a full day that generated much positive feedback from delegates and certainly gave everyone food for thought. n

HARRY MCRANDLE is a freelance finance and business writer and NICK KIRBY is Editor-in-Chief of BL

we have to show we are better than some of our very big country equivalents just to stay in the game. That’s not fair, but such is life


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THE EVCA HAS undergone a rebrand, and relaunched itself as Invest Europe on 1 October. Can you tell us the thinking behind that, and does it mean a shift of focus for the organisation?The name change to Invest Europe reflects the evolution of the private equity and venture capital industry in Europe, and our evolution as an association over the past three decades. From our roots representing venture capital firms in the mid-80s, we grew with the maturing of the industry to represent private equity firms focused on small, medium and large investments.

More recently, we have expanded to work with infrastructure funds and the long-term investors that back all these forms of alternative investment, such as pension funds and insurers.

It has to be remembered that the industry is still relatively young – it will continue to develop and so will our role. Quite simply, Invest Europe says clearly what our membership does on a daily basis, and gives us a better platform to participate in big plans to reinvigorate Europe’s economy, such as Capital Markets Union.

So what are your key objectives?One of Invest Europe’s key goals is to demonstrate the benefits of our membership’s long-term investment for Europe’s companies and citizens. Since 2007, private equity and venture capital firms have invested €350bn in about 28,000 European companies, which employ up to eight million people.

Invest Europe is the voice and principal authority representing private capital providers in Europe, and as such we will continue to engage with policymakers in

Brussels and national capitals, as well as global investors, the media and public, to tell this story and others.

We underpin these efforts with a huge commitment to research – it’s our aim to be the definitive source of private equity and venture capital data in Europe. We also help set the industry’s professional standards, and demand accountability, good governance and transparency from our members. Ultimately, Invest Europe’s objective is to make a constructive contribution to policy affecting long-term investment in Europe by ensuring that our association – and industry – is at the forefront of the debate regarding Europe’s economic future.

Do you view AIFMD as a threat or an opportunity for offshore jurisdictions?Speaking to other non-EU countries it’s clear that they all view AIFMD differently, depending on their circumstances.

For many, it brings the potential benefit of full access for their fund managers to the EU investor base via a marketing passport. But others feel its requirements could make the EU an unattractive place for fund managers to do business, and lead them to focus on raising capital in other, faster growing parts of the world.

At Invest Europe our priority is to ensure that the application and interpretation of AIFMD enables investors in the EU to continue to access the best investment opportunities and the best funds and managers, irrespective of their location.

At our funds conference, you mentioned that Brussels is one of the most lobbied places outside of Washington DC – how difficult is it for an organisation like Invest Europe (and

The man in the know

indeed, places such as Jersey and Guernsey) to make their voices heard?We have a number of advantages that help us get our voice – and that of our industry members – heard. Invest Europe’s presence on the ground in Brussels gives us a proximity to the debate that many associations don’t have – we are able to participate very directly in policy discussions and follow up promptly and directly with policymakers in a way that adds weight. We base our arguments on evidence, backed up by the reliable and robust data we produce. And crucially, we represent an industry whose value is increasingly apparent.

As Europe looks for alternatives to a bank-based model of company finance, the value of private capital to companies of all types and sizes is hard to ignore. That’s not to say it’s easy to be heard in this crowded environment, but we’re confident that our new brand helps us to differentiate ourselves.

Do you think that investors and firms in Europe see the Channel Islands as separate islands or as one entity when it comes to finance?Investment professionals understand the differences between the Channel Islands and between their offerings. But I’d feel much less confident saying that politicians do. That’s a challenge for the Channel Islands, but one I sense that professionals there are aware of and rising to.

If you had to choose one thing, what would you say is the main strength of the Channel Islands?The high degree of professionalism in the services industry in both islands. n

Michael Collins, Deputy Chief Executive of Invest Europe, was a panellist at the Channel Islands Funds Forum. He took time afterwards to answer some questions for BL

NED ForumWednesday 16 March – Pomme d’Or, Jersey

Jersey Trusts ConferenceWednesday 25 May – Pomme d’Or, Jersey

BL Funds Forum JerseyWednesday 28 September – Radisson Blu, Jersey

Guernsey Trusts ConferenceWednesday 16 November – Duke of Richmond, Guernsey

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email [email protected] Sponsorship and exhibitor packages are available for all our events, please contact

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Building for the

As governments around the world look to implement major infrastructure programmes, the Channel Islands are

playing a significant role in getting them off the ground

WHAT DO DRIVING down a motorway, waiting in a departure lounge and turning on a tap have in common? Not much to the end user, perhaps, but from an investment point of view they’re all the result of one growing asset class – infrastructure.

The Channel Islands have seen a lot of

infrastructure deals in recent years. According to data from Monterey Insight from June 2014, in excess of 30 fund managers had one or more Guernsey-regulated infrastructure fund. This year, meanwhile, has seen the first and final closing of iCON Infrastructure Partners III LP fund, the first closing of

Words: Dave Waller

future▼


Equitix Fund IV, the London listing of the Sequoia Economic Infrastructure Income Fund, and a new share issuance of the John Laing Infrastructure Fund.

Over in Jersey, the Jersey Financial Services Commission (JFSC) puts the net asset value of its three largest infrastructure funds at around £2bn, adding that many infrastructure funds on the island may be non-domiciled but operating with Jersey managers.

As this activity suggests, infrastructure is being seen as an increasingly interesting corner of the funds world – which is impressive, given that no one knows precisely how to define it.

Infrastructure is in fact a broad church, encompassing social projects (hospitals, schools and prisons) and economic works (from toll roads, rail and airports to power generation, renewables and telecoms). These projects may seem disparate but they have common traits that make them very attractive to investors.

“First, they’re highly capital intensive,” says Marcus Leese, Partner at Ogier in Guernsey. “There’s often a regulatory element to them, which increases the certainty around returns, and there’s a high barrier to entry, so it’s harder for competitors to come in. This is all appealing to investors seeking a stable long-term investment.”

It makes sense that infrastructure should be particularly relevant to investors right now. In a climate following a downturn, and with interest rates incredibly low, two things happen: governments back infrastructure projects to create jobs and stimulate the economy; while investors, hungry for that elusive yield, start looking for alternatives. Infrastructure investments are good for yield, one example being collecting income from motorway tolls.

Then there’s the appeal of diversification. “Investors know that property prices and traditional private equity investments can be volatile,” says Tom Amy, Managing Director at Elian Guernsey. “Whereas infrastructure investments get support and investment from governments during recession, so can provide a good hedge against the economic downturn.”

LONG-TERM VIEWFor an example of an infrastructure fund in action, look at iCON III, which raised €800 million to invest in the EU, North America, Australia, Brazil and Mexico. Such governments are mandated to invest into infrastructure. “They need the investment and the market seems to want to invest into it,” says Darren Bacon, Funds Partner at Mourant Ozannes in Guernsey, who advised on the fund. “Is that going to change? Not any time soon.”

There is, however, a downside – infrastructure projects aren’t without risk and are therefore strictly for more sophisticated investors or institutional investors such as pension funds.

“These are long-term projects,” says David Porter, Deputy Director in Policy and Strategy at the JFSC. “Make a big investment into one of these assets and you have to wait a long time for returns. You can’t just put money in and hope to exit in a year.” You could be waiting five to seven or even 30 years.

There’s plenty going on in infrastructure in the Channel Islands,

traditional private equity investments can be volatile whereas infrastructure investments get support and investment from governments during recession, so can provide a good hedge against the economic downturn

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and that work is becoming much more diverse. The islands are now seeing a much broader range of infrastructure-related transactions than in the past. What used to be a core of work from established closed-ended-investment funds now includes the legal work around infrastructure matters too. That could be M&A work, where those funds are buying or deploying assets, or acquisitions and financing, advising those who are lending to the infrastructure fund or the individual enterprise borrowing to acquire infrastructure assets.

Then there’s listings work, be that infrastructure funds or investors raising money by issuing debt and listing that on the stock exchange, or the listing of infrastructure businesses.

“We’re working on a very large international transaction where an existing private infrastructure investor is looking to list on major international exchanges,” says Leese. “The work used to be investment fund-focused with a bit of M&A attached. Now it touches all our key disciplines. That’s indicative of how important it’s becoming as an investment class.”

BUILDING BLOCKSYet there’s still a way to go before infrastructure could be considered anything like mainstream. According to Amy, a typical investor investing in funds puts only 5.7 per cent of their money into infrastructure. But its role is changing.

“According to Preqin, unlisted infrastructure assets under management at the end of last year were $296bn,” says Amy. “That’s an 85 per cent increase in the past five years. And there’s more than $100bn of ‘dry powder’ in infrastructure funds, so

managers are under pressure to make new investments. That’s great for service providers supporting those transactions.”

Those transactions could be for infrastructure projects anywhere in the world – from the UK’s recently announced commitment to infrastructure, to rapidly developing areas that are beginning to make significant investments – be that electricity-generating plants in mainland China, desalination plants for water supply in the Middle East, or road and rail infrastructure in Africa. Fundamentally this means more demand for finance to fund them, and for structures to invest, acquire, own and operate these vehicles.

Leese talks of working on a financing transaction acting for “major African bank lenders, lending to a Guernsey private equity fund in a move that includes infrastructure assets”. Bacon cites the example of a consortium of Latin American banks, mandated to invest in Mexican energy infrastructure, which went via Partners Group in Guernsey. “It’s funny,” he says. “In order to invest in Mexican infrastructure projects, these Latin American banks had to go via a Guernsey private equity fund.”

ISLANDS GATEWAYSo why would such a group use the Channel Islands for this kind of investment? It comes down to the Channel Islands’ own infrastructure – the legislation works, and the jurisdictions are stable, well regulated and tax neutral.

“We’re seeing a flight to quality in the infrastructure area, because the amounts involved tend to be extremely large,” says Leese. “These are big ticket transactions into the billions of pounds, so they tend to involve institutional investors that want to ensure the quality of what they’re investing into.”

There are other plus points. If neither the investors nor the investments are based in the EU, there’s no need to go with an EU jurisdiction. The Channel Islands sit nicely outside those regimes and the restrictions that often come with them. Furthermore, Guernsey and Jersey have always had a high profile in terms of advising on closed-ended funds – an area always involved somewhere in infrastructure transactions. Hence the islands tend to sit near the front of mind when someone is considering such deals.

And it’s not just the scale of individual deals (and their timeframes) that could be huge. The potential of the opportunity is too. These are long-term investments delivering very stable returns even in a very low interest rate environment with highly volatile equity markets. When the alternatives are fixed income investing, giving very low returns, or volatile equity products, infrastructure remains a very appealing option. And the Channel Islands have the skills and reputation to capitalise.

Fittingly, the signs are that infrastructure is strong, it’s building, and it’s going somewhere. n

DAVE WALLER is a freelance financial writer

UNLISTED INFRASTRUCTURE ASSETS UNDER MANAGEMENT, END 2014

$296bnSource: Preqin


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Is biotech an investment opportunity not to miss or a bubble set to burst?

THE PHARMACEUTICALS INDUSTRY clocked up a staggering $234bn in announced acquisitions in 2014, and it looks like 2015 is going to be another record-breaker. By March 2015 alone, pharma deals accounted for 10.5 per cent of all mergers and acquisitions worldwide, up from its more usual three to four per cent, according to data from Thomson Reuters.

Some of the stand-out deals include Abbvie’s buyout of Pharmacyclics for $21bn, Teva’s acquisition of Auspex for $3.2bn, and the high-profile hostile bid of $35bn for Perrigo by Mylan, which, at the time of writing, remains in the balance.

The trend in takeovers of young biotech companies with promising new medicines looks set to continue as the giant pharmaceutical firms look for ways to boost growth. Rather than solely invest in research and development themselves, they buy innovative biotech companies with the intention of bolstering their pipeline of new drugs. (Biotechs tend to develop new drugs, while the giant pharma companies commercialise products.)

And last year’s record number of biotech IPOs means acquirers have had a large pool of candidates to choose from. The high level of acquisitions has driven individual stock valuations up and biotech funds have naturally benefited from what has been an extremely buoyant sector.

As Mark Piper, Investment Director at Canaccord Genuity Wealth Management in Guernsey, points out: “Biotech has been the best performing sector in the US for the past five years. With the NASDAQ Biotech Index up 250 per cent since the start of 2012, the cumulative market capitalisation of five of the largest biotech firms is now over $500bn, up from $128bn in 2011 and $82bn in 2001.”

Andy Merricks, Head of Investments at Skerritt Consultants, believes biotech has undoubtedly been the place to make money in recent years. “In the 70s the place to be was gold, in the 80s it was Japan, in the 90s it was technology, in the noughties it was emerging markets, and in this decade it’s been biotech.”

The question is how much further can biotech go? It’s been an extremely active sector offering good growth potential for investors, but has it accelerated too quickly – does a bubble exist or is one forming?

The fact is that the biotech market has already seen a significant correction. Biotech stocks have sold off sharply since the peaks of July 2015. Towards the end of September, the NASDAQ

Words: David Burrows

The current biotech crash was, until recently, predominantly driven by market rather than biotech-centric factors

Biotech Index fell more than 16 per cent, underperforming global equity markets by seven per cent. This is in stark contrast to the preceding six-year period, in which the biotech industry substantially outperformed the broader S&P 500.

Consequently, investors are correctly questioning whether we are witnessing the burst of a biotech bubble, similar to dotcom, or whether this is simply an opportunity to purchase discounted tickets to board the bio-bandwagon.

STILL IN GOOD HEALTHAlan Le Maistre, Investment Manager at Ashburton Investments, believes that despite the correction, the biotech sector remains in decent shape. “The current biotech crash was, until recently, predominantly driven by market rather than biotech-centric factors. Yes, disappointing earnings results from the likes of Biogen were a catalyst but, by and large, there was no clear deterioration in sector-wide fundamentals or sentiment during the period.”

He concedes that fears of a biotech bubble have resurfaced this autumn. He points to media coverage of a drug called Daraprim, purchased by a small US biotech company called Turing, which bought the drug and immediately increased the price from $13.50 to $750. Hillary Clinton tweeted ‘Price gouging like this in the speciality drug market is outrageous’ and vowed to tackle the issue.

Le Maistre insists US pricing power is key to the success of the pharmaceutical and biotech industries. Strong opposition from a potential US presidential candidate campaigning to limit prescription drugs prices is a clear negative for the industry and was taken as such by the market. Pharmaceutical and biotech stocks sold off heavily.

At times like these, he says, it’s often best to step back from the noise. “Perhaps markets are getting carried away with themselves. First, Clinton hasn’t yet secured the Democratic candidacy, let alone the presidency. Second, many of Clinton’s key proposals aren’t new and have failed to gain momentum in the past, the Republicans control both the House and Senate and elements like a proposal to reduce the biologic period of exclusivity from 12 to seven years will be near-impossible to change legislatively.”

The heightened sensitivity of biotech stocks to negative news flow

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is undeniable. It’s probably a reflection of the high ownership of biotech stocks, the high expectations for future earnings growth and the large profits biotech investors are sitting on following years of outperformance. Le Maistre explains: “Each of these factors makes the sector susceptible to a pullback on little news. In itself that feels like a bubble, but fundamentals and valuation leave me feeling a little less concerned.”

RISE IN DEMANDPiper agrees that the fundamentals for biotech remain good. He says that while the investment case for the healthcare sector initially was based on exceptionally cheap valuations, the rise in demand for healthcare goods and services globally has a longer-term attraction.

The ageing population in the West, Japan and China coincided with a rapid expansion of healthcare provision in Asia and emerging markets, as wealth creation brought healthcare services into the reach of vast numbers of people that were historically unable to access them.

“We had a catalyst for change, as the huge increase in demand provided healthcare companies with pricing power

– a very attractive attribute in an otherwise deflationary world,” Piper explains.

So if you are going to invest in the biotech sector, what are the risks and is now a good time?

In terms of timing, Le Maistre believes the ‘easy money’ in the biotech rally has probably been made. “Whilst not outright expensive, the sector no longer offers the value for growth it once did. This late in the cycle, differentiating between the winners and losers is becoming more and more difficult, and investors will need to be more selective. However, at the sector level, until we start to see a deterioration in biotech sector fundamentals, capital flows moving away from the sector or valuations becoming materially stretched, there is still money to be made in biotech.”

Piper echoes this view, suggesting biotech should continue to figure on investors’ radars. “Ultimately, in a low-growth world, investors should be willing to pay a premium for structural growth stories. Biotechnology and the broader healthcare sector provide such an opportunity and while weightings to the sector have to be commensurate with the level of risk that investors are willing to take, as well as their investment time horizon, a small,

dedicated allocation to the sector within any portfolio should be considered.”

As far as risk is concerned, for investors taking the plunge into biotech this late in the cycle, exposure is probably best achieved through an ETF, a specific biotech fund or an actively managed fund with a biotech component, advises Le Maistre.

“The sector is highly heterogeneous. Outside a handful of large-cap diversified companies, most companies are involved in just one or two products in perhaps a single therapeutic category or a disease that is poorly known or understood. Therefore stock-specific risk is high.”

Piper agrees that a pooled investment is a safer investment option and namechecks the Polar Capital Healthcare Opportunities fund and Worldwide Healthcare Trust for broad exposure to the major global themes and opportunities in healthcare. For those wanting the added risk but potentially higher reward of a pure biotech fund, he cites the Polar Capital Biotechnology fund.

It seems that while our experts think there is still mileage in biotech, it's not without risk and care should be taken. n

DAVID BURROWS is a freelance financial writer

THREE BIOTECH STOCKS TO WATCH SPARK THERAPEUTICS Spark Therapeutics is using neutralised vaccines to deliver missing genes to patient cells in order to significantly improve disease symptoms. Initially, the company is focused on phase 3 trials for the treatment of sight loss in patients. Spark Therapeutics hopes to report phase 3 data from this trial soon and, if those results are positive, the company could file for FDA approval by the end of 2015. If approval is granted, the company could be generating major sales in less than a year.

GERON Geron is a small biotech company that has already attracted interest from Johnson & Johnson via its biotech subsidiary, Janssen. Geron is focused on developing its flagship telomerase inhibitor, Imetelstat, into a game-changing treatment for a host of blood-based disorders. Janssen decided to sign a lucrative licensing agreement with Geron following some impressive early clinical trial results for Imetelstat. Hopes are that Geron’s research will result in a blockbuster product.

Stock recommendations first published on Motley Fool

TREVENA Across two mid-stage studies, Trevena’s experimental medicine for acute pain, TRV130, has easily outperformed the most commonly prescribed drug, morphine, in the post-surgical setting. Potentially we could be looking at a drug that is set to capture a significant chunk of the $11bn acute pain market.



WHEN THE CONCEPT of a depositary for Alternative Investment Funds (AIFs) was first introduced in the Alternative Investment Fund Managers Directive (AIFMD), it’s fair to say there were some different views expressed about the role the depositary would take, the scope of their responsibility and the cost of this new function. And that’s before you even got to the views of managers and investors as to whether the depositary would add any value, particularly for real estate and private equity investors who hadn’t previously experienced this requirement for their funds.

Two years on from the introduction of AIFMD, it’s interesting to look back and see how the role has evolved and consider how it might continue to adapt to the needs of managers, investors and regulators.

One of the early debating points was how far down the structure a depositary would need to go when verifying an AIF’s ownership of assets. The regulations state that a depositary’s safekeeping duties shall apply on a look-through basis to underlying assets held by structures established by the AIF for the purposes of investing in those assets that are controlled by the AIF.

When you consider the complexity of some AIF structures, both in terms of vehicles and jurisdictions, this is quite an onerous responsibility and leads to some very alarming ideas on pricing. We heard stories from one manager telling us that their depositary proposed a higher basis point fee than they themselves were getting!

There has also, and continues to be, debate about what’s required to meet the cash monitoring obligations of a depositary. It’s quite clear from talking to other depositary providers and legal advisers that there are diverse approaches being taken to the cash monitoring function.

The introduction of AIFMD triggered a number of initiatives by professionals in the alternative fund industry to discuss possible interpretations of the legislations to try and formulate ‘best practice’.

BEST FOOT FORWARDElian has spent significant time developing policies, procedures and client agreements in conjunction with professional advisers to deliver a clear strategy for how to perform the monitoring and oversight functions of a depositary. Our processes have been designed to provide the right level of control and investor protection, while being as

Two years on from the introduction of AIFMD, Elian Directors Paul Lawrence and Neil Townson consider the evolution of the depositary function and where it is likely to go from here

What next for depositaries?

