Page 1

GLOBAL BUSINESS: A VIEW FROM THE CHANNEL ISLANDS

BUSINESSLIFE

OCTOBER/NOVEMBER 2020

• Monterey insights • Capital markets • Blockchain and digital progress • green, esg and impact investing • fund structures • co-investment

BUSINESSLIFE

ISSUE 70 OCTOBER/NOVEMBER 2020

THE FUNDS EDITION How the Channel Islands funds sector is staying ahead of the next waves


Consciously Independent.

Your partner of choice for trusts, funds and pensions. At Fairway Group, we keep our clients’ best interests at heart. As a truly independent fiduciary group, we are nimble enough to react to changes and understand the individual needs of each relationship through a director-led, dedicated team. We can be trusted to get it right every time. Find out how. +44 (0)1534 511700 GetInTouch@fairwaygroup.com Visit fairwaygroup.com Follow us on Follow us on Follow us on Follow us on

Fairway Group is a registered business name of Fairway Trust Limited, Fairway Fund Services Limited and Fairway Pension Trustees Limited. Regulated by the Jersey Financial Services Commission.


Welcome

Beyond Covid WELCOME TO THIS dedicated Funds Edition of Businesslife. It seems to have been an age since we started any ‘Editor’s welcome’ with anything but a commentary on the seemingly endless negative impacts of coronavirus. However, as the pandemic rumbles on and as many regions struggle with the long-anticipated second wave of cases, it’s interesting to note that not all sectors have been decimated by the crisis. Take sustainable investing – green, ESG and impact investing – as an example. As our feature starting on page 60 explains, the pandemic has sharpened the focus on such funds, increasing demand. And industry experts believe demand will continue to grow further as governments respond to the climate change crisis. This view is supported by recent research from Morningstar, which reveals that, since mid-February 2020, the majority of ESG funds have outperformed their benchmarks with ESG and sustainability themes – attracting strong fund inflows. In fact, in the first quarter of 2020, global investors poured a record $45.76bn into funds that invest in supporting environmental, social and governance practices. The resilience of sustainable investing is also a symbol of the performance of the Channel Islands funds sector as a whole during the pandemic. As our article on page 34 explains, the islands have not only fared well, relatively speaking, compared with other regions’ lockdown measures and controlling of cases, but also in terms of service delivery in the funds sector. “When it comes to administering a fund or

administering someone’s trust, this doesn’t just stop because there’s a pandemic,” Jonathan Smith, Partner at Wyvern Partners, tells us. “Clients still need their services, regardless of what’s happening in the world. Come what may, if you’ve got a trust, you still need to be the trustee.” As part of our overview of the funds landscape, Karine Pacary of Monterey Insight provides a deep-dive analysis of the funds industry across a number of jurisdictions, calling on her firm’s latest available research. Her analysis, starting on page 16, reveals a healthy outlook. It shows that growth in the Jersey funds sector topped 17% in the year ending mid-2019, while Guernsey also returned to strong growth. And, although the UK continues to grapple with some uncertainty, Ireland and Luxembourg also experienced strong growth, according to the research. In this issue, we also look forward – to how the funds sector might evolve. Our article starting on page 26 reveals that, along with many sectors, technology will likely play a pivotal role. In fact, our article suggests that blockchain alone could save asset managers $2.7bn a year by removing the laborious manual practices involved in buying and selling funds. That, combined with the Channel Islands’ continued resilience in the face of the coronavirus pandemic, paints a healthy picture for the funds sector on the islands going forward. Some welcome good news for all. n

In this issue, we look forward – to how the funds sector might evolve

Jon Watkins is Editor-in-Chief of Businesslife

A virtual assistant tailored to your business Save time and money by outsourcing one or more duties on a pay-as-you-go, flexible basis. Executive Support

Editing and Proofreading

Bookkeeping

HR Assistance

Personal Assistance

Event Management

Trusted and relied upon by reputable brands and companies from a variety of industries and locations. Contact me today to find out how I can help: miranda@mirandavilliers.com

www.blglobal.co.uk

07797 776 014

www.mirandavilliers.com

October/November 2020 3


Xxxxx

Providing bespoke funds solutions requires experienced craftsmanship

Inspiring. Independent. Trusted. As an independent financial services business, we don’t apply a ‘one size fits all’ methodology to our services. We provide a complete range of flexible fund solutions explicitly crafted to meet your needs. Whether you’re a start-up manager, promoter or a family office, we ensure that your interests, whether personal or business, are safeguarded. It is this commitment to quality service that our clients and their advisors have appreciated for over 25 years, enabling us to become their trusted partner.