ABOUT ELIAN’S DEPOSITARY SERVICE Elian was granted a licence to provide professional depositary services in Luxembourg in August, adding to its existing authorisation in the UK. We continue to build our depositary capabilities across our international jurisdictions.

Fund managers can access Elian’s depositary offering as a stand-alone service or in conjunction with other administration activity. For more information, email Paul Lawrence at [email protected] or Neil Townson at [email protected]. www.elian.com

Advertising feature

unobtrusive as possible for our clients. Overall, we see the situation settling down. Experience suggests that the introduction of a depositary by the regulators isn’t as much of an obstruction as was first imagined when the regulations were announced. Undoubtedly this has been helped by the fees being charged not reaching the levels indicated by some at the outset.

We’ve also been able to demonstrate that by establishing a good understanding of our requirements at the outset of an

engagement – which in turn requires us to have a good understanding of the funds – we can have lines of

communication and the transfer of information that don’t interfere with the daily operations of the manager and still enable us to meet our regulatory duties.

What would help further is greater clarity from the regulators regarding the duties and functions of the depositary. Clearer guidance on

what the regulators expect from the depositary when it is performing its monitoring and

oversight duties would go some way in convincing the industry of the value of the depositary.

The most recent announcement from the European Securities and Markets Authority (ESMA) in relation to the extension of marketing and/or managing

passports under AIFMD to non-EU AIFMs and AIFs was positive news for

Jersey and Guernsey. ESMA advised that the passport should be made available for entities established in the Channel Islands. At the same time, however, ESMA stated that the EU may wish to consider waiting until it had delivered positive advice on a sufficient number of non-EU countries before introducing the passport.

Maybe this will coincide with the clearer guidance on what the regulators expect from the depositary. n


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the AIFMD ‘passport’ could see a new wave of US fund managers using the Channel Islands to access Europe

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Words: Dave Waller

A SUBJECT THAT you may have already read about on more than one occasion in this issue of BL is the introduction of third-country passports under the Alternative Investment Funds Managers Directive (AIFMD). Admittedly, it hardly sounds like the sexiest of subjects, but it’s one that could have far-reaching implications for funds businesses in the Channel Islands – bringing with it considerable opportunities that will benefit the islands some way into the future.

At the end of July, ESMA announced that Jersey and Guernsey were the only two jurisdictions to which it would consider extending the passport – the only other jurisdiction to get the potential green light was Switzerland. For the Channel Islands, this represented a significant opportunity to service overseas fund managers keen to use the offshore route to access Europe’s vast investor base.

“Directly soliciting investors in the EU will be better with the passport,” says David Porter, Deputy Director in Policy & Strategy at the Jersey Financial Services Commission. “The current private placement regime works well but it’s on a country-by-country basis. With the passport we will be able to offer optionality – to be in Jersey and to market into the EU in either private placement or through the passport or, if they’re not going into the EU, to use Jersey’s existing funds regime to market elsewhere.”

Contrast this position with that of other offshore jurisdictions not on the list. Places such as the Cayman Islands and the British Virgin Islands don’t know when – or even if – they will be granted a similar passport. One thing is certain: they will be all too aware of the competitive advantage it currently gives Jersey and Guernsey.

“There’s a potential opportunity for the Channel Islands, should Cayman not get the passport,” says Mike Newton, MD of State Street in Jersey. “Managers want the flexibility of choice, with no desire to go via mainland EU if they can avoid it.”

ATTRACTION FOR US FUNDSIndeed, the appeal to US fund managers, in particular, could be be massive. The US is by far the largest fund market in the world, and its managers are keen to market to Europe’s broad investor base. And an offshore route remains appealing – they wouldn’t have the same flexibility if they went onshore, falling fully under AIFMD and facing restrictive requirements.

Not that there isn’t US business in the Channel Islands already. The list of US-based investment managers operating in the Channel Islands includes Global Infrastructure, Morgan Stanley,

JP Morgan, Merrill Lynch and Sequoia. Simon Schilder, a Partner at Ogier in Jersey,

has plenty of experience of the US fund management market, having previously worked in the British Virgin Islands for more than 10 years. He reports a similar story from his experience at Ogier, saying business from the US is growing, especially on the corporate and structuring sides. “That’s evidence of a growing cognisance of the Channel Islands among people in the US and those advising around where to put funds,” he says.

While there’s already work for the islands in US funds, it’s hard to ignore the extra significance of being cleared for the passport when the US itself hasn’t even been granted one. Funds from the Channel Islands can now guarantee that a US fund manager will still

be able to use an offshore route to market to the investor base in Europe, even if the existing private placement regime is switched off. While those managers could currently set up a Cayman or

in for a dollarIn for a dime,


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BVI structure to take advantage of a private placement regime, they’d run the risk of being left high and dry once that system comes to an end.

The Channel Islands can offer certainty, and that could prove crucial. “US managers do tend to use Cayman,” says Chris Anderson, a Partner at Carey Olsen in Guernsey. “It’s closer to the US and it’s in the same time zone. Plus people are conservative – it’s difficult to wrest business away from the Caribbean because of its geographical proximity. But these changes may tip the balance.”

Under AIFMD, a US fund manager may set up a management company in the Channel Islands and use the passport to market shares in funds they manage through the EU, without being susceptible to the full regulations. But it’s not just about granting managers access to investors. It’s about ensuring that institutional investors have access to invest in non-EU funds too.

There’s one other major appeal for US managers – using the Channel Islands as a route to a London listing. The London Stock Exchange is attractive to US managers because it’s not prescriptive about the investments that fund managers make. Secondary fund raising is far easier there than on US exchanges and it offers greater flexibility to distribute profits.

The islands have in fact already seen interest from US fund managers launching property funds. Last year Kennedy Wilson, a US property manager, set up a Jersey fund of £1bn to list on the London Stock Exchange. It was billed at the time as the largest real estate fund ever to list in London. Meanwhile when Apax Partners raised €350 million on the LSE to feed into its funds, it did so by listing a Guernsey company, moving assets out of Luxembourg and into Guernsey just prior to the listing.

The Channel Islands are well placed to facilitate such listings. “Try to list a Luxembourg entity on the LSE and investors will say ‘what is this?’,” says Anderson. “Say it’s a Guernsey vehicle and they don’t bat an eyelid. It’s the path of least resistance.” The London Stock

Exchange has been actively marketing in New York to encourage US fund managers to London, and the Channel Islands are sure to benefit if

this marketing pays off. Yet there are potential

hurdles. What if the Cayman Islands and BVI were handed the

passport too? It’s fair to assume that they would remain US managers’

preferred partner, because the benefits of proximity and time zone would remain, as would the historical precedent. But it’s important to note that at this stage there are no signs of the passport heading that way. “In the short term, it’s unlikely,” says Schilder.

Perhaps a bigger threat is that many of the US managers that are looking to market in the EU and currently use Caribbean jurisdictions are so large that, should their preferred routes become problematic, they could simply set up their own EU structure to target this market instead, bypassing the Channel Islands altogether.

“Graham Capital just launched a UCITS fund of their own,” says Schilder. “This size of manager can just go and get a EU vehicle for their investors, so they don’t need to worry about AIFMD at all. It’s a bigger question for the smaller ones, who’ll ask how important it is for their investor base. As the EU becomes a big barrier to entry, they may even figure that they’ll focus their marketing outside the EU.”

The final potential hurdle to note is that of the timeframe. ESMA has yet to announce when it will make the passport concrete, and it may add more countries to its list before it does so – in order that Guernsey, Jersey and Switzerland don’t have a head start on everyone else.

The overall message to the Channel Islands is, therefore, to wait and see. Even if the passport is granted, it will take time to work it through, and then a period to see if it’s attracting managers as expected.

“We should give it two years and reassess,” says Anderson. For now, the one certainty is that the Channel Islands have a privileged place on ESMA’s priority list. And that can only be a good thing. n

DAVE WALLER is a freelance finance writer

There’s a potential opportunity for the Channel Islands, should Cayman not get the passport. Managers want the flexibility of choice, with no desire to go via mainland EU if they can avoid it

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Funds

Are we heading for a big funds sell-off?Depending on who you listen to, a rise in interest rates is inevitable (and imminent). But will this mean investors moving out of funds and back into cash and fixed income?

Words: David Craik

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AS ECONOMIC RECOVERY takes hold in the UK, memories of the ‘credit crunch’ and one of the most severe recessions in history are beginning to fade. However, at least one remnant of the crisis remains – the historic low interest rate of 0.5 per cent, which the Bank of England set in March 2009 to revive crushed business and consumer confidence.

The low rate – down from five per cent when the crisis began in 2008 – and the Bank’s use of quantitative easing have been praised for playing a large part in the UK’s slow march back to economic stability and growth.

Inevitably, over the past two years at least, talk has swirled both within and outside of the Bank’s decision-making Monetary Policy

Committee (MPC) that the first rate hike will soon be on its way. Some commentators expected that first rise, most likely a nudge from 0.5 per cent to 0.75 or one per cent, to come in 2014. It didn’t materialise as the Bank sought more concrete indications that the UK was on a secure path of economic growth.

Earlier this summer, the Bank’s Governor Mark Carney said the time for the first hike was “moving closer”, with MPC member David Miles signalling that it could happen before the US Federal Reserve made its first upward move since the crisis.

However, the market volatility experienced during August as a result of the Chinese economic crisis, as well as persistently low ▼

Funds

62 november/december 2015

inflation, seem to have delayed the first rise until early next year. When it does come, Carney has made two interesting forecasts. The first is that he expects a ‘new normal’ for interest rates of around 2.5 per cent rather than five per cent, with rises more gradual and limited than in the past. The second is that he believes a rate rise could spark an investment sell-off among retail investors.

He is concerned that homeowners will look to liquidate all their holdings in stocks and bonds to cover higher mortgage payments. In fact, he is so worried that he has had direct meetings with more than 100 fund management groups to find out if they were prepared for such an exodus of cash.

QUESTION OF RISKInvestors have certainly been keen to put their money into funds in the downturn, seeking better income and returns than traditional cash products such as bank deposits, which have been hit by lower interest rates.

That has, however, meant that some investors have taken on more risk than would have been acceptable before the crisis, and they may well be keen to get out of such funds once interest rates rise.

Justin Oliver, Deputy Chief Investment Officer at Canaccord Genuity Wealth Management, says there are many investors who will be faced with these decisions. “With record low levels of interest rates, investors have effectively been encouraged to take on risk, although not just in equity markets but also, and perhaps more notably, in bonds,” he says.

“There have been significant inflows into higher risk areas of the fixed-income universe, which has had the effect of depressing yields to the extent that investors haven’t been fully compensated for the risks they have been taking. In effect, investors have had to take more risk for a lower return.”

Investors have also seen more need to diversify their portfolios and use fund managers to look after that wealth in the downturn.

Dominic Simpson, Head of Markets at RBS International, agrees that the low interest rate environment has made a significant contribution to the growth in demand for funds among investors. He says investors have been looking elsewhere for the yields they haven’t been receiving in traditional deposit or equity investments.

“It’s given them an added reason to consider diversification,” he says. “Low interest rates have been used to stimulate the economy and have boosted sectors such as real estate. In turn, that’s made funds focused on these areas more attractive to investors.”

Barry Hardisty, Managing Director of wealth consultants Enhance Group in Jersey, notes: “The credit crisis has shown investors that getting the right people in place to manage money and navigate through the peaks and troughs is no bad thing.”

STICK OR TWISTSo, given this increase in usage and popularity, is Carney justified in being cautious? Will these investors look to sell off their new investments when interest rates rise or are they made of stronger stuff?

“Rises have been so well flagged that there shouldn’t be any knee-jerk reaction, but there is a high likelihood that volatility will rise nonetheless,” Oliver argues. “Markets are unduly obsessed with the first rate rise in the

With record low levels of interest rates, investors have effectively been encouraged to take on risk, although not just in equity markets but also, and perhaps more notably, in bonds

Funds

november/december 2015 63

THE PROFESSIONAL VIEW

“What actually matters are the speed of any increase and the ultimate peak in rates. We believe that policy makers will proceed extremely cautiously and that the peak in rates will be much lower than in the past. It doesn’t seem likely that there will or should be a mass flight to safe havens. Rate rises are entirely expected and shouldn’t shock anyone.”Justin Oliver, Deputy Chief Investment Officer, Canaccord Genuity Wealth Management

“We are entering a land, rising from a record low rate, that we’ve never been to before. Perhaps some people will call it and move back to their bank deposits, but I think most investors are long-term thinkers now.”Barry Hardisty, Managing Director, Jersey, Enhance Group

“Some parts of the asset management industry will come under pressure as rates begin to normalise. In particular, we might see an increase in outflows from certain bond houses.”Dominic Simpson, Head of Markets, RBS International

US in particular, but it should make very little difference. If the US or UK economies can’t withstand a very moderate amount of monetary tightening, then conditions are more serious than anyone believes.”

Derry Pickford, Macro Analyst at investment manager Ashburton, is sceptical. “I don’t see an interest rate rise as being a trigger point to exit funds, especially with bank deposit interest rates unlikely to be back to pre-crisis levels for a long time yet,” he says. “There will be an interest in income-generating funds for some time to come.”

Simpson does, however, envisage some impact for investors, and he urges them to be cautious. “There’s been a lot of speculation of exits from funds as rates increase, but nothing has happened yet,” he says.

“However, some parts of the asset management industry will come under pressure as rates begin to normalise. In particular, we might see an increase in outflows from certain bond houses.

“Fund managers have to ask themselves what is their ability to support exits? For investors, what is the level of liquidity and your duration in bond portfolios? If you have invested in more liquid and shorter duration funds, you will have less to worry about.”

LONG-TERM DEMANDSimpson is confident, however, that the long-term growth in demand for funds won’t be knocked off course. “For parts of the asset management industry, it’s possible that we will see further growth as other factors offset any increase in interest rates. The demographic shift in Western economies means that we are now living longer and therefore pensions and mutual funds are having to explore alternative asset classes in order to both diversify but also to pick up yield.

“There may be more money switched to alternative investment funds from fixed income funds when rates rise,” he adds. “The liberalisation of the individual pension regime, so that people aren’t just restricted to annuities, is also likely to stimulate growth in areas of the asset management industry that are hosted in the Channel Islands, such as private equity, real estate and infrastructure.”

According to industry experts, the only major factor that could prompt a mass sell-off would be a sudden and sharp increase in interest rates. But given Carney’s comments, that is unlikely.

In terms of predictions, Ashburton’s Pickford believes that the US Federal Reserve will hike its rates in December, with the Bank of England likely to make its first move next February and then proceeding cautiously. “Given this steady rise, I think investors will remain in a wait-and-see mode,” he says.

Oliver also expects investors to remain bullish. “What actually matters are the speed of any increase and the ultimate peak in rates. We believe policy makers will proceed extremely cautiously and that the peak in rates will be much lower than in the past,” he predicts. “It doesn’t seem likely that there will be – or should be – a mass flight to safe havens. Interest rate rises are entirely expected and shouldn’t shock anyone.”

Hardisty, however, believes there will be some investors who will ‘call time’ on their funds as soon as the first rate rise arrives. In such cases the most sought after safe havens will be gold, the US dollar and high-quality government bonds.

“We are entering a land, rising from a record low rate, that we’ve never been to before,” he says. “Perhaps some people will call it and move back to their bank deposits, but I think most investors are long-term thinkers now.” n

DAVID CRAIK is a freelance financial writer


Finance

Words: David Burrows

They may not grab the headlines like some areas of the finance industry, but Sharia-compliant products and services are going quietly about their business – and increasing in popularity

Islamic finance:

A quiet success

november/december 2015 65

Finance

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A FEW YEARS ago, Islamic and Sharia finance were talked about in many circles, in the Channel Islands, the UK and Europe, as a real opportunity for financial institutions to attract business. Then, as is the fickle nature of the industry, the attention shifted elsewhere and such talk was seemingly forgotten.

Of course, being out of the headlines doesn't mean that progress hasn’t been made. So just what has happened in recent years? What sort of Islamic business has the Channel Islands been doing and how much are they doing now?

As Bruce MacNeil, a Partner at Ogier in Jersey, is keen to point out, Islamic finance in general has been growing steadily over the past few years as an asset class, and he believes this is likely to continue for the foreseeable future.

That forecast for growth is supported by a report from accountancy firm EY, which showed that, globally, Islamic banking assets grew at an annual rate of 17.6 per cent between 2009 and 2013. It estimates that they will grow by an average of 19.7 per cent a year to 2018.

As to how the Channel Islands fits into this growth market, MacNeil says: “In

Jersey and Guernsey, the Islamic

finance work involving offshore entities has mainly been on the banking and finance side – for example, establishment and financing of SPV [special purpose vehicle] issuers and holding companies to be used in sukuk, murabaha and real estate finance transactions.”

Sukuk is similar to a bond but is compliant with Sharia – Islamic religious law – because it applies a rental fee rather than interest, which is forbidden. Murabaha is an acceptable form of credit sale under Sharia law.

Daniel Hainsworth, Director at Hawksford, agrees with MacNeil that growth within the sector is notable. He points to the fact that the global Islamic finance industry grew from $1.66trn in 2013 to $2.1trn by the end of 2014. Consultancy PwC has projected that this industry will grow to $2.7trn by 2017.

Hainsworth explains why this growth has so much momentum. “More clients, both Muslims and non-Muslims, who would have historically used traditional products, are choosing Sharia-compliant options. This might be down to more competitive offers when it comes to Islamic and Sharia-compliant products, and the British banks that are upping their game and offering clients access to Islamic finance products and services.”

He concedes that this sector may not attract the press attention in the West that other areas of wealth structuring do, but this belies the extent of activity.

“It’s a difficult market to assess since most new clients are forming a range of private, unregulated or family structures, which aren’t as easy to calculate versus regulated operations. On the other hand, there have been some significant industry acquisitions, which have certainly captured the media headlines in recent years – much like Qatari bank Masraf Al Rayan acquiring Islamic Bank of Britain.”

ISLAND INVOLVEMENTIn terms of activity in the Channel Islands, one island seems to be leading the way in Islamic finance. MacNeil suggests that Jersey is attracting more business than Guernsey. “For example, we act for the Islamic Development Bank on its sukuk issuance programme, which uses a Jersey issuer and trust structure, with the trust certificates issued being listed on the London Stock Exchange and the Bursa Malaysia,” he explains.

Hainsworth agrees that Jersey has been the more active of the islands. He says: “Jersey has long-standing relationships in the Gulf Cooperation Council (GCC) region, as evidenced by Jersey Finance establishing a representative office in Abu Dhabi. With Jersey’s robust regulatory

Finance


reputation, its proximity to the UK and an increasing number of Gulf-based businesses establishing roots in Jersey, it’s no surprise that we are seeing an influx of Very Private Funds, typically into UK real estate.”

While Jersey may be enjoying good levels of business, other jurisdictions are highly competitive in the market, reveals MacNeil. “There’s a lot of Islamic finance business in Dubai, the Middle East, Singapore, Malaysia and Indonesia,” he says.

“As regards the offshore world, the Cayman Islands seems to be the most popular jurisdiction used to establish sukuk issuers, although sukuk is only one of a number of different types of Islamic finance transactions.”

Hainsworth namechecks Singapore as an important hub for Islamic finance work in Asia, which stands to reason as it has a large Muslim population and a growing number of high-net-worth individuals.

“Hawksford opened offices in Singapore in 2014, which serves as a convenient hub, attracting finance opportunities within the significant Muslim population in Asia,” he explains.

Given the popularity of jurisdictions such as Singapore and Cayman Islands, why would someone opt to carry out Islamic finance through the Channel Islands? Graeme Paton, Head of Funds and Corporate Services at Minerva, can think of plenty of reasons.

“In addition to their close

proximity to London, the Channel Islands offer political and economic stability, world-class financial services regulation, a gateway to markets, a legal system that works very well with Sharia-compliant structures, appropriately experienced professional administrators and a time difference of only three hours from Dubai,” he says.

Paton adds: “Minerva has had an office in Dubai since 2009, and we work closely with our colleagues on a range of services, including Jersey law Islamic trusts and private trust companies.”

LOCATION AND REPUTATIONHainsworth also singles out Jersey’s location and reputation as standing it in good stead. “Jersey’s expertise in Sharia-compliant structuring is highly regarded,” he says. “With London’s ambition to become a centre of excellence in Islamic finance, it stands to reason that Jersey is one of the most respected jurisdictions for structuring. We share geopolitical and economic ties with the UK, and are backed up by our expertise in the area. In a region like the GCC where reputation is paramount, the global Jersey name is a perfect business enabler.”

Clearly, Jersey offers benefits for Islamic Finance business, but how far can it realistically develop in this space? Hainsworth doesn’t predict a seismic shift towards Jersey as an Islamic

finance hub, but he does envisage steady progress. “The wealth structuring industry is made up of niche areas such as succession planning and private equity. I don’t see Islamic finance becoming the most dominant of all niche areas, but I do see it evolving in the same way that other service areas are shaped by regulatory developments and the changing needs of clients.”

MacNeil also predicts steady rather than stellar growth of business. “We expect this market to continue to grow over the next few years, although realistically the Cayman Islands is more often used than Jersey or Guernsey for sukuk issuance.

“The best opportunities are probably in the areas of Islamic funds investing in UK real estate and Islamic financing for UK real estate transactions.” n

DAVID BURROWS is a freelance financial writer

we expect the market to continue

to grow over the next few years

ISLAMIC FINANCE IN BRIEF

Sharia (or Islamic) law is derived from the religious text of the Koran, and Islamic finance represents a part of these laws.

The Islamic legal code stipulates that Muslims must not get involved with industries or products that are considered haram (sinful), such as alcohol, gambling and pig meat.

There is also an instruction to avoid gharar – excessive risk-taking (for instance spread betting and hedge funds). And, while Islamic teaching encourages trading, investment and charitable giving, it bans the creation of money by money.

Indeed, the central concept driving the Islamic finance industry is the prohibition of interest on money – riba – which is considered sinful. The rule forbidding the paying or receiving of interest makes it hard for Muslims to use conventional bank products such as savings accounts, loans and mortgages.


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IN JULY 2014, the Financial Services Ombudsman (Jersey) Law 2014 was registered by Jersey’s Royal Court. It established the Office of the Financial Services Ombudsman (OFSO) – the culmination of several years’ planning to add this new watchdog function to Jersey’s regulatory framework.

One year on, Douglas Melville, formerly head of Canada’s Ombudsman for Banking Services and Investments, took up the role of Principal Ombudsman. Melville’s role won’t be confined to Jersey. Together with equivalent Guernsey legislation, the law has brought into being the Channel Islands Financial Ombudsman (CIFO), the joint operation of two statutory ombudsman roles, and a further movement towards closer co-operation between the bailiwicks.

Not all the provisions of the law came into force in 2014. It was only those provisions that dealt with the establishment phase of the new office that took immediate effect. And it wasn’t until September this year that the States determined the date on which the operative provisions of the legislation are to come into force, and the OFSO commences business.

That date has been set as 16 November 2015. From then, the OFSO will begin hearing, investigating and resolving

WANT TO KNOW MORE?For more details on the new Jersey Law and any implications for individuals or financial services firms, contact Mason Birbeck: email [email protected] or call +44 1534 630530.www.parslowsjersey.com

complaints involving local financial services providers and their customers. In line with much of Jersey’s regulatory regime, the OFSO’s powers under the law don’t seek to be extra-territorial. It will deal only with complaints relating to financial services business carried on, in or from within Jersey.

Its remit is to achieve a swift resolution of complaints with minimal formality and without recourse to the courts, while also ensuring they are dealt with independently and in a fair and reasonable manner.

If the nature of the complaint is such that the OFSO is unable to help the parties arrive at an informal resolution, it has the power to investigate, arbitrate and, if the complaint is upheld, award compensation to the complainant.

Conversely, the OFSO is also empowered to award costs against a complainant who has acted improperly or unreasonably, causing expense to the respondent. The law requires that the person who is the subject of the complaint be given a reasonable opportunity to deal with it (ordinarily not more than three months) before the matter is referred to the OFSO.

The provisions of the law are quite detailed in terms of setting out who may bring a complaint, and against whom a complaint can be made. In summary,

‘eligible’ complainants will encompass individuals, smaller businesses, charities, trusts, foundations and such other bodies as may be designated by the Minister of Economic Development.

Complaints can be brought in respect of acts by a person occurring in the course of that person carrying out ‘relevant’ financial services business. Broadly, unless exempted or excluded in the manner identified in the law, that will include those conducting trust company business, investment business, banking, credit business, pensions and funds business, and insurance business, as well as certain other businesses identified by reference to Jersey’s proceeds of crime legislation.

The law has retrospective effect in that complaints may be made in respect of past acts occurring as far back as 1 January 2010. It also sets out time limits within which a person must refer a complaint to the OFSO. Generally, a complaint must be referred to the OFSO within six years of the act to which it relates, or two years after the complainant could have been expected to have become aware of the reason for complaint, whichever is the later.

However, alternative ‘abbreviated time limits’ apply if the respondent of the complaint has invoked an appropriate internal complaints procedure to deal with the complaint in question.

Though available to complainants without charge, the services of the ombudsman come at a financial cost to be borne in the form of levies payable by local financial services businesses. Those levies will be supplemented by ‘case fees’ paid by errant service providers that fall foul of the OFSO’s powers to impose financial penalties where complaints against them are upheld.

Despite this added cost to the local financial services industry, the general consensus appears to be that the introduction of a financial services ombudsman is a welcome move, strengthening the perception of Jersey as a leading international finance jurisdiction. n

OmbudsmanMason Birbeck, Head of the Corporate, Commercial and Trust team at Parslows, examines the role of the new Office of the Financial Services Ombudsman and its implications for Jersey


Finance

blacklists: do they actually matter? For years, the Channel Islands have faced being on one blacklist or another. is this a fight they will ever win – and are blacklists really such a big deal?

BLACKLIST. THE WORD hardly sounds appealing, and sure enough a blacklist is not a comfortable place to find your name. Just look at Guernsey’s reaction when it was erroneously placed on an EU list of non-cooperative jurisdictions in June this year. The States furiously denied the charge, and the relief was palpable when the UK and OECD stepped up in its defence.

Both Jersey and Guernsey have spent time on and off blacklists in the past, but are they as ominous as the name suggests? Would people really stop doing business with the Channel Islands simply because its name appeared on the same piece of paper as Panama?

It seems that they would. When Jersey found itself on a unilateral French list following a tax dispute in 2013, the result was felt keenly across the trust and fiduciary sectors for the few months it took to fix the mess. “Lots of French companies with subsidiaries in Jersey said their head office would make it very difficult to continue to do business with Jersey while it was on the list,” explains John Harris, Director General of the Jersey Financial Services Commission. “It becomes a reputation issue for the company back home, and it can very quickly translate to a commercial disadvantage for the jurisdiction in question.”

Neither Jersey or Guernsey currently sits on a collective blacklist put in place by bodies such as the EU or OECD, but France isn’t the only individual nation to have made pariahs of the Channel Islands. Italy, Spain and Argentina are among the countries that

Words: Dave Waller


Finance

▼

currently include the islands on unilateral lists. Yet it’s probably not as bad as it looks. The rationale for lists varies from country to country, and many will single out jurisdictions for nothing more than having a lower tax rate than they do.

“It can be as blunt as that,” says Harris. “You find yourself on a list simply because your tax rate means people would rather put their money with you as opposed to at home. But it makes no sense – that world ended 25 years ago.”

ONGOING BATTLEPerhaps small low-tax jurisdictions have to accept the fact that blacklists and the associated ‘tax haven’ slur are a cross they simply have to bear. It may even be that these lists have limited effect. The threat of life on an Italian or Argentinian blacklist is hardly enough to give the Channel Islands’ financial services community sleepless nights, and one would naturally assume that if people want to do business with the islands they will have done their reading first and know that they are highly regarded.

Yet that may not actually be the case. “We still see individual LPs who can’t invest in Guernsey because of tax blacklists,” says Jo Gill, Director at Private Equity Administrators in Guernsey. “Especially Italian investors.”

Harris has a similar point of view, labelling blacklists a ‘very blunt instrument’. “Any third party looking at a centre on a blacklist won’t do any further research,” he says. “They’ll just see a body with repute like the EU putting you on a list and assume there must be something to it. But the lists very rarely follow objective criteria and are often an exercise in political power. They are very problematic for smaller jurisdictions that may find their way onto them. A blacklisting may drive a bus through years of work that has been done to prove you are the same as the EU and others in terms of regulatory standards. Market access could be fatally undermined by these arbitrary decisions.”

One key point is that despite the broad brush term, which carries a uniformly negative perception as soon as it’s applied, not every blacklist has the same effect. A tax blacklist may simply mean that while business is allowed to continue, the jurisdictions in question are subject to a different rate of withholding tax from the country in question, while a regulatory blacklist will prevent businesses working with those countries at all.

“Each country has its own criteria for a list,” says Gill. “There are no agreed standards, and some lists are not updated, even when tax treaties are put in place. Or they simply copy and paste their neighbour’s list.” Indeed, Harris names the Italian list as an example of one that’s just old and never updated.

Fiona Le Poidevin, CEO of the Channel Islands Securities


Finance

Exchange, cites an interesting case from her time as head of Guernsey Finance. She points out that Guernsey is deemed a tax haven for Brazilian tax purposes, despite its transparency, because its tax rate is lower than 20 per cent. Meanwhile Luxembourg, which is not on the list, has a headline tax rate of 35 per cent, but you would never see anyone actually paying that much because of the various deals available that don’t require transparency. “Do they understand the islands sufficiently to make a good judgement when compiling these lists?” she asks.

CHANGING PERCEPTIONThe other significant impact blacklists have is on public perception. Here, the media has a major role to play. And if you wonder how the mainstream press tends to approach its coverage of blacklists, here’s a clue: it’s generally not about explaining the nuances.

“When a taxi driver in London hears that you’re from Guernsey, he’ll immediately say it’s a tax haven, with images of people lying around under palm trees and ripping off Joe Public tax payer,” says Gill. “It would be great if the papers could say: ‘Guernsey is on a list but these lists are flawed’. The average reader will just take the headline that it’s a haven, so lists do affect public perception. Guernsey is still trying to shake off its tax haven status, and anything that affects that status needs to be taken seriously.”

Of course there’s always an upside to lists. For a start, instead of bashing your head against the wall trying to

get off an irrelevant blacklist, a jurisdiction can focus on qualifying ‘white lists’. For example, both Guernsey and Jersey appear on the OECD’s white list for tax transparency.

In the end, though, the EU’s list of non-cooperative jurisdictions didn’t do Guernsey any harm – the support it received from the OECD wound up publicising how far it had come. Then there’s the fact that your rivals may appear on a blacklist and you don’t – Le Poidevin cites an example of a fund

that recently moved from Cayman to Guernsey because the latter wasn’t on the blacklist that Cayman was.

Yet despite the occasional positive, it seems the islands are engaged in a never-ending battle to avoid being lumped in

with other less well run jurisdictions. Sure, someone who wants to hide their terrorism money will know where to

do it, but there’s no reason that should continue to have an impact on jurisdictions that have proper standards.

“Lots of hard work is being done so people understand that we don’t belong on these lists,” says Harris. “Despite those efforts we’re still vulnerable to an individual political event.

“When the economy minister in the French government was found to have a secret account in Switzerland a few years ago, there was a virulent reaction in French politics. Certain voices there started having a go at everyone who could be seen as a low-tax jurisdiction. And everyone gets tarred with same brush. So even though the problem didn’t involve Jersey at all, we still became part of

the target. We get increasingly frustrated if, despite all the work in achieving equivalence with other

jurisdictions, these ministries turn around and say: ‘We put them on a tax blacklist’. These lists are easy to

get on, but can take years of jumping hurdles to get off.” The bad news is that those hurdles are likely to make their

presence felt for quite a while yet. n

DAVE WALLER is a freelance financial writer

The rationale for blacklists varies from country to country – many will single out jurisdictions for simply having a lower tax rate than they do


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Do you want to make sure your board is competent, balanced and effective? James Orrick, Managing Director, and Jo Gill, Director, at Private Equity Administrators, highlight 12 points that can help make it happenSINCE THE FINANCIAL crisis there’s been an ever-increasing focus by regulators, politicians and the public on the competency of boards. Interestingly, however, there are still no minimum qualifications or requirements to act as a director (except in some specific investment roles), so responsibility largely falls on the board itself to ensure that its membership has the appropriate mix of skills and levels of competence to discharge its duties.

Competence is the by-product of the skills, experience, qualifications, values, attitudes and beliefs of the individual members of the board. Together they understand the nuts and bolts of the business and the wider industry in which it operates. They ensure pragmatic compliance with the applicable legal and regulatory environment, make certain that the firm acts ethically, and think and act strategically to ensure the company is successful.

To make this happen, boards need to include specialists, particularly in regulation, compliance and IT. A greater focus on risk management requires personalities who can challenge the business and understand the implications of their decision-making on its operations.

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3. Build a balance between executive and non-executive roles. As NEDs offer independent advice and typically aren’t involved in the day-to-day, consider the skills you’ll need on an infrequent basis.

4. Look at your risks – are you working in a highly litigious environment? If so, get a lawyer on your board.

5. Carry out board evaluations – are your directors responsive and in attendance, do they cause friction, are they technological dinosaurs or reluctant to change? If it doesn’t work, change it.

6. Assess succession planning. Are you planning to divest? Bring in a specialist who can assist with negotiations and challenge the investment team.

7. Overbearing or egocentric chairmen/women don’t get the best out of a board. Appoint a respected team leader who will encourage collaboration. Don’t forget he/she really does need to know and fully understand your business.

8. Provide detailed briefings and plenty of notice prior to board meetings – don’t spring complicated, detail-heavy documents on your board and expect a decision within 24 hours. Hold enough meetings throughout the year and set out the following year’s primary quarterly meetings when you sign the accounts.

9. Keep board members abreast of what the firm is doing so they have the necessary background to review and understand the risks involved.

10. Have a clear and documented governance framework to facilitate smooth communication to and from the board. Make sure management information reports the key risks that

the board is expected to manage, and present it clearly and in plain English. Think about how to make management information accessible to your board, some directors prefer paper formats, others digital. If possible, enable digital file-sharing among your board and senior management team.

11. Follow up your resolutions – ensure there is a process to review and implement the agreed decisions.

12. Rely on your board – they are the experts. Involve them in key thought processes and decision-making – ignore them at your peril!

While not all members of your board will have the same degree of expertise, a breadth of experience and a readiness to learn are vital. The key message for your board is their requirement to evolve with your firm, its strategy and objectives. Effective evaluations and succession planning directly linked to training and strategy are imperative. n


Finance

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Grant Thornton Ltd is a member firm within Grant Thornton International Ltd (Grant Thornton International). Grant Thornton International is one of the world’s leading organisations of independently owned and managed accounting and consulting firms. Grant Thornton International and the member firms are not a worldwide partnership. Each member and correspondent firm within Grant Thornton International is a separate national firm. These firms are not members of one international partnership or otherwise legal partners with each other (with the exception of certain limited instances), nor is any one firm responsible for the services or activities of any other. Each firm governs itself and handles its administrative matters on a local basis. Any and all references to Grant Thornton International are to Grant Thornton International Ltd.

With offices in Jersey and Guernsey, Grant Thornton Limited is one of the Channel Islands’ leading accounting, tax and business advisory firms dedicated to serving the needs of privately held businesses, financial services and private clients. We offer a full range of audit, assurance, tax, corporate recovery and advisory services. As a member firm within Grant Thornton International we have access to member and correspondent firms in over 130 countries, offering our clients specialist local knowledge supported by international expertise and methodologies.

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Cost of living, lack of qualifications and rival jurisdictions are contributing to a skills shortage in the Channel Islands’ finance industries. what needs to be done to turn the situation around?

THE MOST PREDICTABLE side-effect of a recession is a rise in unemployment figures. Unfortunately, as an economy begins to grow again, there’s no guarantee that those who lost their jobs will find new ones, as a financial crisis stirs things up. The economy that exits a recession can look quite different to the one that entered it.

Although the economies of Jersey and Guernsey are still finance-centric, there has been change. The banking sector in both islands is dwindling. The funds sector is growing, as is private equity and the digital industries. These all existed in the islands before 2008, but they have all gained traction and are attracting new ▼

Mind the

Words: Kirsten Morel

gap


Finance

business, and they need people to work in companies keen on growth.

On the face of it, this is all good news, but look a bit closer and you can see that today’s success stories are posing challenges for the islands’ workforces.

JOB CREATIONJersey recently announced record employment figures, with 650 jobs having been created in the 12 months to the end of June. Guernsey hasn’t hit record levels but has seen an increase of 150 jobs created in the same period. This is positive stuff, but when you look at the unemployment figures, these new jobs have had very little impact. In fact, Jersey now has more people actively seeking work than it did a year ago, and in Guernsey the unemployment rate has remained steady over the past 12 months.

The post-recession employment picture is one of contradictions. It’s both optimistic and pessimistic. There are more jobs, but there has been no fall in unemployment.

The logical conclusion from this scenario is that firms are bringing people in to fill skilled roles that the islands’ existing workforces can’t fill themselves. Whether that is the right or wrong way to deal with a skills gap is a question for another day, but it does highlight the fact that the islands find themselves in a difficult position as their economies recover.

“Governments go out and promote the islands, but we haven’t got the people with the required qualifications,” says Theresa Jackson-Guillou, Head of Human Resources at fund administrator Ipes. “As a business we are growing, but there aren’t enough skilled people in the islands.”

According to Shelley Kendrick, Managing Director at recruitment consultancy Kendrick Rose, one of the causes of the gap was the reaction of many businesses to the slowing economy.

“Today the demand for qualifications is greater, but because of the recession there was a cull in graduate trainees and other positions, but no element of succession planning for better times.”

At Ipes, Jackson-Guillou says that they continued to invest in training during the downturn but that other businesses “put a pause on training and recruitment”.

In this light, financial services businesses can be seen to have played a role in making things difficult for themselves.

And with employment licences easier to come by for more senior roles, where experienced and qualified professionals are required, it can be seen that the skills gap itself isn’t focused on a lack of candidates for top positions.

“There’s a shortage of individuals with experience in the low to mid-levels, people who are looking for their second or third job in that mid-level role,” says Mike

There’s an awful lot of headhunting of Jersey people by UK companies. They’re using social media to get to them. It’s a more competitive world and people are much more savvy


Finance

Bonsall, Guernsey Manager of recruitment consultancy AP Executive.

The problem that this creates for the islands isn’t one that’s easily solved by issuing more licences, because at these levels Guernsey and Jersey are both much less attractive as propositions for young professionals.

“The cost of living, even with a licence, can be off-putting,” says Bonsall. “A newly qualified accountant or lawyer can still make it work in terms of cost of living, particularly if they’re single – but with a family, it can be challenging.”

Kendrick also sees the specific nature of the offshore finance industry as possibly putting people off working in the islands. “I think it’s hard to bring people in from the UK because offshore is specialised,” she says. She also points out that this means that other, more mainstream financial centres are attractive to young, qualified islanders looking for something more than the islands can offer. “There’s an awful lot of headhunting of Jersey people by UK companies. They’re using social media to get to them. It’s a more competitive world and people are much more savvy.”

ACTION POINTSOf course, making Jersey and Guernsey cheaper or changing laws so that the workings and regulation of the finance industry mirror those of other jurisdictions

aren’t realistic options. So what can the islands do to ensure they have the right people available for the vacancies that companies need to fill?

Bonsall believes the licensing of workers from outside the islands for limited periods of time has its drawbacks. “As a company, you put a lot of time and resources into developing people and you get them to a point, but then you wave goodbye to them and see them disappear to a competitive jurisdiction.”

However, given the political will that would be needed to amend these laws, businesses shouldn’t hold their breath for change any time soon. What they can do, however, is look to get the most from the existing regime, says Bonsall, who believes that “firms should be aware of what’s needed to make a robust application”.

The islands can also work to make themselves more attractive in areas that are more easily controllable. On the political front, Shelley Kendrick sees Jersey’s five-year rule – which ensures that only those with five years’ residency are able to apply for permanent positions – as being ripe for change. “There has to be some understanding of business needs, and reducing the five-year period to three years would help a great deal,” she explains.

At the root of the problems with the rules and regulations identified by Kendrick and Bonsall is the difficulty in changing

them. Naturally, there is an ebb and flow in the size and nature of the skills gap. Just five years ago, firms were laying people off, not hiring them, but regardless of the economic conditions, employment and population laws have remained pretty much unchanged.

“Flexibility is important,” says Jackson-Guillou. “The question I would ask is, how flexible is the government?”

Given the accessibility of the islands’ governments to the business sector, it could be argued that they are at least open to debate, but changing laws takes time and, unlike business leaders, politicians have to take the views of the whole electorate into account before they will make changes.