Robert Ayliffe Executive Director +44 7700 349 750 robert.ayliffe@fiduchi.com

Together, let’s establish your new Fund.

PRIVATE CLIENT CORPORATE EMPLOYEE FUNDS YACHTS

www.fiduchi.com

LONDON | JERSEY | DUBAI

Fiduchi Limited and Fiduchi Fund Services Limited are regulated by the Jersey Financial Services Commission. 4 xxxx/xxxx 2019 Full legal, regulatory and data notices are published on our website.

www.blglobal.co.uk


Contents

INSIDE

BL

10 COMMENT

BUSINESSLIFE

Businesslife is published six times a year by Chameleon Group +44 1534 615886 www.blglobal.co.uk

CEO, CHAMELEON GROUP Carl Methven carl.methven@blglobal.co.uk EDITOR-IN-CHIEF Jon Watkins ART DIRECTOR Angela Lyons SUB EDITOR Kate Wheal ADVERTISING sales@blglobal.co.uk NEWS AND EDITORIAL news@blglobal.co.uk GENERAL ENQUIRIES enquiries@blglobal.co.uk

34

26 6 News

26 Blockchain

The latest Channel Islands business news

Blockchain’s much anticipated arrival across financial services, along with its promises of enhanced speed and security, has been slow to materialise. So could it really revolutionise the funds sector?

8 Appointments Recent people moves across the Jersey and Guernsey

16 funds landscape Monterey Insight MD Karine Pacary on the dominant players and trends in the key jurisdictions of Jersey, Guernsey, the UK, Ireland and Luxembourg

22 capital markets Are the Channel Islands still the place to go for non-UK London Stock Exchange listings? And what does it mean for the Channel Islands?

regimes promise speed to market, firm regulation and banking nous

54 Building trust Following the Woodford scandal, how can trust be rebuilt to ensure the effective management of investors’ money?

34 Wave of optimism

60 Going green

What impact has the Channel Islands’ approach to Covid-19 had on its funds sector?

The pandemic has sharpened the focus on green, ESG and impact funds, and experts say demand will grow

40 Digital evolution Five fund management leaders share their experiences of digital advances in the sector

48 Fund structures Channel Islands fund

Data transformation should be a critical part of any company strategy, not just digital transformation, says Zizo CEO Peter Ruffley

66 Co-investments

71

The knowledge How to avoid making redundancies, breadcrumbing, the rise of the world’s tech hubs, plus lots more

Investors’ desire to have more of a say in where their money is invested has led to the rapid emergence of co-investment

contributors The BL Global Discussion Forum

Follow us @blglobalnews Office: Meadowlands, La Rue a la Dame, St Saviour, Jersey JE2 7NQ © 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.

www.blglobal.co.uk

ALEXANDER GARRETT

With investors taking an increasing interest in where their money is invested, Alex discovers that many are turning to co-investments to enable them to be more involved.

JAMES TALL

Meanwhile, James asks why, with its ability to deliver speed, security and transparency, blockchain is taking so long to get a grip on the funds sector – and finds that things could be about to change.

SOPHIE MCCARTHY

Sophie takes a look at how the Channel Islands funds industry managed to fare so well during the lockdown period – and hears that robust planning and foresight were key to success.

IMOGEN ROWLAND

Imogen gauges the views of five leaders from the funds sector on how digital developments have shaped – and continue to shape – the funds landscape in the Channel Islands and further afield.

october/november 2020 5


in the NEWS Follow us @blglobalnews

JERSEY WINS IFC AWARD Jersey has been named Best International Finance Centre at this year’s WealthBriefing European Awards, which honour businesses and individuals that have demonstrated innovation and excellence in 2019. Jersey Finance CEO Joe Moynihan (pictured) said: “This award is a testament to Jersey’s ability to evolve as a jurisdiction and remain a well-regulated and stable international finance centre. We continue to offer an attractive proposition tailored to the needs of global investors.” GFSC PUBLISHES Q2 INVESTMENT DATA The Guernsey Financial Services Commission has published investment figures for the second quarter of 2020. The key points are as follows: • The total net asset value of Guernsey funds has decreased in sterling terms during the last quarter by £6.4bn (-2.7%) to £226.8bn. Over the past year, total net asset values have decreased by £0.9bn (-0.4%). • Within these totals, Guernsey-domiciled open-ended funds increased over the quarter by £3.1bn (6.8%) to £47.8bn,

Done Deals Aztec Group has supported the fundraising and final close of Nordic Capital’s Fund X. Launched in April, the fund raised €6.1bn in less than six months in a remote raise held without face-to-face meetings. Fund X will continue Nordic’s strategy of investing in non-cyclical growth companies in healthcare, technology and financial services. Aztec will provide ongoing administration, financial reporting, depositary and investor services to Fund X from Jersey, Luxembourg and the UK.

6 october/november 2020

Sign up for email updates at www.blglobal.co.uk

an increase of £0.5bn (1%) during the past year. • The Guernsey closed-ended sector decreased over the quarter by £9.4bn (-5%) to £179bn, a decrease of £1.4bn (-0.7%) in the past year. • Within the totals for Guernsey funds, Guernsey Green Funds held a total net asset value of £3.3bn at the end of the quarter. • Non-Guernsey open-ended schemes – for which some aspect of management, administration or custody is carried out in the bailiwick – had a net asset value of £39.1bn at the end of the quarter. • The total net asset value of Guernsey funds and non-Guernsey open-ended schemes has decreased in sterling terms during the last quarter by £1.2bn (-0.5%) to £265.9bn. • Over the past year, total net asset values decreased by £29.9bn (-10.1%). INTERTRUST REBRANDS Intertrust has unveiled new branding (pictured) and a partnership with US-based non-profit company Kiva. The rebrand completes the company’s integration of Viteos following its acquisition in 2019. And its partnership with Kiva aims to support the San Francisco business’s mission to broaden financial access to under-served communities. Kiva, which was founded in 2005, operates in 76 countries. n

Collas Crill has advised on the launch of Alpha Investment Funds PCC, a registered, closed-ended private investment fund, and the proposed creation of its first cell. The new fund uses the Guernsey protected cell fund structure to create a number of funds within a fund. The first, the Alpha Life Science Fund, managed by Guernsey licensee Alpha Management, will invest in healthcare, medical technology and pharmaceuticals. The Collas Crill team included Partner Paul Wilkes and Senior Associate Gareth Morgan. Appleby has acted as counsel to the Issa Brothers and TDR Capital in their bid to acquire the Asda Group from Walmart. Asda

MERGERS AND ACQUISITIONS MJ Hudson has acquired Dublin-based funds service provider Bridge Consulting. An initial fixed consideration of €2m is payable in cash, with a deferred earn-out consideration of up to €10m over two years. This will comprise cash and new ordinary shares in MJ Hudson representing 20% of the total. All Bridge staff will move to MJ Hudson and trade under its brand. Imperium Trust Company (UK), the UK branch of Guernsey-based Imperium Trust has acquired Vicena International, an accountancy services business founded in 1993 and based in Kent. Imperium has extended its presence in the UK in response to demand for UK-related services, partly due to legislation change and the enhanced reporting of structures and individuals that hold UK situs assets. Jersey-based SRJ Technologies has signed a non-binding strategic alliance with Mitsui & Co (Australia) that will allow both companies to promote their products across each other’s networks. SRJ listed on the Australian Securities Exchange in September, with Mitsui taking a stake. n

was acquired by Walmart in 1999 and the acquisition values it at £6.8bn. Appleby’s corporate and banking teams advised on the Jersey law aspects of the bid, supported by Appleby Global Services. The team included Partner Andrew Weaver and Senior Associate Kevin McQuillan. Hatstone Lawyers has advised the Bank of London and The Middle East on the Jersey aspects of its Sharia-compliant refinance of a £6m London property for a private client. Working with City law firm Druces’ London property and corporate teams, the Hatstone team included Group Partners Bella Ward and Simon Vivian. n

www.blglobal.co.uk


Expect more Our tailored fund solutions are designed to help investment managers create, protect and realise value throughout the fund lifecycle. •