LEARNING CURVEIt’s not just these big changes that can make a difference, however. Jackson-Guillou points to the lack of opportunities for gaining professional qualifications through evening classes in Guernsey as a factor that may put employers off investing in training. “In Guernsey, it’s hard to support someone through a qualification if they might be out of the office for 40 or 50 days of the year,” she says.

Certainly, smaller companies are likely to find it difficult to make time commitments on this scale and Jackson-Guillou feels that Ipes’ decision to continue investing in training throughout the recession has played an important role in the company’s growth.

Jersey is also reaching out to young islanders who have left for university. It is building an alumni network to help graduates keep up to date with the opportunities available ‘back home’, as part of the effort to halt the brain drain that often characterises small jurisdictions.

Unfortunately, there is no silver bullet that will suddenly close the skills gap that the Channel Islands is experiencing. But aside from waiting for the ebb to become a flow once more, companies and governments must work together to address the skills shortage.

There is a need to make the islands more attractive to residents and non-residents alike and there must be opportunities for people to gain the skills they need to fill the roles that currently lie vacant.

In such a highly competitive world, doing nothing is not an option. To do so would result in businesses looking elsewhere, and then the anticipated flow may never return. n

KIRSTEN MOREL is a freelance business writer

07.10.2015 10:09 (QUADRI-tx vecto) flux: PDF-1.3-Q-300dpi-v-X1a2001-fogra39


Ross Youngs, Head ofSales at BNP ParibasSecurities Services inthe Channel Islands, explains how equity bridge facilities can help funds companies keep moving forward

IN A RAPIDLY changing world, standing still is probably the worst thing any company can do. Indeed, stand still for too long and you may actually find yourself heading backwards as all the companies around you go speeding past.

Making sufficient investment and developing your business, however, isn’t easy in the current climate, particularly if you are relying on financing to make this happen. With many financial institutions closing their books and being unwilling to extend finance in many instances to all kinds of companies, including funds businesses, it’s a source of reassurance to many to discover that there is an option, through an equity bridge facility (EBF).

EBFs – also known as ‘subscription line facilities’ or ‘capital call facilities’ – are medium-term loans secured by the limited partners’ commitments in infrastructure, private equity, real estate or other funds. They usually take the form of revolving facilities over a one- to three-year term.

It’s an area of particular relevance at BNP Paribas Securities Services, as we have most recently introduced such a facility to the private equity fund community.

The facility, which is subject to applicable legal and regulatory limitations, is granted at fund level or through a special purpose finance vehicle held by the fund, with an accompanying guarantee from the fund and/or from the investors.

WHY USE AN EBF?EBFs are most typically used to provide both certainty for the investment manager that they have funds available for investment immediately should the

ABOUT BNP PARIBAS SECURITIES SERVICES BNP Paribas Securities Services is the largest custodian in the Channel Islands. We offer a highly beneficial integrated model, blending together the roles of fund administrator, transfer agent, depositary, financier and FX provider. Our experienced teams can streamline and simplify processes across products, and ensure that we fully meet the needs of your fund and your investors.

To find out more about our EBF offering, contact Ross Youngs on 01534 813833 or email [email protected].

opportunity arise, and to act as a working capital facility for fund expenses.

Even if a fund has investible cash in the form of limited partner commitments, an EBF removes the administrative need to call capital from investors in anticipation of a deal that may not go through, or to call frequently for small regular expenses.

This additionally removes the risk of a funding gap for an investment, should an investor default at the time of a capital call. The EBF may also be used by the fund to pay any costs incurred upon a failed acquisition.

Using the EBF as working capital reduces the number of capital calls made during the investment period, providing the fund’s management company with significantly cheaper capital. The delay to call capital from investors improves the IRR at exit by reducing the total time that capital has been invested, and in some cases removes the need for investor commitments ever to pay directly for fund expenses.

SECURITY AND OTHER CONSIDERATIONSAs with any line of financing, there are factors that a funds business needs to take into account. Security, for instance, varies from one jurisdiction to the other. In the case of our EBF, the lender has the right to call undrawn commitments under the fund’s documents (only in case of default). Jersey General Partners, however, may assign undrawn investor commitments to the lender by way of security, giving them the express right to request direct payment of any sum due under the EBF from the investors.

The costs of borrowing are also a

consideration and depend on the fund’s size and the investors’ risk. Our margin, commitment and arrangement fees, along with other key facility terms, are benchmarked against other market transactions and are considered competitive. Our facilities are typically committed, with the flexibility of an additional uncommitted tranche.

A detailed analysis, including due diligence, of the investment structure and the investors is critical in determining the key terms of the facility to be granted to the fund. In addition, due diligence into the fund documentation and its investors is necessary to define the duration of the financing, and to review the impact of the financing on the fund’s investors.

Clearly each fund and manager will have unique requirements and our ability to be responsive, efficient, and flexible to these needs is critical in helping businesses keep moving forwards. n

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Bridging the funding gap

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money

Money on their minds

CHARLIE MUNGER IS Warren Buffett’s slightly lesser-known billionaire business partner at Berkshire Hathaway. Often called the ‘world’s greatest living investor’, he’s also considered an amazing thinker – a man known for his worldly wisdom. Apparently, Munger realised that learning new things produced the same pleasure chemicals in his brain as gambling does for others. Only in his case, he’s a helluva lot more successful at reaping the rewards.

It’s not only poor returns on savings

What drives people to invest their own money in someone else’s business – and do ‘angels’ think

differently from venture capitalists?and the attraction of reality shows such as Dragon’s Den and its US equivalent, Shark Tank, that have helped inspire the estimated 18,000 ‘angels’ investing in early-stage startups in the UK. Like Munger, personal motivation appears to strongly influence how individuals choose to invest their own money in ventures, what role they’ll play beyond that and how much due diligence happens before they succumb to ‘gut feel’.

Each investor will have their own criteria for parting with their money and how much

Words: Dr Liz Alexander

£belief

Business

passion

involvement they want after writing the cheque – but is their thinking also swayed by whether they invest professionally on behalf of other people as well as for themselves?

Ajay Goel is a prime example of someone who straddles both these worlds. A Stanford University alumnus who belongs to the Stanford Angels & Entrepreneurs network, he is also Managing Partner of a venture capital and private equity firm in Bangalore, India.

In the disruptive technology and Internet of Things sectors that Goel is most passionate about, startups don’t need huge amounts of money to get under way, he says. What they do need is older, business-minded individuals with experience in areas like operational excellence, IP protection, global marketing and successful exiting.

As an angel/venture capitalist, Goel helps founders take advantage of an increasingly popular exit strategy – one in which the younger, more nimble disruptor is acquired by larger corporations that are looking to achieve the innovation they need for future growth.

That said, it’s not only large enterprises that want this. In the case of fellow Indian angel, Naveen Lakkur, an investment of his, PeopleHealth – an online marketplace connecting doctors, hospitals and insurance companies to consumers looking to compare healthcare costs and services –

was acquired by a one-year-old US-based startup looking to achieve growth in emerging markets, including India.

But all this talk of selling up is perhaps getting ahead of the game. Yes, an investor needs to have a view on the exit, but there’s a lot that needs to take place before that happens.

ADDED VALUEBusiness angels often look at what benefits – other than money – they can accrue while waiting the five, six, even 10 years before they see returns.

As Goel, who previously held positions within Symantec, Cisco Systems and Sun Microsystems, explains: “This is where I can contribute back to society and that can be my career, rather than running an operation. I may not be innovating myself, but I’m helping a bright set of young innovators become successful.”

Indeed, there’s a ‘bundle of inputs that angel investors provide’, which a 2010 Harvard Business School paper – entitled The Consequences of Entrepreneurial Finance – found had a ‘large and significant impact on the success and survival of start-up ventures’.

Charlotte Mason isn’t the least bit surprised by that. She’s Entrepreneur in Residence at graduate business school INSEAD and runs a ‘private club’, or angel syndicate, in Guernsey. When it comes to

the mindset of someone investing their own money, as opposed to VC firms investing institutional money, however, she says that there are key differences.

Recalling a talk she heard recently, Mason says: “A VC was saying how they will make 10 investments and if, after 12 months, one doesn’t look like it’s going the right way, they’ll take it out of their portfolio and close the entity down.

“Angels, on the other hand, are more forgiving, more willing to wait for returns, more willing to help, and don’t necessarily want to control your business. VC firms would like to work in partnership, but make no mistake about it, if the equity isn’t performing, they’ll step in.”

An angel since 2010 and a self-described ‘risk taker’, Mason has yet to see anything from the 13 investments she’s made, only one of which has so far failed.

She says there’s no definitive exit strategy for angels and when a founder tells you they’re looking at three to five years, your best bet is to double that. So, unlike their VC firm counterparts, angels shouldn’t be looking for a quick return.

They also diverge on attitudes toward risk. While ‘friends and family’ invest at the earliest, riskiest idea stage, angels typically want evidence that the venture has generated some revenue, that there’s a market for the product or service.

However, as Jennifer Strachan, Executive

belief innovation▼

Business


Director at Startup Guernsey, explains: “To an angel with a portfolio of 10 investments, if a couple work well because they’ve chosen wisely, four tick along and they get their money back, and four fail, they’re still considered to have done well. But for a VC firm, their costs and the expectations of their shareholders are so high that companies that just ‘tick along’ are considered failures.

“From their perspective, they have to invest in growth, and they participate in that growth by going in with a specific strategy for how to make that happen, whereas an angel will just go in believing in that company.”

DIFFERENT STROKESSuch ‘belief’ takes different forms. In Mason’s case, it’s always about people, much of which is ‘gut feel’. Her rule of thumb? Even if the product is fantastic, if the team is poor she won’t invest. Far better, she says, to have a not-so-fantastic product and a brilliant team that can communicate effectively, and execute on their promise.

Goel, who also belongs within the VC firm/private equity world, takes a more ‘scientific’ approach, using the same selection criteria and due diligence for his own investments that his firm developed to safeguard shareholders’ and limited partners’ money.

That’s also true for Eric Martineau-Fortin, Founder and Managing Partner of White Star Capital, whose $75 million tech fund invests in startups that develop mobile apps, connective devices, wearable technology and the like.

“As an angel for almost 10 years, I’ve never invested differently than I do as a VC in our institutional fund. If you want to make money in this industry – as an angel, VC or growth equity partner – you have to apply the same level of discipline,” he says.

What due diligence means for Martineau-Fortin, however, is different to angels investing in ‘smaller tickets’ – they likely aren’t writing cheques for $500,000 to $5 million, as White Star does. That’s because the institutions and government entities whose money he’s investing alongside his own insist on certain rules – including conducting robust criminal record and credit checks on every founder the firm is looking to fund.

“Angels and VCs in family offices might decide not to do these checks,” he says. “When it’s your own money, you take your own risk.”

Nevertheless, the key for Martineau-Fortin is that the partners of White Star have ‘skin in the game’, and therefore a full

measure of the risk everyone’s taking. Coming back to Charlie Munger’s

‘worldly wisdom’, how do angels and VCs best select the ventures to invest in?

Lakkur, an early user of PeopleHealth, found he was so impressed with the service – as were the friends and family to whom he’d recommended it – that he decided to get in on the ground floor as an investor.

The same was true for Strachan, who orchestrated two investments in Channel Islands firms Law at Work and MJ Hudson on behalf of Polygon Group, as a result of experiencing their professional services.

She also agrees with Charlotte Mason, that participation in angel networks also helps individual investors not only to diversify their portfolios, but provides exposure to other members’ business expertise and sector knowledge.

Just don’t overlook that squishy, intangible concept known as ‘passion’. Martineau-Fortin is passionate about mobile technology, believing that this disruptive environment offers ‘spectacular value creation’.

If you combine pleasure and profit, then as an angel or VC, you’ve (hopefully) got it made. n

DR LIZ ALEXANDER is an author, educator, business strategist, and Founder of business consultancy Leading Thought

As an angel for almost 10 years, I’ve never invested differently than I do as a VC. If you want to make money you have to apply the same level of discipline

management


Business

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Business

Five networking

no-no’sNeed better connections? Need more people on

your side? Then don’t do these five things. Ever

EVERYONE TRIES TO network – whether that’s in person at a gathering of ‘peers’, or online through LinkedIn and other platforms. It’s seen by some as absolutely necessary to business success, while others just plain hate it. Few people, however, do it well, and many often make the same basic mistakes.

So here’s what not to do when you’re trying to expand or leverage your network.

1DON’T TRY TO TAKE BEFORE YOU GIVEThe goal of networking is to connect

with people who can help you make a sale, get a referral, establish a contact and so on. When we network, we want something.

At first, however, never ask for what you want. In fact, you might never ask for what you want. Forget about what you can get and focus on what you can provide. Giving is the only way to establish a real connection and relationship. If you focus solely on what you’ll be able to get out of the connection, you’ll never make meaningful, mutually beneficial connections.

When you network, it’s all about them, not you.

2 DON’T ASSUME OTHERS SHOULD CARE ABOUT YOUR NEEDS

Maybe you’re desperate. Maybe partnering with a major player in your industry could instantly transform red ink into black. No one cares. No one should care. Those

4 DON’T ASSUME TOOLS CREATE CONNECTIONS

Twitter followers, Facebook friends and LinkedIn connections are great – if you do something with them. In all likelihood, your Twitter followers aren’t reading your tweets, your Facebook friends rarely visit your page, and your LinkedIn connections aren’t checking your updates.

Tools provide a convenient way to establish connections, but to

maintain those connections you still have to put in the work. Any tool that

is easy or automated won’t establish the connections you really need.

5 DON’T REACH TOO HIGHIf your company develops cutting-edge

technology, establishing a connection with entrepreneur Elon Musk would be great. Or say you need seed capital – hooking up with Peter Thiel would be awesome. Awesome and almost impossible.

The best connections are mutually beneficial. What can you offer Musk or Thiel? Not much. You may desperately want to connect with the top people in your industry, but the right to connect isn’t based on want or need. You must earn the right to connect.

Find people who can benefit from your knowledge and insight or your connections. The ‘status’ level of your connections is irrelevant. All that matters is whether you can help each other reach your goals. n

JEFF HADEN is a best-selling business author. This article originally appeared on www.inc.com

Words: Jeff Haden

are your problems and your needs. Never expect others to respond to your needs. People may sympathise, but helping you is not their responsibility.

The only way to make connections is to care about the needs of others first. Ask how they’re doing. Ask what could help them. Care about others first – then, and only then, will they truly care back.

3 DON’T TAKE THE SHOTGUN APPROACHSome people network with anyone,

tossing out business cards like confetti. Networking isn’t a numbers game. Find someone you can help, determine whether that person might (someday) be able to help you, and then approach him or her on your own terms.

Always select the people you want to network with. And keep your list relatively small – it’s impossible to build meaningful links with dozens or hundreds of people.

Quilter Cheviot Limited is registered in England with number 01923571, registered o� ce at One Kingsway, London WC2B 6AN. Quilter Cheviot is a member of the London Stock Exchange, is authorised and regulated by the UK Financial Conduct Authority, is regulated by the Jersey Financial Services Commission for the conduct of investment business in Jersey and by the Guernsey Financial Services Commission to carry on investment business in the Bailiwick of Guernsey. Accordingly, in some respects the regulatory system that applies will be di� erent from that of the United Kingdom.

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OS005052_QC_Ad_Jersey_Business_Life_276x203[1].indd 1 22/09/2015 16:37


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working toward wellnessGlenda Rivoallan, Director of private members club Healthhaus, looks at the vital role that employers have to play in the health and wellbeing of their employees, and how Healthhaus Express could be a first step to wellness

IF THE MOST recent findings of the States of Jersey Innovation Review are anything to go by, then Jersey labour productivity still lags behind many of its European counterparts. Recommendations put forward to improve this situation include investment in technology and innovation, deregulation and upskilling the workforce.

There’s no doubt that each of these has a part to play, but the recommendations don’t take into account the fundamental problem that is a serious barrier to growing prosperity – that a large proportion of the workforce isn’t healthy enough to drive the necessary improvements in productivity.

With poor diets, growing obesity, diabetes, smoking and sedentary lifestyles – as well as increasing levels of workplace stress, personal debt, family breakdown and depressive illness – the burden

Healthhaus

of chronic disease in the workplace population is set to rise at alarming rates over the next 30 years. As a result, the Channel Islands and the UK are facing the economic and social consequences of a wellness crisis.

There’s no escaping the fact that employee health and wellbeing needs tackling head on – and at Healthhaus Express we believe this needs to happen at every level, be that government, corporate or individual.

While there’s a growing acceptance of the fact that something needs to be done, and quickly, there’s an argument to be made that the focus, at government level at least, is often too much on cure, rather than prevention, as a recent health debate in Jersey demonstrated. There is much that government can be doing to

provide incentives for organisations to put employee wellbeing firmly on their corporate and social responsibility agenda.

COMPANY ACTIONCompanies, on the other hand, are waking up to the importance of wellbeing. In the UK, 200 million days are lost each year due to sickness, at an estimated cost of £13bn, according to the CBI. And each week, four per cent of the workforce (one million employees) takes time off due to illness.

Although companies are able to implement programmes much faster than government ever can, the problem is that many of them are going about it in completely the wrong way.

Some treat wellbeing as a perk or benefit in kind, that employees only receive once in a while. Others are trying to implement


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working toward wellness

By exercising in short intervals on a set of exercise stations arranged in a circle, you can give your entire body a workout

FIND OUT MOREFor more information on Healthhaus Express or to book a complimentary corporate wellness event, contact our corporate lead, Nathalie, on 01534 747212 or email [email protected]

programme. Employers can take all the steps possible, but if employees aren’t involved in the solution, it’s difficult to succeed. Wellness often requires a complete lifestyle and behaviour change, and that takes time and commitment. Individuals need to commit too – taking proactive responsibility for their lifestyle choices, health and fitness.

This could include making dietary changes, taking regular breaks at work, generally being more active (such as taking stairs rather than the lift), and rethinking how they get to work, such as cycling rather than driving.

HOW HEALTHHAUS EXPRESS CAN HELPStudy after study has shown that a proper diet and regular exercise are two of the foundation stones for a healthier life. The latter can also lead to a much healthier mental state.

While it would be easy to say that everyone should eat more healthily and exercise more often, at Healthhaus Express we acknowledge that due to higher stress, longer working days and constant multitasking, it’s more difficult to find the time to act on wellness goals.

It’s against this landscape that we launched Healthhaus Express earlier this year in Gloucester Street in the heart of St Helier. Creating a site in this town location was important because we wanted to be as convenient as possible and near to people in their workplace.

Running as a sister club to the larger Healthhaus at the Hotel de France, Healthhaus Express offers:● Milon circuit training● On-site nutrition to go● Evening outdoor running club● Lunchtime outdoor circuits● Complimentary nutrition course● On-site personal trainers● Luxury changing rooms

The foundation of training at Healthhaus Express is the innovative and award-winning Milon Circle. By exercising in short intervals on a set of exercise stations arranged in a circle, you can give your entire body a workout, enhance muscle strength, reduce body fat and body weight, and boost metabolism.

And this form of exercise is more effective in less time. You only need to train twice every 10 days for 35 minutes, or four days out of 10 at 17.5 minutes, for guaranteed results.

Research has shown that strength training such as this is the best way to tone your body and lose weight.

When we talk about strength training at Healthhaus Express, we don’t mean bodybuilding, we mean wellness training.

Our muscles not only keep us young and fit, they also help us stay slim. They actually consume energy and help us burn fat more efficiently.

The Milon suite is constantly staffed by our Milon Experts, and our Milon hot desk will ensure that you get the attention you rightly deserve. Most importantly, this training can easily be integrated into your working day.

As well as the services outlined above, Healthhaus Express also offers an in-club mentor and online home support service to help clients stay on the path to true health and happiness.

Acknowledging the role that companies have to play in the wellbeing of their employees, Healthhaus Express offers a corporate rate, which is available to employees when organisations commit to a wellbeing strategy in partnership with Healthhaus Express.

So, whether you’re an individual looking to get on the road to a healthier way of life, or a company that recognises the importance of wellness in the workplace, Healthhaus Express could well be the place for you. n

wellness programmes with little or no experience or without a carefully structured plan. Indeed, some firms, despite having the best of intentions, may well be spending money that doesn’t deliver the results it could, given a little more consideration and planning.

At Healthhaus Express, we firmly believe that employers, especially SMEs, can make considerable cost savings if they can reduce absence by improving employee health and wellness at work. Indeed, corporate health and wellness should be seen as high a priority in terms of budgetary allowance as are research and development, and customer relationship management.