Fund structuring

Tax planning, automated reporting and compliance

Accounting, reporting and financial statements

Audit and assurance

Governance and risk management

Strategy and operations

Digital transformation

Regulatory advice and compliance

IPO services and restructuring

Sustainability services

We combine our depth of local knowledge with our experience of delivering work across key jurisdictions for fund clients to deliver practical, effective and insightful advice that cuts through the complexity of the global funds industry. Real estate Private equity Hedge Debt Our Debt Fund Services team – Winner – Best Audit Service – 2019 Alt Credit European awards. Jersey: 01534 824200 Guernsey: 01481 724011

Deloitte.co.uk


News

Appointments Cees Vermaas has been named CEO of TISE parent company The International Stock Exchange Group. Cees has held executive positions at several international exchanges, including as CEO of CME Europe, CEO of Euronext Amsterdam and Head of European Cash Markets for NYSE Euronext. He has more than 20 years’ experience working in international financial market infrastructure and, prior to that, spent a decade in IT and programme management roles in Philips and Delta Lloyd Group. Cees will be relocating to Guernsey and joining the board in November, subject to regulatory confirmation.

HSBC has appointed Aline Ayotte as Head of Commercial Banking for the Channel Islands and Isle of Man. Aline joined the bank more than 20 years ago and has spent her career in front-line commercial banking roles in Canada, Hong Kong and London, most recently as Regional Head of International Subsidiary Banking in London. Prior to this, she managed the Commercial Banking business in British Columbia. Now based in Jersey, Aline will lead the Commercial Banking division of HSBC during its next phase of growth, which includes a focus on digital innovation and sustainable finance.

Mourant has appointed Julie Melia as Head of Property, based in Jersey. Julie brings to the position more than two decades of experience, and specialises in all areas of Jersey property, including commercial acquisitions and leases, development schemes, planning issues, mergers and acquisitions and property finance. She joins Mourant having spent the past eight years as Partner and Co-Head of the Property Team at Ogier. Prior to this, she spent 14 years with Walkers. Julie qualified as a Jersey Advocate in 1992 and is a qualified Notary Public. She is also a past Chair of Jersey Business.

Jersey fiduciary and administration solutions provider VG has appointed Paul Roper to the role of Director. Paul joins from Stonehage Fleming Group, where he was a Group Partner responsible for the family office team in Jersey. Initially qualifying as an Advocate of the High Court of South Africa, Paul became a Legal Adviser at Old Mutual, then took on a consultancy role at South African financial services group Absa. Following Absa’s majority acquisition of Stonehage, Paul worked with Absa to develop Stonehage’s presence in the Channel Islands. He moved to the Stonehage Group in Jersey in 2002.

Business analytics firm Summit has appointed Richard Gaudin as a Senior Business Consultant. Richard has spent 20 years running global business units as well as start-ups and small businesses in the digital sector and has been involved with a number of M&A transactions as both buyer and seller. He has spent the past three and a half years as Commercial Director at Logicalis Managed Security Services in Jersey, and has also served as CEO of IT consultancy Fostra Group since 2013. His career has also included roles with Collas Crill, G4S and London-based Data2Vault.

The ID Register has appointed Stuart Layzell as Chairman. Stuart, who recently served as CEO at Ocorian, brings to the role international experience in regulated businesses across fund administration and wealth management. He has a strong track record in helping private equity-backed businesses scale internationally, particularly in the technology sector. He has served as CFO at UK-based businesses Tilney Bestinvest, Isotrak and software firm Fourth, and as a Director at PwC, LDC (the private equity arm of Lloyds Banking Group) and the Business Growth Fund.

12 march/april 2017

www.blglobal.co.uk


News

Butterfield has made two senior appointments in the Channel Islands. In Jersey, Charlotte Beddoe (pictured) has been named Vice President, Country Compliance Officer, while in Guernsey Marc Guille has taken the role of Assistant Vice President, Compliance Advisory. He will also act as Deputy Money Laundering Reporting Officer and Money Laundering Compliance Officer. Charlotte, who was Group Head of Compliance and Risk at Bedell Cristin, will sit on the bank’s Jersey executive committee. Marc was Head of Operations for Guernsey risk management services provider Corporate Risk Solutions.

The Law Society of Jersey has appointed Advocate Rose Colley as its President for the next two years. In taking up the role, she becomes the first female president to be elected by members of the society since it was established in 1899. Rose has served as a Partner with Viberts since 2000. As leader of the firm’s Family Law team, she has been involved in many significant family law decisions made in the Royal Court of Jersey. She was sworn in as an English Solicitor in London in 1980 and then as a Jersey Advocate in 2000. Rose spent three years as Head of Private Client and Litigation at Mourant Ozannes before joining Viberts.

Pensions specialist Anna Gray has joined the PraxisIFM Group as Director at Trireme Pensions Services and Cavendish Corporate Investments, both of which are part of PraxisIFM Group and offer pension products locally and internationally. Anna brings more than 13 years’ experience as a pensions lawyer in the UK and Guernsey to the role. She has worked for the UK pensions regulator and assisted the Guernsey Financial Services Commission in its development of the Guernsey pension scheme and gratuity rules. Her career has also included more than 10 years with Travers Smith and two with Babbé.

Jason Laity has taken up the role of Chairman of Jersey Finance, taking over from Gunther Thumann, who has chaired the organisation since 2017. Having worked for more than 30 years in international financial services, notably as Chairman and Senior Partner of KPMG in the Channel Islands, Jason has significant board and partnership-level experience. In his most recent role, as Head of Fintech for Digital Jersey, he was responsible for spearheading the fintech agenda for Jersey. He will relinquish that position before moving to the new role in December. Jason is also a former Chair of the Jersey branch of the IoD.

Hawksford has made two appointments to its Jersey team – Gavin Wilkins (pictured) as Global Head of Client and Intermediary Relationships and Ross Rennie as Manager of Corporate Services. Gavin joins from Oak Group, where he was a Director. Prior to this, he spent 12 years with JTC. He has international experience in Asia, the Middle East and Africa, and knowledge of a range of asset classes, private and regulated investment structures, funds and capital markets. Ross joins from Collas Crill in Jersey. His career has also included periods with HSBC, Bedell Cristin and Ogier.

Sanne has appointed Archie Irtizaali to the position of Business Development Director in Jersey. Archie will work alongside Sanne’s alternative asset and corporate services teams on client strategies to create long-term partnerships and drive growth. He brings to the new role a 20-year background in financial services businesses and has served as Head of Business Development and Marketing at Viberts since 2018. Earlier in his career, he spent almost 12 years with HSBC in Guernsey, as well as periods with Bedell Group Services and Collas Crill in Jersey.

www.blglobal.co.uk march/april 2017 13


Creating a robust data foundation for digital transformation

CO M M E N T

PETER RUFFLEY CEO, Zizo

Data transformation should be a key part of any company strategy, not only a key element of digital transformation

I

n boardrooms across the land, digital transformation is being merged with the Internet of Things, machine learning and even artificial intelligence to create an unmanageable, unfocused concept of ‘doing things better’ – without addressing the fundamental, underpinning essence of that change: the data. Data transformation should be a key part of any company strategy. Data is changing everything that we do as human beings, how we interact with each other, with our governments, and with those we choose to do business with. As such, it is vital that organisations use data to learn more about their customers, their own products and their competition if they are to stay in the game. But while digital transformation may now be a board-level objective, when it comes to strategy or roadmap, there are some concerning shortcomings. On the one hand, organisations are investing in new ways of capturing data, such as connected devices. On the other, they are embracing exciting visualisation tools, such as exploding pie charts and genomic analytics. Spot the gap? Where is the underpinning data structure? Where is the essential data trust? Boards of major corporates still fail to understand that the data held within their business is as big an asset as their machines and their factories – if not bigger – and can have a much wider impact on their bottom line than launching a new product or service. The current wave of unicorn businesses, such as Uber, are successful because they have simplified the movement of data between two parties. They work so well because they have convinced each party that sharing data with each other enables a simpler, faster transaction.