Just a few of the benefits that firms will gain from investing in a healthier workforce include: ● Improved retention ● Higher employee commitment ● Higher productivity ● Enhanced employer brand ● Greater employee resilience

We believe that these alone present a strong business case for improved focus on and investment in wellbeing. But how can an employer incorporate wellbeing into the workplace?

The first thing for companies to do is to go beyond the bare bones of the legal ‘duty of care’ for which they are accountable under health and safety legislation. Corporate wellness can’t be treated as a band aid, and you definitely won’t be able to find it in a fitness app.

Here are just a few strategies that employers should consider: ● Health screening ● Wellness education ● Access to health and wellness services● Employee assistance programmes● Incentive schemes ● On-site healthy nutrition

Engagement, motivation, support and strategy are the keys to a successful

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BLtechnology

Wearable is being hailed as the biggest step forward in tech since the home computer,

but certain limitations are already making some question how far it can go

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Wear’s the future?


who detected his movement at regular intervals and measured the impact of his medication.”

There’s nothing intrinsically new about wearable tech. Travel back in time to 17th century China and you will find the abacus ring – designed to perform complex mathematical tasks ‘on the hop’. It might not look much, but it had an epic battery life.

What’s new, however, is the notion of the ‘quantified self’ – a concept that incorporates technology and data to self-monitor aspects of our daily lives, from our health and fitness to the food we consume and the quality of the air we breathe.

SUPPLY AND DEMANDSince the introduction of the first mass market smartwatch in 2012, with Pebble’s Kickstarter campaign raising $2.02 million, the market was blown wide open for Apple and Android to step in. The Apple Watch went on sale earlier this year in the UK, in case you hadn’t noticed.

Another major player in wearable tech is Fitbit, which can be worn or clipped to clothing and can monitor the number of steps taken or floors climbed, time your exercise routines and even approximate the number of calories you burn.

Despite the limited range of colours and the subtlety of the Fitbit wristband, the device’s parent company has gone from strength to strength. From an IPO of $20 a share in June 2015, at the time of writing shares had reached $35 in value, having surged more than

20 per cent in value on the second day of trading, exceeding competitors Garmin and Jawbone.

However, the road to a wearable future hasn’t run smoothly. Google Glass was announced in 2013 to much fanfare - a pair of ‘super specs’ allowing a user to lay a map over their vision and, if the advert was anything to go by, help them find obscure jazz LPs in record shops. It looked and felt like a prototype – a singularly nerdy looking device that was marred by poor product design, a hefty price tag and a naive presumption that people want to talk to themselves in public. This, of course, translated into poor commercial success, and the device is still in the prototype phase.

This underlines the need for wearable technology to be stylish – a fashion accessory

that happens to have utility. With catwalk models parading wearables as the world of tech

converges with fashion, it’s got to be sexy. Steve Jobs enshrined the religious devotion to product

design – even if competitors make superior devices, Apple hardware makes you look cool.

Aside from his personal experience, Aonghus Fraser, a former developer of medical software, is enthusiastic

Words: Ben Jordan

I’M JUST GOING to submit myself to a physical examination… hold on. A quick glance tells me my heart rate is just under 80bpm. My blood pressure at rest is a comfortable 120/80. As for my BMI... well, my hypochondria just took over.

I didn’t have to consult a GP to get these readings, I used a wearable piece of technology called the Jawbone Up. Just one of many pieces of kit that are transforming the way we interact with technology and the world we live in.

Tony Moretta, CEO of Digital Jersey, is a proud owner of a wrist-mounted Jawbone 24. “It’s a wonderful thing, as it gives me a read-out of my vital signs and sleep pattern analysis, as well as the number of steps I take during the day. It has an extra sensitivity mode that tells me the number of times I woke up during the night and assesses my quality of sleep. It’s uncannily accurate,” he explains.

Aonghus Fraser, Group Chief Technology Officer at C5 Alliance, has found a more direct medical benefit. “My father has suffered from Parkinson’s disease for almost 10 years,” he says. “He recently took part in a trial and was given a smart watch to monitor his shaking. The data was then fed to a consultant,


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about the health benefits of wearable tech. “The potential applications are enormous. A wearable device can measure heart rate, blood pressure, irregular heat patterns and, in extreme cases, alert the emergency services. It could potentially save lives.”

Of course, beyond early adopters and tech geeks, is there really such a huge demand for wearable technology, seeing as we’ve got this far without it?

Key Kawamura and Ali Ganjavian – the founders of the Batband head device that transmits audio directly through your skull, bypassing the ears – have an ambivalent attitude to such questions, saying: “[It’s] a terrific question for market analysts. We prefer taking part in the action.”

CHICKEN AND EGGAccording to the Wearable Future Report – part of PwC’s Consumer Intelligence research series – the outlook is mostly promising. Admittedly, more than a third of those surveyed who’d bought a piece of wearable tech over a year ago no longer use it – however, 53 per cent of millennials and 54 per cent of early adopters say they are excited about the future of wearables. The main areas of interest were child safety, healthier living and, of course, being able to access mobile apps easily.

The same study acknowledges the relatively small current market share of wearables, but predicts that sales will increase to 130 million units in 2018, leaving huge opportunity for growth.

If this is true, it would be significantly more than the 10 million units sold last year, according to Deloitte’s TMT report, which was divided fairly evenly between smart glasses, fitness bands and smart

watches. To put this into perspective, 160 million smart tablets were sold in 2014.

Deloitte’s optimism has been tempered by the admission that uptake will depend on a number of factors, including privacy concerns, the availability of compatible apps and battery life.

Moretta also underscores the importance of suitable apps to interface with the devices. He says: “The developers make use of the hardware that is available to them, which ends up defining it. It’s chicken and egg. The developers only design software if enough people buy the device, and the consumer only buys the device if they know there’s going to be enough software. It will get there.”

Fraser likewise has a pragmatic view. “There are obviously a lot of privacy concerns and culturally a lot needs to happen before there is mass uptake – it must be fashionable but it must also have real benefit,” he says. “Once there is government funding through the NHS, for example, and the medical community gets a better idea of its utility as a medical tool, it may be that it will result in a more efficient and better health service.”

TABULA RASAGiven that the most well known items of wearable tech centre around either smart glasses or wrist-mounted devices to monitor health, will development in this sector be fairly limited? Are there more variations on this theme?

Tony Moretta stresses again that this will be defined by the apps available for wearable devices. “It’s back to the software,” he says. “When the iPad came out, what did you use that for? What has driven the usage of

BY 2018,TWO MILLION EMPLOYEESWILL BE REQUIRED TO WEAR HEALTH AND FITNESS DEVICES AS A CONDITION OF EMPLOYMENTSource: Gartner

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iPads in the business world is software developers creating really useful apps like a notebook, presentation suite and video conferencing. In itself it’s a tabula rasa.”

The founders of Batband neatly summarise the potential for wearable tech versus human beings’ ability to realise it. “The shock of the new always creates ripples of fear,” they say. “When Gutenberg invented the printing press, reactionaries feared that handwriting would die out. And here we are, almost 600 years later, still scribbling words on Post-it notes. Innovation and advancements always take time to be embedded in our day-to-day lives.”

Despite the zeal of developers, you’d be forgiven for thinking wearable tech was a passing Silicon Valley fad. Whether you wear it for fashion, fitness or fun, what is wearing is the patience of consumers.

Wearable critics have argued that the measure of a successful device is whether it stays on your wrist or simply winds up forgotten in a drawer somewhere. Short battery life, poor product design and functionality could well be a killing blow for such innovations.

So will the world give up on wearables? As ever, most people are waiting for the next gen before they make up their minds. All hail the ‘next cool thing’. n

BEN JORDAN is a freelance technology writer

BELTYThe Belty

smart belt is a fascinating variation on the heath

wearable. Not only can

it count your steps, it can tell

you when you’ve been sitting down for too long – a fine choice for those resigned to a life of a couch potato. In addition, the belt will loosen according to your expanding waistline – and when sitting down – and it will vibrate when you’ve eaten too much!www.wearbelty.com

SKULLYThe Skully is a fully integrated smart motorcycle helmet, which boasts, among other features, a heads up display that increases a rider’s field of vision to 180º, built-in GPS, and even the ability to tint the visor in response to lighting levels. Clearly there is a demand for such products as this particular piece of wearable tech was able to launch through crowdfunding on IndieGoGo, where it exceeded its funding target by just short of a staggering 1,000 per cent. Skully, however, retails at about $1,500, while a perfectly adequate helmet can be bought for a tenth of that. Then again,

when has price ever stopped a tech-head?

www.scully.com

HIKARU SKIRTOnly in Japan. It’s from the sublime to the ridiculous with these futuristic short skirts that illuminate the wearer’s thighs. Hikaru aptly means ‘shining’ and the skirt comes equipped with LED lights and miniature gyro sensors on the inside. As the skirt lights up, the colour and pattern of the light changes when the wearer moves. Japanese designer Kiyoyuki Amano has combined fashion and technology with the skirts, which are meant to bridge the gap between everyday fashion and cosplay.

When Gutenberg invented the printing press, reactionaries feared handwriting would die out. and here we are, almost 600 years later, still scribbling words on Post-it notes

WEAR NEXT?BL takes a look at three pieces of wearable kit that may or may not take the public by storm


As the speed of technological advances accelerates, how can firms expect to keep pace – let alone anticipate what’s coming next?


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DISRUPTION – IT’S THE holy grail of innovators and entrepreneurs the world over. No longer is a business model sufficient if it has a unique selling point, today’s investors are looking for more than gradual improvement; they want to see companies destroy existing paradigms and build new ones in their place.

That’s definitely the story you’ll see bandied around the media and espoused by politicians who, desperate to see their jurisdictions diversify and succeed in the 21st century, are prone to proclaiming that they want the next Facebook to come from their small patch.

We’re all aware of certain companies that are viewed as disruptors. From Amazon to Uber via Airbnb, these firms have changed their respective games by applying new technologies that lower barriers to entry and provide greater consumer choice. Yet while their successes can’t be doubted, they’re not strictly speaking new technologies.

The reality is that these firms’ successes come from the application of technologies that have been enormously disruptive because they have changed the underlying infrastructure of the world around us. It’s the microchip and its adaptation into the smartphone, the Internet and its evolution into the cloud, that have had the greatest effect – changing not just a single sector but the entire business world.

“Disruptive technology bounces the curve,” says Dave Newbold, Chief Operations and Technology Officer at JT Global, referring to the comforting, curving graphs that reassuringly confirm to business leaders that they are on the right track. “Disruptive technology changes the business model in a violent way, causing the curves to jump massively up or down, and it’s hard to predict.”

Indeed, it’s this lack of predictability – the not knowing what or when – that amplifies the disruptive power behind technological advances. And while we may not know when new technologies will gain traction, disruptive innovation is definitely happening more often than ever before.

“I don’t see it slowing down at all,” says Mark Loane, CEO of C5 Alliance Group. “You can see the time cycles between disruptive technologies becoming smaller. Society’s ability to deal with it may slow down but the changes won’t.”

Words: Kirsten Morel

Certainly, many of us feel as though the pace of technological change is accelerating and a quick look at history concurs. From the invention of the wheel to the Internet via the printing press, the steam engine, the combustion engine, the airplane and the silicon chip, the interval between game-changing advances is shortening.

This accelerating pace of change has been keenly felt in the workplace, where computers have vastly increased the ability for companies to store and access data. In factories, robots have proven themselves faster, more accurate and efficient than humans.

And back in the nineties, before the slowest firms had even begun to adapt, the Internet broke through, smashing geographic and political barriers before morphing into the cloud, which has made computing power available on a scale and at a price that could hardly have been imagined.

To many, back in the seventies and eighties, the arrival of the PC in their workplace came out of the blue. In today’s more tech-savvy world, we can be more prepared for change because there is a technological awareness that was previously missing. That said, we will never be prepared for the great, unexpected leaps forward.

Of the technologies that we do have a handle on, Dr Kevin Curran, Senior Member of the Institute of Electrical and Electronics Engineers (IEEE) and reader in computer science at Ulster University, sees the spread of computing into every part of our lives as the next big step.

“The Internet of Things (IoT) will put computing everywhere,” he says. “We’ll see a lot of wearable devices that connect to the Net. We’ll also see faster 5G coming online and homes becoming hubs, sharing their bandwidth with others.”

It’s the incredible fall in pricing and combined rise in computing power that will enable ubiquitous connectivity. Moore’s Law still prevails and it’s only now that we are truly waking up to its implications. Curran foresees a world in which customers remain loyal to companies because of the convenience that firms will be able to provide.

“We will see a lot of single use devices. Amazon for instance, has a button that reorders a particular product. It takes care of the whole process for you and although it only has one use, it does it beautifully. If you’re a small business trying to break into a market, you’ll issue your own buttons.”

SENSE OF INEVITABILITYThe Internet of Things is not a single technology, it’s a result of the inevitable convergence of Moore’s Law with the Internet. Once we’ve linked every device and item of clothing

in our homes, the mass of data that will be created will be ripe for exploitation.

Ian Goddard, Head of Crown Dependencies at Infrasofttech, says: “I think the combination of technologies and data will enable companies to provide more services and enhance existing services. Ultimately, this mass of data will be used to personalise services. You can envisage a technology that knows my eating habits,

restaurant booking patterns and preferences and is therefore able to suggest ideas for me to eat.”

The payments industry is one area that has seen constant change over the past 30 years and it’s not slowing down. Today, the likes of Apple and Google vie with banks, payment providers and new technologies such as Bitcoin for domination of the space, with the outcomes far from clear.

“Even though the major banks have their own mobile

Disruptive technology changes the

business model in a violent way,

causing the curves to jump massively

up or down, and it’s hard to predict

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payment apps, they’ve all gone down the route of working with Apple on Apple Pay, which tells you all you need to know about the disruptive potential of Apple,” says Nick Vermeulen, Partner at PwC in Guernsey. He believes that these threats from non-banking firms will only increase.

“Facebook knows so much about me that it will undoubtedly look at the financial services space. The pace at which banks will have to respond to this is debatable, but they will have to respond.”

Looking at the Channel Islands, change in their leading industry is inevitable. “The finance industry is ripe for disruption,” says Mark Loane. “It has lots of legacy problems that haven’t been solved – for instance the cost of money transfer – but that isn’t to say it hasn’t adapted.”

COPING WITH CHANGEThere may be opportunities for the Channel Islands, and some will surely take advantage of them, but that doesn’t mean there won’t be upheaval. New technologies and the fear of losing jobs have always gone hand in hand, but as some industries change forever, will this world of almost constant change lead to an era of mass unemployment?

“We will never have high-street shops as active as they are now,” says Dr Curran. “It’s downhill from here and it’s the same for libraries and bookshops – but this doesn’t mean the number of jobs will reduce, they will just change into other areas.”

Coping with change is the key to life in an age of disruption and in order to do that, both society, businesses and individuals need to adapt. “The education system needs to change to encourage people to continually learn and adapt because it’s not the fittest or strongest but the most adaptable who will survive,” says Ian Goddard.

Perhaps the most immediate and unsettling effect of disruptive technology is the brutal form of economic Darwinism that it brings into every living room and business in the land.

Goddard is optimistic, believing that in the long term “it will create jobs and improve health”, but that in the meantime “it will be hardest on those who find adaptation difficult”.

For the CEO of Kodak and the factory worker whose job was taken by a robot, the destructive effects of technology are clear. But there is a way to cope and that is to learn the art of flexibility – because nothing is more prone to disruption than an industry or an individual who is unwilling to take a new path. n

KIRSTEN MOREL is BL’s Technology Editor

The education system needs to change to

encourage people to continually learn

because it’s not the fittest or strongest

but the most adaptable who will survive

THE GREAT UNKNOWNInnovation fuels the technology industry. Without it, we’d still be using quill pens and candles rather than smartphones and LEDs, but as much as most of us eagerly adopt the latest tech, one defining characteristic of innovation is mystery. The reality is we don’t know where it will lead us.

This is, of course, what disruption is all about. We don’t see it coming until it’s too late and while recent experience has shown the majority of disruptive technologies to have had a positive effect overall, those people who have lost their jobs in affected industries may not feel quite the same.

The big ‘known unknown’ that lurks on the technology horizon is the combination of machine learning and robotics. We know that robots have rendered thousands of jobs redundant across global manufacturing, but what we don’t know is quite how much this will be magnified as machines become able to learn for themselves.

Current thinking sees the loss of employment opportunities moving from blue collar to white collar jobs, something that has been confirmed by organisations such as Deloitte and also the House of Lords. Deloitte foresees a high likelihood of automation entering process-driven areas such as financial accounting, accounts payable and payroll, while a House of Lords report predicts that 35 per cent of jobs in the UK could be automated within the next 20 years.

What the consequences will be, nobody knows. It was job automation that brought the Luddites out in protest. Whether the 21st century will be any different to the 19th remains to be seen.


Checking your emails before you get out of bed? Constantly glued to Facebook or Twitter? Maybe it’s time you took a break from the digital world and got back to reality

time for a

digital detox

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IT’S NEVER BEEN easier to get online. Static sites, email and Internet cafés have given way to powerful smartphones, tablets and an array of ‘always on’ social networking services.

Ofcom’s 2015 Media Use and Attitudes report shows that, since 2005, Internet use among those aged 16 and over has doubled. It also shows marked changes in how we get online – in 2010 only five per cent of adults used a tablet; by 2014 this had risen to 39 per cent. Smartphone use doubled in the same period, from 30 per cent of adults to 66 per cent.

This touchscreen revolution has also changed where and when we go online. Between 2005 and 2014, the amount of time spent connected away from a traditional ‘fixed’ connection point, such as home or work, has shot up from 30 minutes to more than two hours.

Put simply, we’re spending more time staring at devices. The 64,000 Bitcoin question is: is this bad for us?

“The challenge that digital presents is threefold,” says Christopher Journeaux, a psychotherapist and partner at Therapy Jersey. “There’s the potential for addiction – an immediate urge to respond to emails, comment on social media and drop everything else – and how this can dominate our lives; fear of exclusion from social circles and the wider, informed world by not immersing ourselves 24/7; and the success of the digital industries to persuade us that communication means digital.”

Studies suggest a shopping list of potential physical ill-effects, from postural issues and RSI, to sleep disturbance and even addictive changes in the brain. One study, carried out by Swansea and Milan Universities in 2013, found that subjects identified in tests as being ‘addicted’ would report an increased negative mood after stopping Internet use that was similar to a drug comedown.

Such concerns have led to a digital detox movement. An increasing number of people want to make changes to their digital habits – and there’s an expanding number of experts, gadgets and facilities to help them do it.

Vaishali Shah is an entrepreneur who runs two successful businesses – Female Focus, a global networking platform for businesswomen, and Creative ID, a design and marketing consultancy. She has seen the benefits of simple changes.

“I’ve been hearing from clients and business contacts, particularly over the past

Words: Sharon Gethings

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12 months, bemoaning the fact that we’ve become slaves to our digital devices and that, like them, we’re always switched on and reachable. We’re paying a heavy price for the convenience of instant communication because we have no place to hide.”

This is a sentiment echoed by Martin Talks, Founder and Director of Digital Detoxing. “We constantly check our phones – we’re addicted to that dopamine hit that the buzz, beep or vibration signals. As a result we’re constantly distracted and never quite present. In a work environment this is extremely damaging, with ‘presenteeism’ – being at work but unfocused – a far bigger issue than absenteeism,” he says.

Shah says technology also means that work bleeds into personal time. “We’ve set up guidelines and parameters with staff members of when and how often they should communicate and be reachable after ‘office hours’. Personally, I now limit the amount of time I spend online each day, and only check emails at certain times. This has improved the quality of my time away from work – I’m more present and more able to enjoy myself.”

So how can you reduce your tech time?

1. DIY DETOXTalks has been in the digital industry for 20 years. “Too many people are on a junk food diet of social media,” he

says. “It’s bad for our health, our happiness and our productivity.”

He offers these tips to help you tame your digital addiction:• Talk – don’t just email or text, Snapchat

or status update. At work this will lead to greater collaboration and fewer misunderstandings.

• Have meals with other people, not the Internet, TV or your smartphone. Get everyone to put their phones in the middle of the table – the first to reach for theirs has to clear up or buy the next round.

• Light from screens stops the body’s production of melatonin, which is vital for getting to sleep. So don’t look at tech for an hour before you go to bed.

• Put your phone out of sight, hearing and

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reach in the car. Even hands-free phones slow reaction times.

• Do some exercise – it’s great for overall wellbeing.

• Take time to be in the moment using mindful exercises such as meditation to reduce stress and increase focus and energy.

2. TECH WILL EAT ITSELFIt might seem counter-intuitive, but there are digital solutions. Award-winning artist Steve Lambert created SelfControl with the help of coder Charlie Stigler while a Senior Fellow at New York’s

Eyebeam Centre for Art and Technology. The app blocks email and pre-selected websites for a set duration, and it can’t be overridden or uninstalled during this time.

On his website, Lambert explains why he created SelfControl: “I needed it. And now we’re giving it away because we want it to be useful. I’m an artist and, as anyone who creates things knows, the time you can block out to get focused work done is invaluable. Hopefully, this will help you focus on whatever you need to do, from creating that project, writing your novel, studying for your exams, or whatever you want to do.”

Other site-blocking tools include Chrome Nanny, FocalFilter, LeechBlock and StayFocusd.

3. FIND A BALANCEPsychotherapist Christopher Journeaux takes a holistic view of breaking the digital habit. “It’s about detoxing our lives rather than just one facet of living. A period of complete abstinence can, for some

clients, build up an anticipation that then sees them leap back into social media when that period ends, often in a more submerged and reliant way than before,” he says.

He recognises the benefits of digital communication and believes the key to healthy use is moderation not obliteration. “Social interaction is a sustaining element of human existence – we are social beings. Digital channels extend that social interactivity both in terms of availability and also breadth of contact.

“However, if all we consume is this one

aspect of contact, and we do so to an extreme, we risk the healthy balance of living.”

Journeaux believes that digital is a great tool for making contact and staying in touch, but it shouldn’t become a replacement for the richness of human contact and communication that makes us who we are.

4. THE GREAT ESCAPEIf you are still struggling to be in control of digital, rather than the other way around. You may want to think about escaping the digital grind altogether. And there are a growing number of firms that offer ways in which to achieve this.

Unplugged Weekend is a digital detox camp based in the Brecon Beacons, a mountainous – and very much signal-free – region in South Wales. The centre is the brainchild of Londoners Vikki Bates and Lucy Pearson, who met on a retreat in the Sahara desert in 2014.

“We didn’t have any phone signal for a week – it was great,” says Bates. On their return, they both quit their jobs in advertising and went into business together. “When we got back to London, we put our heads together and Unplugged was born.”

The detox process begins with group members placing their digital devices into a black trunk before taking part in a mixture of activities – the day starts with yoga and meditation – and group therapy. Art classes and rambling help to fill the digital void.

Digital Detoxing also organises outdoor breaks for groups and work teams, lasting one, three or seven days. Teambuilding, rugged terrain and the countryside replace email, tweets and phone calls.

“With the advent of wearable, ingestible and embeddable technology and the rise of artificial intelligence, there are big decisions to be made about drawing the line between man and technology,” says Talks. “I believe it can be a huge force for good – and indeed it will help solve some of humankind’s biggest issues – but in saving humans, we must be careful not to lose what makes us essentially human.” n

SHARON GETHINGS is a freelance lifestyle writer

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The Guernsey Financial Services Commission (GFSC) has confirmed that it will apply a blended rate increase of

two per cent to the fees charged to licensees, effective from 1 January 2016.

The proposed restructuring of fees for the fiduciary sector, as well as the other changes set out in the GFSC’s consultation paper, which was published in August this year, will also be implemented.

The GFSC received 16 responses to its consultation paper, which were broadly supportive of the proposed blended rate increase, as well as the strategy for future fee setting. Several consultees did, however, suggest that the GFSC shouldn’t proceed

with the proposal to rebate to industry the surpluses that arise from enforcement cases, as it was felt that this could lead to some volatility in future fees.

GFSC Director General William Mason (pictured) said: “We have carefully considered the points that have been put to us and, as a consequence, the Commission has decided not to implement this proposed new policy.

“We will, however, continue to record all surpluses that may arise from individual enforcement cases and ensure that these are taken into account by the Commission in determining the fees payable in the future.”

The GFSC has also agreed to work

with representatives of the Guernsey International Insurance Association during the early part of next year to determine whether an alternative approach could be taken to the allocation of fees across the insurance sector while continuing to deliver proportionate and credible regulation.

This time last year, the estimated fee income for 2015 was £12.70 million and the GFSC’s proposals for 2016 will result in fee income increasing to £12.96 million, based upon current estimates for new licensees and licence surrenders. n

▼

GFSC announces blended rate increase for 2016 fees tariff

location unveiled for Digital Greenhouse

Survey reveals startup appetite in guernsey

The States of Guernsey Commerce and Employment Department has revealed the location of the Digital Greenhouse, a States-funded initiative dedicated to growing Guernsey’s digital and

creative sectors in collaboration with business and the community.It will be located on the top two floors of Rectory House

(formerly the Co-Op Bank building) in the Market Square, St Peter Port. At more than 4,000 square feet, members will be able to rent desk space on a flexible basis to showcase skills, network and collaborate on new initiatives, and attend events and training.

Startup Guernsey will also be based there, working with the Digital Greenhouse and other established networks to provide an environment to support innovation and growth on the island.

The building has been extensively renovated by the owner, with fit-out work completing in time for its opening at the year end.

Mike Culverwell, Interim Director of the Digital Greenhouse, said: “We’ve run several initiatives over the summer to engage and support collaboration and open innovation, celebrate new launches and work with the excellent local training providers to identify what else we can do to support skills development. These premises will provide an invaluable focal point for a lot of this activity and to further support digital entrepreneurship on the island.” nwww.digitalgreenhouse.gg

About 80 Guernsey residents who took part in the recent Startup Guernsey Entrepreneur Survey, conducted by Island Global Research, are considering starting their own business.

There were nearly 500 responses to the survey and 18 per cent of them indicated that they were thinking about starting a business. In addition, 31 per cent were interested in providing help, mentoring or advice to new startups, while 80 per cent wanted to receive expert support such as access to angel investors, marketing or business plan development.

Tony Brassell, General Manager at Startup Guernsey, said: “This feedback is an encouraging indication that there is no let-up in the number of ambitious Guernsey residents who are considering going into business.

“This wasn’t really surprising as we were consulted by 197 individuals in 2014. We will be using the information gathered through the survey to help shape the services and support we provide to our clients and we remain open to suggestions on how we can improve on what we do.”

The creative and IT services sector was well represented by respondents and there was strong interest in Startup Guernsey’s learning initiatives, such as mentoring, networking, and coaching in financial and business skills and tax issues. n


GACO seminar focuses on igor information exchange portal

Richard Le Tocq to lead Locate Guernsey

Stable funds and banking figures for Q2 T

he latest seminar held by the Guernsey Association of Compliance Officers (GACO) in October focused on the

introduction of the Information Gateway Online Reporter (IGOR), an online portal centred on the automatic exchange of information.

During the seminar, GACO Chairman and Carey Olsen Partner Mark Dunster said it was a key objective for the association that Guernsey continued to be an early adopter of the highest reporting standards.

“Part of that process is ensuring that the business community both understands what is required and is supported in delivering those requirements,” he said.

Guernsey Income Tax Office Compliance and International Manager Lee Harris, who is also the project manager for IGOR, demonstrated the new system. It allows registered organisations in Guernsey to submit and review reports related to

their organisation in line with the latest compliance regulations for US FATCA and other inter-governmental agreements.

“The processes that the Guernsey Tax Office adopts for FATCA and other exchange of information regimes are crucial to the way that the island is perceived as an offshore jurisdiction. Such initiatives help to maintain our position at the forefront of the finance industry,” Dunster said.

The presentation addressed some of the issues that had been raised with IGOR since the passing of the US FATCA reporting date on 30 June.

In particular, it was emphasised that in order to register a financial institution, there must be an individual global intermediary identification number.

Harris also advised on the importance of correct registration and of seeking appropriate legal advice about the types of reporting required. n

Richard Le Tocq has been named as the head of the team to promote Guernsey as a relocation destination.

Le Tocq, who is also the Chairman of the Guernsey branch of the Institute of Directors, will lead Locate Guernsey, which has a mandate to encourage businesses and high-net-worth individuals to move to the island.

Locate Guernsey’s aim is to enhance the island’s economy through the arrival of businesses that bring employment opportunities, as well as the relocation of wealthy individuals into the Open Market who are likely to bring other long-lasting benefits.

Le Tocq said: “I am delighted to have been given the opportunity to head up the Locate Guernsey initiative. Locate Guernsey will be most effective if it

works collaboratively with on-island businesses, so getting these partnerships established will be a key part of my role.

“Seeking out and securing leads is, of course, vital and I want Locate Guernsey to be doing this as part of a supportive Guernsey business community.

“I know there’s a great deal of positive feeling towards the Locate Guernsey concept and I’m looking forward to building on that very strong foundation.”

Le Tocq brings to the new position 25 years’ experience in the Guernsey financial services sector and a track record of senior roles in business.

He will take up the post at the start of the new year. n

Guernsey’s financial services regulator approved 18 new investment funds during the second quarter of 2015,

resulting in a total of 112 additions for the year ending 30 June 2015.

Figures from the Guernsey Financial Services Commission (GFSC) also show that the net asset value of all funds under management and administration in Guernsey fell by £2.3bn (one per cent) during the second quarter to £219.9bn.

The value of deposits held by banks in Guernsey increased by £0.2bn (0.2 per cent) during the same period to reach £83.6bn, representing a rise of £6.1bn (eight per cent) year-on-year.

The 18 new investment funds approved by the GFSC between the start of April and the end of June comprised 14 closed-ended funds and four non-Guernsey open-ended schemes, bringing the total number of funds currently approved for domiciling or servicing in Guernsey to 1,044.

Guernsey closed-ended funds increased by £0.5bn to £135.5bn, while Guernsey open-ended funds decreased in value by £2bn to £39.1bn. Non-Guernsey schemes – open-ended funds that aren’t domiciled in Guernsey but have some aspect of their management, administration or custody carried out on the island – decreased in value by £0.9bn during the second quarter to £45.3bn.

Data from the investment management and stockbroking sector for the period up to the end of March 2015 confirmed total gross assets under management in Guernsey of £116.4bn – a rise of £7.4bn (6.8 per cent) over the quarter. n


BL Guernsey

guernsey to host Creative hub website

states urges Recapitalisation of Aurigny Group

new Digital oversight Group debates safe harbour changes

The first phase of a new website that aims to

make the Channel Islands a hub for global artists and creatives has been launched in Guernsey.

Guernsey resident Simon Torode (pictured), the founder of Livingroom estate agency, launched Soldstory in October to offer creatives (or their representatives) a new avenue to sell their work. The site is home to a raft of excellent, varied and authentic creative works and has already built an impressive community, with more than 10,000 followers across social media platforms.

Torode said: “I created Soldstory for like-minded, passionate artists working in all accessible mediums. Creatives, often working in isolation, may struggle to get a broad audience for their work but, with the power of global social connectivity, Soldstory means they now have access to an international community of artists and art lovers.” nwww.soldstory.com

In its November Billet, the Treasury and Resources Department at the States of Guernsey is recommending the

recapitalisation of airline company the Aurigny Group (Cabernet Ltd).

This will address its accumulated losses of £19.9 million, which date back to 2003. In addition, the Department is recommending that Aurigny is capitalised for its forecast losses totalling £5.3 million for the years 2015, 2016 and 2017.

The recapitalisation is a legacy of previous decisions made by the States as far back as 2005 about the debt funding

model for the airline, which has led to it having to borrow to fund its operating and capital expenditure costs.

Peter O’Donovan, Aurigny’s Finance Director, says: “Recapitalisation will restore Aurigny’s balance sheet to a neutral position. This will help our financial position immensely because we will no longer have to repay borrowing at relatively high rates. Aurigny operates in a highly volatile industry where direct costs can impact on the business without any degree of predictability.”

Aurigny was bought by the States of

Guernsey in 2003 to secure the island’s air link with London Gatwick when British Airways announced that it was cancelling the route.

The Treasury and Resources Department report argues that the States’ continued ownership of the airline remains overwhelmingly in the bailiwick’s strategic interests. It adds that it provides an insurance policy which ensures any decisions on the island’s essential public air services are determined not just by commercial considerations, but also by wider economic and social ones. n

In conjunction with business experts, the States of Guernsey held its first

meeting of the FinTech and Digital Oversight Group (FDOG) in October. The Group was established following recommendations from PwC’s strategic report, commissioned by the Commerce and Employment Department (C&E).

The Group discussed opportunities identified in the report that make Guernsey a prime location for the developing fintech and digital sectors. This includes Guernsey’s position as a secure, trusted location for data storage, allowing it to process data lawfully from multiple jurisdictions including the US and EU.

The timing of the meeting allowed the group to discuss the landmark judgment of the European Court of Justice, ending the US Safe Harbour scheme – a decision deemed unthinkable 12 months ago.

The Safe Harbour Decision, adopted by the European Commission in 2000, had been one of the main legal mechanisms for transferring personal data from Europe to the US for the past 15 years. Now that the decision has been declared invalid, it can’t be used to render these transfers

of personal data lawful. The European Court’s decision

is based on the Edward Snowden leaks. Facebook Ireland had been transferring the personal data of its users in Europe to Facebook

USA. The leaks revealed that Facebook USA’s data is capable

of being accessed by US security agencies in the course of mass and

indiscriminate surveillance. Further, the European Court identified

that the US has no independent authority capable of verifying that such access to personal data is strictly necessary under the Safe Harbour Scheme.

In contrast, the bailiwick’s legislation ensures that sufficient checks and balances are placed, not only on the processing of data, but also on official requests for disclosure of information.

Nick Vermeulen, Partner at PwC and member of FDOG, said: “Guernsey has progressive legislation in both data protection and intellectual property rights. The ability to aggregate data from a multitude of jurisdictions on the island will mean that we are able to assist companies as they consider what the end of the Safe Harbour regime means for them.” n


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A search for funding is a key factor delaying the implementation of a new charities law in Jersey.

The Charities (Jersey) Law 2014 was approved by the States in November 2014, but no money has been allocated by ministers to pay for it. It’s understood they even considered using lottery profits, which have rocketed in recent years from £300,000 to more than £800,000 as a result of new distribution arrangements and major retailers boosting ticket sales.

However, leading figures in the charitable and third sectors gave an ‘over our dead bodies’ ultimatum that they

would bitterly oppose such a move. The Jersey Voluntary and Community

Sector Partnership represents the interests of about 300 to 400 ‘pure charities’ in the island. Chairman Jim Hopley says: “There are no funds within the Chief Minister’s department to pay for a Charities Commissioner. It strikes me as bizarre, but that’s the situation.”

The situation is leaving many charities in limbo. When the law was approved, ‘phase one’ was to introduce several changes:● Define ‘charitable purposes’ and set out a

charity test, including requirements as to public benefit ▼

the complicated business of charityDelays to the implementation of Jersey’s new Charities Law are causing uncertainty for local charities – and there still seems to be no timeline going forward

Words: Harry McRandle


● Set up a register of charities● Establish a Charities Commissioner

to administer the charity test and maintain the register, and a tribunal to hear appeals against decisions of the Commissioner

● Impose obligations on registered charities and their governors, including obligations to act consistently with the registered charitable purposes and public benefit

● Impose restrictions on the use of the terms ‘charity’ and ‘Jersey charity’ by entities that aren’t registered or which are certain foreign charities

● Amend Article 115 of the Income Tax (Jersey) Law 1961 so that the income tax exemption for charities primarily depends on registration.

Hopley believes the funding gap could be resolved if the States supports moves to use money sitting in dormant bank accounts.

However, a decision on that could still be some way off. Hopley predicts it could be some time before a Charities Commissioner is appointed and the registration process begins. And it could then take a further two years before all charities are registered and regulations fully put in place.

FULL DISCLOSUREThere’s little doubt about the need to change the law, says Hopley. “It’s Victorian, it’s so far out of date it’s ridiculous, it’s not fit for purpose and doesn’t cover many bodies currently considered charities.”

He adds that regulation is needed to protect both the public and the charities. “We’re all vulnerable to the occasional aberration, the bad egg in the basket. And there are significant governance issues out there.” Clearly, however, no one expected things to take quite so long.

The new law is fairly simplistic and stipulates that to qualify as a charity a body has to fulfil certain criteria, including that the organisation must be established for public benefit. There are 16 areas loosely described as a charitable purpose – everything from health to religion to sport.

For example, a table tennis club with a £10 annual subscription and a £1.50-a-night fee would be classed as ‘open’, but a golf club with a £1,000-a-year membership fee and long waiting list wouldn’t be considered charitable as it’s set up mainly for the benefit of its members.

When the provisions are eventually enacted, the law will make charities more accountable and force them to publicly provide financial information for the first time, which could have a dramatic effect on the charities landscape in the island.

“With a requirement for increased levels of governance, smaller charities may come together under the umbrella of a bigger one,” says Sue May, Founder of the Jersey Brain Tumour Charity.

She believes effective governance is vital. “I think it’s of paramount importance because if people are giving money, they need to know that it’s properly used.”


BL Jersey

With a requirement for increased levels of governance, smaller charities may come

together under the umbrella of a bigger one

▼

Charities will have to appear on the new register to enjoy tax breaks. If a charity has exempt status, it avoids tax on income from property rental or bank interest and can also reclaim goods and services tax (GST).

Profits from fund-raising events – and from lotteries or raffles held at such events – aren’t assessed for tax, even if they take place regularly.

There are grey areas, such as school parent-teacher associations (PTAs).

Jon Hackwood, a Director of Sycamore Financial Services, who has written extensively about the new law, predicts that state school PTAs currently classed as charities won’t get charitable status.

“Any organisation operating under the auspice of a States Member is excluded from becoming a charity, so that might include sporting and arts bodies,” he says.

OPEN AND CLOSEDUnder the new arrangements, all bodies already classified as a charity will be allowed to register initially. They will then have to prove their charitable purpose and demonstrate that they are set up for public benefit.

“Some charities will fail that test,” says Hopley. “They will be told what the problem is and be given time to put their house in order. If they don’t, unfortunately they’ll lose their charitable status.”

It’s expected that the Jersey Financial Services Commission will manage the register for the Charities Commission. Hackwood says: “They have the technology and infrastructure. It makes sense rather than reinvent the wheel.”

The register will be split into two parts, a full public register and a closed one. Hackwood says when it comes to charitable trusts – a key financial services industry product – the public register will give limited information and won’t include officer details. “It was felt that was particularly appropriate for family offices not looking to resource from public money,” he says.

That said, the authorities will be able to see the full picture.

Michael Goulborn, Executive Director, Jersey at Nautilus Trust, believes the need for privacy in the charitable trusts sector is vital as there are perfectly valid reasons why people would want to keep details of their giving private.

“Up until now, the trust industry has had to rely on case law in respect of the governance of charitable trusts,” he says. He doesn’t believe, however, that people will be put off domiciling trusts in Jersey as a result of the new requirements.

Goulborn points out that while the relevant authorities will be able to inspect the closed register, there is no compulsion for trusts to register. “But if they don’t, they won’t be able to use words such as charity or charitable,” he explains.

ON THE RECORDIt’s expected that the new requirements will have little effect on larger charities, with the impact greater on smaller ones.

“There’s an understanding that size is everything, your objective is everything and the regulations, when they are brought forward, will be balanced, sensible and appropriate,” Hopley says. “One would anticipate an escalating range. The law talks about proportional regulation. So if you’re a small charity with five or 10 members and an income of less than £5,000 a year, you’re likely to be asked to lodge very simplistic unaudited accounts.”

There are, however, many other details that might catch out smaller organisations. Hopley points to the fact that smaller charities must realise that compulsory insurance provisions and the requirements of the Employment Law apply now when it comes to employing volunteers or paid staff. “The Employment Law in Jersey doesn’t differentiate between paid and unpaid staff,” he explains.

He also warns that the new rules may mean that a different approach has to be taken toward corporate and social responsibility projects, and that sending

keen amateurs such as fund administrators or lawyers out to carry out tasks such as painting or decorating can create risk for a charity. “It makes more sense for the corporate to pay a painter or a landscape gardener to do the work,” says Hopley.

“From a purely risk perspective, it gives the charity someone to sue if it goes wrong,” he adds. It would be better for corporates to use their expertise to provide accounting or corporate governance services, he points out.

Hackwood also highlights the fact that trustees or charity governors will have to provide information annually on whether they have been involved in any civil or criminal cases that may affect their standing. “It’s not an exclusion, but they have to declare it,” he explains.