10 October/November 2020

If big corporations thought the same way, imagine what they could do with the wealth of the data they own. A cloud-based analytics platform provides the essential data foundation. It creates the building blocks for the cultural change that will define a digitally transformed organisation – an organisation that will have immediate visibility of all data and, critically, implicit trust in that data. While existing applications will continue to perform as usual, the digitally transformed platform will enable organisations to rapidly build new applications that use diverse data resources to drive operational change. And with this data platform in place, organisations can confidently scale and embrace a raft of digital innovation, from artificial intelligence to cognitive analytics. A data-first culture is one that makes decisions based on all the information available to it, using data found within the business. In order to achieve this idea of ‘data democratisation’, the business must learn to trust the data that is being used. This is where ‘big data’ comes in. By having access to all the data at a granular level, we are able to remove elements of ‘gut feel’ and the ‘anecdotal’ decision-making that many companies still rely on. There is no one-size-fits-all, of course; no prescription for a digitally transformed organisation. However, by taking a solution-led approach, rather than a nebulous ‘digital’ strategy, organisations can embark upon the transformation journey. Critically, the focus must be on addressing specific business requirements, whether prompted by the need to upgrade a dated system or to respond to new operational requirements. By ensuring developments are business-driven, data-led and customer-focused, with the right foundation a business can use its data to make essential change. The December edition of Businesslife will be dedicated to the topic of digital transformation. Please contact jon.watkins@blglobal.co.uk if you would like to contribute to the publication.

www.blglobal.co.uk


OUR CLIENTS THINK AT A SPEED VERY SIMILAR TO OUR OWN. FAST. Most successful people are quick thinkers, it’s a mindset we share. They want to achieve success not only through the money they have in the bank, but by their enthusiasm for living and working on their terms. Amen to that. If you like this approach, maybe we should talk.

Kay Parnwell

Email: kay.parnwell@investec-ci.com

Call: +44 (0)1481 706483

Minimum eligibility criteria and terms and conditions apply. Investec Bank (Channel Islands) Limited is a wholly owned subsidiary of Investec Bank plc. This document is distributed by Investec stec Bank (Channel Islands) Limited which is licensed in Guernsey by the Guernsey Financial Services Commission under the Banking Supervision (Bailiwick of Guernsey) Law,1994, as amended, and the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended, to carry on banking and investment business. Registered Address: Glategny Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 1WR. Registered Number: 5845. The Jersey Branch of Investec Bank (Channel Islands) Limited is regulated by the Jersey Financial Services Commission to carry on deposit taking business under the Banking Business (Jersey) Law 1991, ass amended. The Jersey Branch address is One The Esplanade, St Helier, Jersey, JE2 3QA. The Isle of Man Representative Office of Investec Bank (Channel Islands) Limited is regulated by the Isle of Man Financial Services Authority and its place of business address is Second Floor, The Old Courthouse, Athol Street, Douglas, Isle of Man, IM1 1LD.


BL BY NUMBERS

“When it comes to administering a fund or administering someone’s trust, this doesn’t just stop because there’s a pandemic” Jonathan Smith, Partner at Wyvern Partners, on how the Channel Islands funds sector worked through the Covid-19 crisis

113

GUERNSEY IS TOP OF THE PILE WHEN IT COMES TO TOTAL LONDON STOCK EXCHANGE LISTINGS BY JURISDICTION

17%

PAGE 22

The level of growth in the Jersey funds industry last year. But how does that compare with other jurisdictions? PAGE 16 “INVESTMENT THROUGH EQUITY IS CLEARLY WHAT IS NEEDED [POST-COVID-19], AND OUR FUNDS INDUSTRY WILL BE ABLE TO DEMONSTRATE ITS IMPORTANT ROLE AND WILL HELP ECONOMIES GROW” Elliot Refson, Head of Funds at Jersey Finance

PAGE 48

PAGE 34

£1BN $2.7BN Estimated investor losses from the collapse of the Woodford Fund. So how does the sector rebuild trust?

Estimated amount asset managers could save annually by using blockchain to remove laborious processes

PAGE 54

PAGE 26

12 October/November 2020

“TECHNOLOGY AND ROBOTICS CAN ACT AS A SUPERCHARGER”

Martin Keelagher, CEO of Agile Automations, on the future of tech in the funds sector

PAGE 40

X2

37%

Investment in ESG and ‘green’ funds has more than doubled since 2012. So what’s driving their appeal?