The intricacies of the new law are complex enough without delays hanging over the heads of potentially hundreds of charities. At the time of going to press, BL heard that the Commissioner’s job was expected to be advertised before the end of the year – which at least indicates that things are starting to move forward. n

HARRY MCRANDLE is a freelance business and finance writer


Tech firm TORA opens european base in jersey

Latest Jersey Business Tendency Report published

JFSC to hold key Enforcement Seminar

TORA, a technology and financial services company focusing on the investment management space, has opened an office in Jersey.

The office will be the European base from which it expands its pan-European business, offering a range of specialist software solutions to its client base of asset managers, hedge funds and brokerage houses. The firm also has offices in Singapore, Tokyo, Sydney and San Francisco, as well as a development centre in Romania.

The new business in Jersey will look to offer a number of employment opportunities to local residents.

Chris Jenkins, Managing Director of Asia, is moving to Jersey as part of the expansion, and will head the new office. He said: “Having met with Jersey’s Economic Development Minister and officials from Locate Jersey in Hong Kong over the past couple of years, we were impressed by the capabilities, expertise, support and potential Jersey could offer us.

“In establishing our new presence in Jersey, with its good connections to the UK and Europe and fantastic reputation as a centre for the alternative funds business, we now have a strong base from which to access the European asset management market.” n

The latest Jersey Business Tendency Survey (BTS) for the period up to the end of September 2015 has been

published by the States of Jersey.The BTS is a quarterly survey that

provides qualitative information about the island’s economy and covers private sector businesses in Jersey. It asks the Chief Executive or Managing Director of sampled businesses for their opinions on the current situation of their business compared with three months earlier, along with their expectations for the next three months.

In September 2015, the headline all-sector business activity indicator was up five percentage points. This implies that

more companies reported an increase in business activity as opposed to a decrease.

However, this indicator was down significantly from the strong positive levels seen during the previous six months.For the finance sector, the findings included the followings:● Six of the 10 indicators were down on the previous quarter● The business activity, new business, profitability and business optimism indicators recorded their lowest levels for at least two years● The input costs and employment indicators showed an improvement on the previous quarter.

For the non-finance sectors:● Eight indicators were unchanged and two improved slightly – input costs and employment● The business activity indicator for the non-finance sectors overall was more positive than that for the finance sector for the first time in at least six years. n

This year’s Biennial Enforcement Seminar from the Jersey Financial Services Commission (JFSC) will be an interactive cross-industry event. It will provide an opportunity

for delegates to hear from members of the Enforcement Team about the major issues and generic learning points arising from recent serious and complex cases.

This thought-provoking event will be driven by scenario-based sessions, highlighting good practice that can be applied to regulated business. Attendees will learn how to avoid making the same mistakes as others, by being aware of the realities of conducting business in compliance with Jersey’s regulatory regime.

The audience will hear how Enforcement will approach the use of civil penalties in the future, and be given an update on the first six-months’ work of the Jersey Fraud Prevention Forum.

Keynote speakers include JFSC Chairman Lord Eatwell and Director General John Harris, as well as Detective Chief Inspector Lee Turner from the Jersey Fraud Prevention Forum and speakers and panellists from the JFSC Enforcement Team.

The goal of the Enforcement Division is to be firm but fair, and to engage in constructive dialogue with those that the JFSC regulates, while having the ability to identify and deter abuses and breaches of regulatory standards.● The JFSC’s Enforcement Seminar takes place on Wednesday 25 November at the Radisson Blu Hotel, St Helier, from 8.45am to 1.15pm. For further information and to book places, delegates can visit www.eventbrite.co.uk. n


BL Jersey

states Scrutiny Panel declares Jersey International Finance Centre not viablE

digital health hub launches

The Corporate Services Scrutiny Panel at the States of Jersey has declared in its interim report on the Jersey International Finance Centre (JIFC) that the project is not financially viable.

During this phase of the review, the Panel has been advised by EY, which has assessed the financial viability of the first proposed building, known as Building 4. The report concludes that: ● The project for the delivery of the JIFC is not considered viable ● The project will not deliver sufficient return to fund basic public realm improvements such as underground car parking and a park ● The development of the first building has been commenced on a speculative basis, which is against the undertakings of little or no risk to the public purse ● States advisers have severe reservations as to whether there will be sufficient demand to fill the JIFC in any reasonable time and question the ability of the market to absorb the space proposed ● The JIFC and the wider masterplan for the Esplanade Quarter

must be reviewed and updated by the States of Jersey. The Panel’s Chairman, Deputy John Le Fondré, said: “This

represents the first independent assessment of the financial viability of Building 4, and raises significant concerns about the viability of the JIFC and the masterplan for the Esplanade Quarter.”

The announcement has been condemned by the Deputy Chief Minister, Senator Andrew Green. “It is disappointing the Panel have chosen not to base their findings on the EY report – which the Panel commissioned – as a whole, but have chosen only to select areas that support a negative conclusion,” he said.

“Contrary to the Scrutiny Panel findings, on the basis of the evidence of professional viability and valuation assessments it is clear that Building 4 is financially viable. It is not clear how the Panel’s conclusions reconcile with the EY report. That report fully assesses the viability of Building 4. Even using a low valuation, the Panel’s own advisers show the building does generate a profit.” n

Cyber security reviews form basis of new strategy

Local technology experts and health experts have come together in Jersey to form a digital health consortium,

MedTech.je. It will provide technology solutions for Jersey’s health and medical services, and aims to drive digital innovation on a global scale.

The organisation includes technology specialists from C5 Alliance, Carmen Health, JT Global, Total Solutions Group, WebReality and Palm Springs Nursing.

MedTech.je has already partnered with Microsoft, IBM and Samsung, as well as medical bodies such as the NHS and the Royal College of Nursing.

Danny Bannister, CEO at Total Solutions Group, commented: “The launch of MedTech.je marks the beginning of an exciting time for Jersey’s digital community. This is the first time local businesses have collaborated to excel in this field, with local technology experts working together towards a shared vision.

“We are confident that the success of MedTech.je will provide more digital job opportunities in Jersey, as well as inspire and drive others to innovate.” n

The States of Jersey is developing a cyber security strategy based on the findings of internal audits and independent

reviews by intelligence sector experts.Cyber security tackles potential threats

not just to areas such as data and systems in government and business but also to the island’s critical infrastructure. In recent years the cyber security landscape has changed dramatically. The frequency and complexity of cyber attacks is increasing, making it more important to ensure that the security of data both online and offline is considered a priority by governments, businesses and individuals.

The reviews underpinning the States of Jersey’s strategy have: ● Examined the island’s current cyber resilience● Assessed the main risks facing Jersey● Identified cyber security priorities● Considered approaches to enhancing the island’s cyber resilience.

The reviews have covered every department in the States of Jersey, as well as the island’s national infrastructure and elements of its private sector.

The States is building on the findings and recommendations of the reviews to develop an all-encompassing cyber security strategy that aims to make Jersey a safer place to live and to do business.

It is proposed that the strategy will be built on the requirements to: ● Secure government systems● Strengthen the critical national infrastructure● Work in partnership with the private sector to encourage and incentivise improved cyber security across the island’s businesses● Ensure the appropriate legislation is in place in Jersey and engage with the international community to enhance international cooperation● Help ensure people in Jersey are secure online by building cyber skills, knowledge and capability.

To deliver the strategy, the Government plans to work in partnership with the critical national infrastructure, the Jersey Financial Services Commission and the private sector to encourage and incentivise improved cyber security across the island. n

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➨INSIDE THE AGENDA: FOOD, MUSIC, TECHNOLOGY, FURNITURE, BEAUTY, FRAGRANCES,

FASHION, FOOTWEAR, JEWELLERY, DRINKS, CARS, WATCHESEverything you need for a more stylish life.

The Agenda is compiled by BL’s Fashion and Lifestyle Editor, Thom O’Dwyer, with additional material by Danny Cobbs, Peter Dean and Jeffrey Chinn of Hettich Jewellers in St Helier

1. SOUNDS INCREDIBLESearching high and low for something to give that ultra-special man who has everything this Christmas? These Deluxe Edition 18-Carat Gold Earbuds by Happy Plugs might well be the answer. A fresh new luxury take on brazenly opulent bling, these earphones will upgrade any style-hungry trend zealot’s techno look. These extravagant little sound receivers are hand made by a Swedish goldsmith. In his workshop on a little side street in Stockholm, 25 grams of gold is carefully moulded into the Happy Plugs earbuds. So with each pair, you’re talking about the same weight of a serious piece of top-end jewellery! They’re compatible with devices such as iPhone, iPad, Android, HTC, Nokia, Sony Ericsson, LG, Motorola, Samsung and more. With these babies, sound will never sound richer! £8,247.50, www.goldgenie.com

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THE AGENDA

2. PUTTING ON THE GLITZReligious iconography was infused with romantic Sicilian glamour at Dolce & Gabbana’s autumn catwalk show. These yellow gold-tone brass clip-on statement chandelier earrings are a beautiful way to tap into the look. They feature delicate filigree cross-shaped drops studded with terracotta cameos and pearly Swarovski beads. Emulate the label’s old-world rococo style with tousled tresses and one of D&G’s enchanting lace midi dresses. Every girl deserves a little bit of lavishness now and then, especially at Christmas. £625, www.matchesfashion.com

3. FEET FIRSTThe new season’s 1970s styling is tackled with utmost elegance and finesse at Aquazzura. This renowned Italian luxury footwear brand – a favourite with the fashion cognoscenti and celebrity stars – is designed by Edgardo Osorio, a product of Britain’s internationally respected fashion design academies. The suede Coachella ankle boot pictured below is crafted with a rounded toe and a de rigueur high, chunky heel, and is trimmed with a feathered and tasselled tie around the ankle. Great worn

with either the new midi-length dresses or skirts, or with more casual distressed ripped jeans. £580, www.matchesfashion.com 43

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4. ENDURING STYLEIn the words of designer Coco Chanel: “Fashion changes, but style endures.” This should become the mantra of every modern woman. She must, in a sense, curate her wardrobe – simplify her approach to dressing and invest in quality, fuss-free, polished key pieces that will stand the test of time. The all-important autumn/winter purchase is, of course, a new coat. This season the style on every fashion-conscious girl’s gotta-have list is a soft, tactile suede trench coat. When M&S brought out a suede trench in its autumn Autograph range, selling for an incredible £299, the entire stock was sold out within days. For the luxe version of that M&S bargain, why not go back to the trench coat’s original source, Burberry. In 1914, the War Office commissioned Burberry to adapt an officer’s coat to suit warfare – hence the ‘trench coat’. After the Great War, the coat became hugely popular with civilians, and it remains so now. Pictured above is Burberry Prorsum’s full-length classic suede trench made from soft, premium skins. Relaxed, elegant and luxuriously 21st century. £4,495, www.burberry.com


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6. DIVINELY DECADENTShould you be at a loose end sorting out a foolproof Christmas present for that certain special epicurean someone in your life, the problem is now solved. The delightfully funky En K De Caviar Set pictured here is the perfect luxury, high-class gift for any bon viveur who appreciates the finer things in life. The special Christmas Exclusive Gift Set comprises six 15g tins of either Royal Oscietra or Imperial Oscietra caviar – the choice is yours. All are presented in hip, postmodern, crazy-colour packaging. The set even comes complete with its own uniquely designed caviar spoon. Non-metallic, of course. £149.95, www.finefoodspecialist.co.uk

5. LUXE FOR LESSIn 1961, Sir Hardy Amies – dressmaker to Queen Elizabeth II from 1952 until 1989 – made fashion history by staging the first men’s ready-to-wear catwalk show at London’s Savoy Hotel. The runway show was a first on many other levels, as it was both the first time music was played and that the designer accompanied models on the catwalk.

Amies once said: “My mission in life is to create a wardrobe for what I call the Complete Man.” When the brand’s Six Signature Pieces range – The Hardy collection – was launched this autumn, Sir Hardy’s original vision of creating an adaptable wardrobe of polished key pieces for the modern man finally came to fruition. The collection provides all the sartorial building blocks for the clothes-conscious man. A compact movable wardrobe that stays true to the brand’s heritage, and which is a continuation of its democratisation of elegant masculine style. Everything – be it suit, blazer, topcoat, mac, peacoat or bomber jacket – is designed to be contemporary, versatile and, most importantly, eminently affordable. Pictured here, The Hardy Suit comes in the finest pure wool and is a modern reinterpretation of the classic Savile Row British Fit. The half canvas-lined jacket has a slim, sharp silhouette with formed but relaxed shoulders and a gently defined waist. The attention to detail is meticulous. A suit that is a feat of the finest tailoring and at a knock-down price. £395, www.hardyamies.com


7. EPITOME OF COOLBy its very nature, a fridge is cool, but only a very few are ‘cool’ in a stylishly trendy way. Thanks to Smeg – the globally respected Italian manufacturer of upmarket domestic appliances – your kitchen can now be as fashionable and design-led as any other room in your home. For over 60 years, Smeg appliances have been widely regarded as the ultimate zeitgeist in elegant product design. The company slogan is ‘Technology with Style’, and truer words were never spoken. Oozing voguish panache, Smeg’s 1950s All-American-style fridges offer huge capacity as well as huge personality. A retro look with cutting-edge technology. In other words, a fridge as a design feature. Icon styling, retro colours and timeless design. A perfect resting place for your New Year’s Eve Dom Pérignon!Cream fridge £979, www.smeguk.com7

THE AGENDA

8. EVERYBODY’S TALKINGThe 1950s, 60s and 70s have all been hot trends on the fashion catwalk the past few seasons, and it’s no different in interiors. Mid-Century Mod touches of flashy metallic Studio 54 disco ball glitz are rampantly in vogue right now. The time is right to embrace some real retro bling! Why not get started with your kitsch homage to old school cool with this replica phone? A line-for-line copy of the iconic 8

GPO746 telephone launched in 1967, it went on to inspire two decades of conversation, and to this day it remains the universal symbol of the telephone. Our snazzy take comes in three metallic brushed finishes – copper, chrome and brass. For modern convenience, the dial has been replaced by buttons without distracting from the original bold curves and bezel design. £49.95, www.cuckooland.com


THE AGENDA

10. HEAVEN SCENTTo celebrate the holiday season, Maison Cartier has drawn its celestial creative imagery from the shimmering glow of the cosmic dawn. The silvery twinkle that lights up the cold winter skies has been called upon to inspire the spectacular package design and the shimmering iconic bottle of its new fragrance Cartier La Panthère Celeste Limited Edition. Donning a cloak of light with a shower of golden stars, the front of the distinctive bottle is adorned with radiant sparkles encasing the amazingly heavenly scent contained inside. This is a captivating fragrance for a free-spirited and passionate woman, but one with an alluring soul and sense of being. Also, in the lead-up to C-Day, Cartier is offering a special seasonal GWP (gift with purchase) – a gorgeous 6ml Christmas bauble – with every 50ml bottle of La Panthère or its sister perfume Baiser Volé. As the French say: “Irrésistible!” £93 for 75ml, from select department stores nationwide.

9. HOT METALFrom the world-renowned luxury brand, Montblanc Emblem Intense is a new fragrance for the man who is elegant, refined and singularly independent. This is a strong, deep, sensual scent – fresh, woody, oriental and spicy with explosive notes of grapefruit, a touch of apple, sage and cardamom. The scent is as bold and immediately recognisable as the packaging. The trademark bottle has a rich shiny-cold metallic coating and the signature star detail echoes the extraordinary craftsmanship of every Montblanc creation, encapsulating the cool masculinity of the fragrance within. £45 for 60ml, £65 for 100ml, from major department stores nationwide

➨1111. STAR BILLINGNew York-based jewellery designer Lulu Frost is creating a big noise in the fashion world. Her work blends a vintage feel with a modern element and a quirky twist. Her delightfully unpredictable work is a favourite with rocksters Taylor Swift and Beyoncé and First Lady Michelle Obama. Reminiscent of the jewel-coloured richness of a medieval cathedral’s stained glass window, the designer’s Petra Cuff has clustered precious stones in tight formation, held together by a gold-tone brass setting. It slips neatly onto the wrist for a dramatic and mesmerising effect. £265, www.matchesfashion.com

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12. ULTIMATE SUVGot the odd £160,000 kicking around for a new SUV? Then you may be interested in the Bentley Bentayga. And even though it’s a little challenging in the looks department (you’re either going to love its styling or think it’s the most god-awful design since the Austin Allegro), it’s almost certain to make those who think nothing of spending £100,000-plus on a top-spec Range Rover sit up and take notice.

Powered by an all-new 6.0-litre twin-turbo W12 600bhp engine, the Bentayga boasts a 0-62mph time of 4.1 seconds and can hit 187mph. With plenty of ground clearance, a selectable four-wheel drive transmission also ensures this SUV is as versatile off the road as on it.

Like every Bentley before it, the Bentayga is handcrafted and individually tailored to satisfy the tastes of the most discerning of customers. The cabin also remains a master class in automotive opulence – a tsunami of

soft leather and rich burr walnut veneers festoon the interior. Onboard gadgetry hasn’t been forgotten either. An eight-inch colour touchscreen becomes the nerve centre for the infotainment and satnav system, and a mirror link allows for complete compatibility with both Android and Apple mobile phones. Safety equipment includes a lane departure warning system and a night vision feature.

Being chauffeured around in the back of this car shouldn’t cause too much hardship either. Back seat passengers get a massive amount of leg and headroom, and the levels of comfort and refinement are equally shared throughout the cabin.

‘The fastest, most luxurious and most exclusive SUV in the world’ is the way Bentley is describing the Bentayga. And it’s all of those things, plus a massive amount of conspicuous consumption. But hey, if you’ve got the money and want to flaunt it, then the

Bentayga was put together with you in mind. That said, you might have to wait a while – there’s a waiting list that means you won’t actually get behind the wheel until 2017 at the earliest. £160,200, www.bentleymotors.com


THE AGENDA

14. PERFECT TIMINGReinventing a classic always requires an understanding of the original lines. To create their brand new Clé de Cartier range, Cartier went back to their design archives to draw inspiration from 1950s and 60s watch architecture and reshape it into modern new styling. The Clé de Cartier range takes the traditional round watch face and turns it into a design that’s familiar yet strikingly unconventional, to create a watch that simply looks right. Wearability is balanced with iconic style to create a handsome and striking timepiece.