PAGE 60 Proportion of limited partners expecting to make co-investments in the next 12 months

PAGE 66 www.blglobal.co.uk


Sponsored content

Jersey A gateway to Europe for Sovereign Wealth Funds

Over the last two decades, there has been a significant increase in Sovereign Wealth Funds (SWFs), indeed at the end of 2019, SWFs maintained some US$8trn in assets under management.1 This is more than double the value in 2007.2 As the volume of global investment has increased, SWFs, particularly from Asia, the Middle East and North America, have come together to form ‘super funds’, that have the financial weight to be invested globally across multiple asset classes. When it comes to managing SWFs in European markets, Jersey, as an internationally respected financial hub, remains a strategic base that provides a gateway to the continent. Global account visibility One Jersey firm working with SWFs around the world is Ocorian, which provides corporate administrative services in a multitude of countries. Ocorian uses its global network of offices to support SWFs at both ends of their investment. As part of that support, Ocorian often works closely with HSBC to ensure its clients have the necessary bank account structures in the relevant markets. “It’s great for us to work with a bank like HSBC, that understands Sovereign Wealth Funds. Predominantly, HSBC will have a relationship with the client in their home jurisdiction. This then assists us in setting up accounts in that jurisdiction,” explains Nick Terry, an executive director at Ocorian. “For us as a corporate administrator to then be able to see those accounts from multiple jurisdictions on a single IT platform is very helpful.” Why Jersey? Jersey has been a leading international finance centre for almost 60 years. With a forward-thinking approach, the Island is at the forefront of wealth management, funds, capital markets and banking.3

Jersey’s regulatory framework is one of the strongest in the world and it is designed to bring clarity and transparency to the world of finance. The Island also has a highly skilled workforce and key stakeholders work together to develop products and services.4 Why HSBC? HSBC in Jersey has a strong track record in supporting the needs of Sovereign Wealth Funds, whether that’s working with the funds directly or through a Corporate Service Provider. With an extensive global presence and well-established relationships with other service providers all over the world, HSBC is able to provide well informed access to global markets at a local level. HSBC is also able to provide visibility to global accounts from one central, digital platform, making it straightforward for clients to manage accounts in home and investment markets simultaneously. How we can help Jersey is well situated for the management of SWFs and provides convenient access to investment opportunities in Europe. With HSBC being well established in the Channel Islands and having the global footprint to reach most markets, it provides SWF support to a wide range of clients.

To find out more about how HSBC can help, contact your relationship manager or visit www.business.ciiom.hsbc.com/ en-gb/sovereign-wealth-funds to view the video on Sovereign Wealth Funds in Jersey.

Together we thrive https://internationalbanker.com/finance/sovereign-wealth-technologys-new-growth-engine/ 2 https://www.worldfinance.com/markets/state-run-sovereign-wealth-funds-continue-to-grow-in-power-and-influence 3 https://www.jerseyfinance.je/jersey-the-finance-centre/ 4 https://www.jerseyfinance.je/jersey-the-finance-centre/

1

Issued by HSBC Bank plc, registered in England and Wales number 14259. Registered office 8 Canada Square, London, E14 5HQ. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. HSBC Bank plc, Jersey Branch is regulated by the Jersey Financial Services Commission for Banking, General Insurance Mediation, Fund Services and Investment Business. HSBC Bank plc, Guernsey Branch is licensed by the Guernsey Financial Services Commission for Banking, Insurance Intermediary and Investment Business. In the Isle of Man HSBC Bank plc is licensed by the Isle of Man Financial Services Authority. ©HSBC Bank plc 2020. All Rights Reserved. Approved for use in the UK by HSBC UK Bank plc. AC 54797


Advertising feature

Fund migration: streamlining your approach Simon Burgess, Head of Alternative Investments at Ocorian, considers the effects of new regulations in Jersey and Guernsey enabling inbound migration of foreign limited partnerships, and how outsourcing administration functions can help mitigate the challenges of fund migration and rising external pressures THE INTRODUCTION OF the Limited Partnerships (Continuance) (Jersey) Regulations 2020 in July was welcomed by the island’s funds community after making it significantly easier for fund managers to migrate limited partnership (LP) fund structures to Jersey. The regulations come at a time when managers continue to evaluate their fund structuring options in light of an increasingly complex global funds environment and greater investor scrutiny as to the choice of jurisdiction. The move will undoubtedly increase interest in the jurisdiction from alternative fund managers wanting to restructure

their funds. It aligns Jersey with the laws of other jurisdictions by formalising a continuance pathway for non-Jersey LPs wishing to continue into the jurisdiction. As a result, LPs will be able to migrate their fund structures seamlessly and more efficiently than before. Guernsey adopted similar regulations in July, the Limited Partnerships (Guernsey) (Migration) Regulations 2020. They also permit the migration of limited partnerships registered overseas into Guernsey and further simplify the procedure for moving existing overseas funds into Guernsey. This follows the introduction of a fast-track application process for the migration of fund managers of overseas collective investment