The function, as you’d expect from Cartier, is impeccable – a case curved to rest comfortably against the wrist, a top-notch watch movement, organic design and meticulous attention to detail – right down to a winding key that pivots with a perfect click. Sleek and sophisticated, Clé de Cartier watches are designed to be worn by men or women who share an appreciation for classic design and understated style. Clé de Cartier in rose gold with a leather strap, 40mm, £11,988, www.hettich.co.uk

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13. CLASSIC CHRISTMASThose Rudolf the Red Nose Reindeer, screwball Santa and Frosty the Snowman Christmas jumpers are as outdated as Christmas Past. This year, the festive sartorial style offers something far more refined, yet equally eye-catching. Thanks to Dolce & Gabbana, you can celebrate the season-to-be-jolly wearing something far less in-your-face than those novelty monstrosities we’ve all learned to loathe. This crew-neck printed brocade sweatshirt is finished with ribbed-knit trims and features a beautiful Renaissance-style rendering of the nativity scene. Just the thing to wear on Christmas morning for present opening. It will also go down a treat later, when you escape to the pub while your other half does the cooking! £675, www.matchesfashion.com

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THE AGENDA

15. DRIVING SEATLooking for a special piece of furniture to jazz up your home? Look no further. From its humble base in the medieval market town of Lemvig in Denmark, Canett Furniture is one of the most innovative home furnishings suppliers in Europe. Their mission – they proudly and emphatically state – is to ensure a positive ‘Canett Furniture Experience’ for every customer. All their products are easy to love and maintain and are of the highest quality make. Their designers

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1616. STYLE AND FUNCTIONPart of the Clarks: Rebooted Collection celebrating 65 years of the iconic Clarks desert boot, The Atlas pictured here was created by British artist Adam Dant – creator of the Donald Parsnips Daily Journal, an art world pamphlet that attracted a mass cult following in the mid-1990s. Inspired by the British spirit of adventure, Dant’s design celebrates the romantic, swashbuckling spirit of surviving against all the odds in a harsh desert environment. The map illustrations are detachable, so the wearer can customise their own boots, and there are five other styles to choose from in the limited edition collection. Clarks is donating five per cent of the sale of every pair of desert boots to The Halo Trust, the oldest and largest humanitarian landmine clearance organisation in the world. £200, www.clarks.co.uk

put their own twist on the traditional for a look that’s distinctive, individual and madly desirable. Nothing quite sums up Canett’s eye-catching design ethos more than this Vintage Taxi Bench. The attention to detail in this piece is evident throughout its high-end finish. The retro feel is enhanced by the shabby chic cream paint and every piece is made to order. Functional fun at its best. £2,995, www.cuckooland.com


THE AGENDA 19. FRINGE BENEFITS

The 1970s-inspired bucket bag has been the ‘It’ handbag for 2015. Rejuvenated and redecorated, it will find its way into the cold winter months of 2016 as well. The updated bucket bags have – surprise, surprise – latched onto another signature style from the 1970 – fringing. It’s all part of that retro-tribal-boho chic vibe that is currently splashed all over the fashion and style bibles. At this season’s catwalk shows there wasn’t a designer on earth who didn’t feature fringes and tassles on practically everything. Handbags included. The best fringed bucket bags appeared at the Burberry Prorsum AW15 fashion show. Pictured here, the classic bucket bag comes in the iconic Burberry House Check, subtly concealed under a canopy of suede fringeing. Best get on the waiting list now! £1,295, www.burberry.com

17. CATWALK TO COUNTERNot only can trend-followers buy a frock, pair or shoes or handbag after they’ve seen it on the designer catwalk, but the models’ make-up colours are now almost instantly available too. Fashion-forward catwalk make-up has become amazingly influential. Backstage is where brands can experiment with products, seeing what works before serious marketing begins. One limited-edition range that’s come up trumps is the Burberry AW15 Runway Palette. The AW15 catwalks were awash with shades of green, notably military green camouflage colours. Burberry’s palette sweeps those soft neutral tones across lids, making a subtle, sultry statement. Paired with brown mascara, eyes were the undeniable stars on the AW15 catwalks. £50, www.burberry.com

171918. DROP OF THE COLD STUFF

Winter’s Gold, the latest single malt from Diageo, is all about the cold. It comes from Dalwhinnie (annual mean temperature 6.6ºC) and the eponymous distillery is the highest in Europe (winter temperatures as low as -15ºC). So as a paean to the cold, the distillery has created a whisky made in the depths of winter. The colder it is, the less contact the liquid has with the copper while condensing, making it more sulphury and then more honeyed after maturation. Taken neat or with water, this medium-bodied spirit is gorgeously smooth with aromas of caramel, fruit tart and hints of mint and smoke. And in a break from tradition, the distillery recommends drinkers serve it frozen. But this is no

appeal to the frozen shots market – the liquid becomes syrupy when frozen and the rich flavours come alive as your hands warm the glass. A gorgeous dram that’s perfect for beating the winter chill. £39.99 a bottle, www.waitrosecellar.com18

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Training to improve your business performance

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Appleby is the leading provider of offshore legal, fiduciary and administration services. Uniquely positioned in the key offshore jurisdictions of Bermuda, BVI, the Cayman Islands, Guernsey, Isle of Man, Jersey, Mauritius and the Seychelles, as well as the international financial centres of London, Hong Kong and Shanghai. We are also the only firm to have offices in all three British Crown Dependencies. Our services include: ● Corporate● Dispute Resolution● Private Client & Trusts● Property Members of the Jersey and Guernsey offices regularly advise London City and international law firms on all legal aspects of offshore corporate, finance and investment fund transactions and arrangements in the Channel Islands. For more information visit our websitewww.applebyglobal.com/our-expertise Michael Cushing Managing Partner, Jersey+44 (0)1534 818 [email protected] Gavin FergusonManaging Partner, Guernsey+44 (0)1481 755 [email protected]

Ashburton Investments is a new generation investment manager. We are the investment management arm of the FirstRand Group, one of Africa’s largest financial services companies. Our offering spans traditional and alternative investment strategies, as well as active and passive investment styles.

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David Benest Law provides agile and responsive solutions to a broad range of litigation.

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Cazenove Capital Management is the wealth management business of the Schroder Group in the Channel Islands, the UK and in Asia; and is a leading provider of specialist financial solutions to private clients, family trusts, companies, charities and pension plans.

We offer exceptional levels of personal service from our team of experienced specialists, whose role is to tailor our range of wealth management services to meet our clients’ individual circumstances and objectives. Our range of services includes personalised discretionary and advisory investment services, wealth planning, cash administration and specialised lending.

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GuernseyJulian Winser, [email protected]+44(0)1481 703700

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Cazenove Capital Management is a trading name of Schroders (C.I.) Ltd which is licensed under the Banking Supervision (Bailiwick of Guernsey) Law 1994 and the Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended. Schroders (C.I.) Ltd is a participant of the Guernsey Banking Deposit Compensation Scheme. Registered address at Regency Court, Glategny Esplanade, St Peter Port, Guernsey GY1 3UF, (No.24546). Terms and conditions apply. For your security, communications may be taped or recorded.

We are an independent trust company fully regulated and licensed by the Jersey Financial Services Commission in the conduct of trust company business.

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Deloitte LLPDeloitte LLP offers professional services to the UK and European market. The company has the broadest and deepest range of skills of any business advisory organisation and employs over 14,400 exceptional people in 28 offices in the UK and Switzerland. We provide professional services and advice to many leading businesses, government departments and public sector bodies and publish many influential studies and thought leadership pieces. Deloitte LLP employs 160 professionals across the Jersey, Guernsey and the Isle of Man offices. It is the UK member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its global network of 150 member firms, each of which is a legally separate and independent entity. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. For further information please do not hesitate to contact: John Clacy, Partner, GuernseyEmail:[email protected] +44 (0) 1481 724011 Greg Branch, Partner, JerseyEmail: [email protected]: +44(0)1534 824325www.deloitte.com

About EYEY is a global leader in assurance, tax, transactions and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

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Mike Bane, Partner, Assurance and TASE: [email protected] T: 01481 717435

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Chris Matthews, Partner, AssuranceE: [email protected] T: 01534 288610

David Moore, Partner, Assurance and Advisory E: [email protected] T: 01534 288697

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Wendy Martin, Partner, Tax E: [email protected] T: 01534 288 298

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Grant Thornton Limited is a leading Channel Islands accountancy and consultancy practice with offices in Guernsey and Jersey. We are the Channel Islands member of Grant Thornton International, one of the world’s leading organisations of independently owned and managed accounting and consulting firms. We provide a range of services in the Channel Islands that include:

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services● Private Client services● Tax services● Business Risk services For more information please contact: JERSEY OFFICEAdam BudworthDirectorBusiness Advisory ServicesE [email protected] +44 (0) 1534 885885www.gt-ci.com GUERNSEY OFFICEDave ClarkManaging DirectorE [email protected] +44 (0) 1481 753400www.gt-ci.com


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A leading accountancy practice, with offices based in Jersey and Guernsey, KPMG in the Channel Islands provide audit, tax and financial advisory services.

KPMG’s global network enables us to draw on our international resources and skills to meet our clients’ needs. We address complex business challenges with methodologies and processes spanning markets and national boundaries.

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Neale JehanHead of [email protected]

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John RivaHead of [email protected]

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Robert KirkbyExecutive [email protected]

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The Intertrust Group is a global quality leader in the trust and corporate services sector, providing a broad range of specialised administrative services to multinational corporates, financial institutions, alternative investment funds and private clients from every corner of the world.

Intertrust in Guernsey is one of the Channel Islands leading fiduciary companies offering a range of trust and corporate services, fund administration services, taxation services and compliance out-sourcing services. With over 130 experienced and highly qualified staff and a presence in Guernsey which goes back to 1900, Intertrust Guernsey can provide professional, personal and multi-jurisdictional services for clients all over the world.

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Intertrust GuernseyP O Box 119, Martello Court,Admiral Park, St Peter Port,Guernsey GY1 3HB

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i2Office Guernsey offers a more flexible and lower cost alternative to the traditional long term lease with prestige serviced offices and meeting space in Royal Chambers on St Julian’s Avenue, St Peter Port, Guernsey.

i2Office provides high quality serviced offices for rental on flexible, competitive terms with top-grade technology services. The offices can accommodate all sizes of operations, from small start-up teams to companies looking to house more than 50 people, either for a project, an interim period whilst refurbishing or moving offices, or for a long term real estate solution.

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i2Office operates high quality serviced offices and meeting rooms in over 25 locations in the UK, including Mayfair and the City of London as well as major cities such as Birmingham, Edinburgh, Glasgow, Leeds and Manchester.

For further information please contact: Michelle MorleyGeneral Manager i2Office Guernsey LtdThe RotundaRoyal AvenueSt Peter PortGuernseyGY1 2HL Tel: 01481 760000Email: [email protected] www.i2office.co.uk


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Marbral Advisory is the largest change management practice in the Channel Islands. We deliver a significant, measurable improvement that goes beyond our clients’ own capability for managing change. By hiring smart people to do smart things, we use our skills to ensure programmes are delivered on time and to budget.

We recognise that to deliver extraordinarily effective change, you must consider the technology that supports the change, the processes that help deliver it and most importantly, the people who drive and embed the change. Our ethos is to make change wanted, make change happen and make change stick.

We work together with businesses to achieve enduring results. We are passionate about our clients and can provide short-term expertise or long-term project delivery support. Whatever our clients require, we ensure our service delivery is tailored to meet their expectations and budget. For further information, please contact:T: 00 44 1534 744303E: [email protected] Alexsis Wintour – Principal ConsultantT: 00 44 7700 333333 Chris Shield – Principal ConsultantT: 00 44 7829 736810 Hazel Thomson – Principal ConsultantT: 00 44 7700 717493 Leonie McCrann – Principal ConsultantT: 00 44 7700 717721

www.marbraladvisory.com

Minerva is a family owned business that has been in existence in Jersey for over 35 years.

As a leading independent provider of trust, corporate and fund administration services, we focus on internationally active clients located in sub Saharan Africa, India, the GCC and Europe.

We firmly believe in the value of personal relationships and are familiar with how our clients and professional intermediaries operate from a cultural and business perspective within these regions.

In addition to Jersey, we provide services from a number of offices based in key jurisdictions including London, Geneva, Mauritius, Dubai, Singapore and Amsterdam, as well as affiliate offices in Kenya, India and New Zealand.


John WoodManaging Director

Minerva Trust & Corporate Services LimitedPO Box 21843/45 La Motte StreetSt HelierJersey JE4 8SDChannel Islands

T +(0)1534 702930E [email protected] www.minerva-trust.com

As a full-service law firm, Parslows regularly act for clients in all fields of law from corporate commercial trust and commercial litigation to conveyancing, personal injury claims, family law, wills and probate.

Whatever your needs, be you a corporate client or an individual instructing a lawyer for the first time, you will find Parslows lawyers and staff efficient, experienced and approachable. Above all, you can be sure that we will work in partnership with you to reach a positive outcome.

Our lawyers are tenacious in litigation and pragmatic on transactional matters. Our forward thinking, imaginative and meticulous attitude has ensured that we have built a growing network of loyal clients. Have a look at our website to find out more at parslowsjersey.com For further information please contact Dispute resolution and Court [email protected] Corporate Commercial [email protected] Personal legal [email protected] Property and [email protected] Risk & [email protected] [email protected] Parslows, 17 Broad Street, St Helier, JE2 3RR01534 630530www.parslowsjersey.com

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Directory To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or [email protected]

Building trust in society and solving important problems

We focus on three things at PwC in the Channel Islands: assurance, tax and advisory services. But how we use our knowledge and experience depends on what you want to achieve. So whichever one of our 320 plus staff in the Channel Islands you work with (or 208,000 people across the PwC global network of member firms), they’ll start by asking the following questions:

Are you looking to build trust? Give your shareholders more value? Or do you want to do something completely different with your strategy?

When we work with you we really listen, to understand you better. We’ll get to know you, your business and your goals. Then we’ll share what we’ve learned to help you get there. We want to deliver the value that you, our clients, our people and our communities are looking for.

Talk to us about your issues and aspirations.


John Roche, Partner, GuernseyTel: +44 1481 752040 [email protected]

Karl Hairon, Partner, JerseyTel: +44 1534 [email protected]

www.pwc.com/jgFollow us: @PwC_CI

Rathbone Investment Management International is part of the award winning Rathbone Brothers PLC (“Rathbones”), which was established in 1742. Rathbones is a leading provider of discretionary investment management services for private investors, charities and trustees.

We enjoy the stability afforded by being a FTSE-250 listed company with significant critical mass (£28.3 billion of funds under management as at 30 June 2015).

We offer a range of tailored investment options:● Bespoke portfolio management ● Multi-manager portfolios ● Unitised portfolios (the RIMI Strategies

Funds)

Our services are delivered by a team of innovative and experienced offshore professionals based on an understanding of a client’s specific investment and risk objectives, backed-up by the performance-driven Rathbone investment process and encompass the full universe of assets.

For further information please do not hesitate to contact:

Jonathan Giles, Managing [email protected]

Phil Bain, [email protected]

Vaughan Rimeur, [email protected]

+ 44 (0) 1534 740550www.rathboneimi.com

Rathbone Investment Management International Limited is regulated by the Jersey Financial Services Commission

Specialty: Bespoke IT Development & Business Consultancy

Our ProductsPureClient is a new pioneering client data management platform that will maintain client records for any entity or relationship. Built with an integrated customer due diligence and risk assessment tool, PureClient has 4-eyes control throughout that will ensure your business can trust the data within it.

Designed to support FATCA, PureClient provides the necessary transparency to enable “look-through reporting” that is needed to manage sophisticated structures and automatically identify U.S. or other high risk entities and relationships.

PureClient will automatically manage new, outstanding and renewable KYC and ensure entity documentation is stored and quickly retrievable on the integrated document management platform.

PureFunds is a powerful and intuitive investment administration platform supporting Hedge Fund, Mutual Fund, Private Equity and Real Estate businesses within a single application.

PureFunds multi-currency transfer agency platform brings a new and dynamic approach to dealing and administrative activities ensuring that all client, fund and company registers are automatically updated. The flexible straight- through batch processing functionality will automatically process, file and email all client correspondence. This functionality will minimise business risk and deliver many efficiencies without compromising control, integrity or security.To find out more how Puritas can help your business.

Contact Mike FeighanHead of Business DevelopmentT: +44 (0) 1534 874100E: [email protected]


www.blglobal.co.uk


Rowlands has been actively supporting businesses in Jersey for almost 40 years. With a wealth of experience, in-depth market knowledge and a genuine enthusiasm for people, careers and resourcing we are well positioned to help you make the most of your recruitment opportunities and to secure the best possible people for your business.

Our performance is based on honest, effective personal relationships and it is our aim to provide you with a long term, valuable resource that will help to improve your business. The services we provide have developed through client demand; building a reputation for professionalism and confidentiality. Our services include:

● Permanent Recruitment – all levels● Executive Placements● Temporary/Flexible Solutions ● Contract Recruitment● Graduate Services● Pre Employment Screening● Outplacement Services● Psychometric Testing● Remuneration Survey

For more information on these services and how we could support you and your resourcing strategy please contact:

Jeralie Pallot Managing DirectorRowlands Recruitment, Trinity House, Bath Street, St Helier, Jersey JE2 4ST

T: +44 (0)1534 626722E: [email protected]

We are an award winning, established law firm with a multi-facet approach to law. Renowned for our integrity, accountability and vast legal network, we build longstanding relationships with clients who return to us time and again. This is substantiated further by our Lexcel status, recognising us for excellence in legal practice management and client care.

Representing clients across the Channel Islands, UK and Europe, we act as their strategic legal partner utilising our off-shore expertise and international reach. We understand your business is unique and that you require a bespoke solution to meet your business needs and responsibilities.

In this way, we ensure our services are aligned to your legal requirements - whether you are a global corporation, a business start-up, a national government or a private client.

Our range of bespoke legal services includes:

For expert legal advice that can redefine your business, please contact us today.

E: [email protected]: +44 (0) 1534 888 666W: www.viberts.com

● Commercial● Dispute Resolution● Employment● Family

● Personal● Property

TO GET YOUR FIRM LISTED IN THE DIRECTORY CONTACT

CARL METHVEN+44 (0) 1534 615886 / +44

(0) 7797 796377 ORCARL.METHVEN BLGLOBAL.CO.UK

ONLINE DIRECTORY

THE ONLINE DIRECTORY THAT WILL GET YOUR FIRM NOTICED. With a profile summary on every press release, and a

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Contact us:

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We are an award winning, long established, international law firm renowned for our outstanding client service, effective problem-solving skills and outcome focused strategic thinking. Whether you are a multinational corporation, a business start-up or an individual, contact us today to experience our pragmatic approach to law.

COMMERCIAL EMPLOYMENT FAMILY LITIGATION PERSONAL PROPERTY

@vibertslawyersgoogle.com/+VibertsLawlinkedin.com/company/vibertsyoutube.com/c/VibertsLaw

Tea or coffee?Coffee! (apparently scientifically proven to be good for you as well…)

Favourite movie?Dirty Harry is a great film. It means different things to me now than when I first saw it, but in the sheer bloody-minded independence of Harry Callahan, there are lessons for us all.

Fondest childhood memory?Scoring my first ace at tennis. Anyone who has played against me knows that the occasional sparkling serve is all the sweeter for the generally abysmal inconsistency of most of them.

Favourite holiday destination?New York – or any other big, sprawling city (to balance the idyllic small island life that we have).

Scariest thing that has happened to you?Getting lost in the Malaysian jungle alone for a couple of days in 1990, on a student expedition that went awry, was certainly up there.

Your best quality?Enthusiasm – I can’t help seeing the upside in situations.

Something about yourself you would change?My wife tells me my timekeeping has room for improvement.

Last meal on death row?Might as well indulge if there are no long-term health consequences. I’d suggest a shot at the Coney Island hotdog eating record.

Cats or dogs?Dogs are great. I have an allergic reaction to cats.

Someone you admire?Anybody who can deal with regulatory change and keep smiling!

First job you had?Aged 14, I got a job at the shop in my Yorkshire village. What I hadn’t realised is that this gave me control over the ability of considerably older kids to be able to buy alcohol, cigarettes and 18-rated videos. It was an early lesson in using negotiating leverage…

Worst job you’ve done?There’ve been a few. Selling baguettes at Glastonbury was particularly badly paid – but I guess the location did have some compensations.

Dream job?While I enjoy most of the job that I do now, obviously it would be nice to get paid to play music. However, the laws of supply and demand mean this would probably be me paying people to listen, rather than the opposite.

Any hobbies?The guitar still occasionally gets an airing (despite the answer above). My band, Allegro, recently performed to a capacity crowd at a venue in London. A very small one.

Something that drives you nuts?It’s hard to think of much that’s worse than the bus transfer system at Gatwick to make one question the meaning of the universe.

Best bit of advice received?‘Enjoy it!’ – said to me by my first boss before I went off to deal with a particularly stressful and technically complex legal application. I thought he was mad, but it’s true that you have to see the positive side of the most difficult situations. It’s the only way to learn.

Fantasy dinner guest?Maybe Voltaire (assuming everyone can speak French). Or Jimi Hendrix.

Buzzword you hate the most?‘Chillaxing’ is a particularly unpleasant word.

Favourite chocolate bar?In principle I’m a savouryperson. But Marathons are good. In my book they will always be Marathons (not Snickers).

Something about you that people might be surprised by?I secretly quite like to do a spot of gardening.

TIM MORGAN is a Partner at Mourant Ozannes in Jersey

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Contact us:

+44 (0) 1534 888666

[email protected]

www.viberts.com

Follow us:

E-commerce

Banking & Finance

Intellectual Property

Commercial Disputes

Commercial Property

Construction & Planning

Commercial Agreements

Employment & Incentives

Trusts & Wealth Structuring

Corporate Processes & Transactions

Financial Services Regulation

Mergers & Acquistions

for yourbusiness strategic choice

the

We are an award winning, long established, international law firm renowned for our outstanding client service, effective problem-solving skills and outcome focused strategic thinking. Whether you are a multinational corporation, a business start-up or an individual, contact us today to experience our pragmatic approach to law.

COMMERCIAL EMPLOYMENT FAMILY LITIGATION PERSONAL PROPERTY

@vibertslawyersgoogle.com/+VibertsLawlinkedin.com/company/vibertsyoutube.com/c/VibertsLaw

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RAISING THE BAR ISN’T OURASPIRATION. IT’S ONE OF OUROPERATING PRINCIPLES

We’re here to make a difference. Replacing stale, familiar norms with dynamic, value-driven performance, we’re raising industry standards by challenging standard practice. Across Corporate Services, Fund Services and Private Wealth, our relentless pursuit of excellence is the new benchmark.

ELIAN.COMRegulatory information is detailed on elian.com/legalnotice

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bl magazine issue 41 november/december 2015

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