schemes in June by the Guernsey Financial Services Commission. Both sets of regulations are expected to precipitate a rise in interest from real estate, private equity, infrastructure, debt and other alternative managers wanting to restructure their funds. They will be looking to domicile their funds in a jurisdiction that can offer political and fiscal stability with a limited change outlook from a regulatory, political and legal perspective. Jersey and Guernsey are both attractive options in this regard and, critically, exhibit high levels of sector-specific expertise, as well as being strongly committed to international substance laws and corporate governance. The speedy introduction of the regulations in both islands is testimony to their dynamic approach to funds industry opportunities and pragmatism in a time of volatility.

THE RISE OF PRIVATE FUNDS Considerations surrounding domiciliation, structuring and marketing, combined with investor needs, can be difficult and timeconsuming to navigate. However, the Jersey Private Fund (JPF) regime enables LPs to establish operations in Jersey quickly and efficiently and continues to be a popular solution with fund managers. Many foreign LPs that migrate to Jersey and continue as investment funds are likely to seek approval to become JPFs and utilise the JPF regime’s flexible, lower-cost and lightly regulated solution

14 October/November 2020

www.blglobal.co.uk


Advertising feature

for firms launching funds targeting fewer than 50 investors. The regulations stipulate that for those pursuing this route, a number of additional consents and approvals are required from the relevant general partner and the Jersey Financial Services Commission. However, the application process for a JPF is straightforward. Local Jersey fund administrators (who act as the designated service provider for the JPF) and lawyers should be engaged to facilitate the application process and advise on the continuance, respectively. In Guernsey, any non-Guernsey LP will be able to apply to the Guernsey Financial Services Commission for regulatory consents in order to continue as a fund. Similar to the JPF regime, LPs will be able to continue as a Guernsey Private Investor Fund if they are marketing to 50 or fewer investors and take advantage of the fast, light-touch regime.

STREAMLINING THE MIGRATION PROCESS Engaging with a specialist fund administrator experienced in successfully administering funds and underlying entities with operations in the Channel Islands is essential and will enable managers to take advantage of the quicker and more costeffective migration process. At Ocorian, we support fund managers migrating their fund structures to: • Guide them through the migration from their existing structure and provider and drive this process to ensure a smooth and timely transition, using tried and tested project management specialists • Establish an operationally effective model through specialist technology

and a dedicated team, to provide a seamless service to fund managers and investors alike. We have significant experience in the transition of existing platforms and work with fund managers to build out a bespoke migration plan outlining all necessary steps against an agreed timeframe to ensure the smooth transition from their existing administration provider. One of the biggest challenges managers face while migrating is the transfer of vast amounts of historical investment data for which Ocorian offers a proprietary data automation service, Robert.

Case study: fund migration Our client was a real estate fund manager who wanted to transfer some 30 separate legal entities (including companies and unit trusts with assets worth in excess of £300m). The client transferred the fund to gain access to our end-to-end service offering and to our specialist real estate team. In this case, we offered chartered surveyors, who joined the boards, providing valued support to the manager in dealing with a number of challenging assets. We oversaw and administered the migration of the underlying entities quickly and efficiently.

TECH-ENABLED SOLUTIONS We harness cutting-edge process automation tools to assist with the fast-tracking of data transfer, as well as conducting automatic reconciliations to expedite the process. With each migration supported by a dedicated technology support team, project team and steering committee, this enables us to provide a robust administration and accounting fund solution.

MIGRATE YOUR FUND SEAMLESSLY The regulations are a significant step forward for Guernsey and Jersey’s funds ecosystem and the expectation is that there will be a rise in fund relocations. In Jersey alone, there are now more than 300 JPFs. With expertise across all investment structures and with particular specialisms in private markets, we are well placed to support fund managers migrating their structures under the new migration regulations, so they can focus on adding value for their investors. n

FIND OUT MORE

For more information about Ocorian’s fund services, visit ocorian.com

Why are funds outsourcing their administration? As the demands on in-house fund managers become ever heavier from a regulatory and compliance perspective, and investors demand more streamlined or bespoke approaches, fund managers are increasingly outsourcing fund administration and associated services. Investors are also demanding certain functions to be managed independently of the fund manager. Investment fund accounting, the production of financial statements, NAV calculations and compliance and regulatory oversight are just a few of

www.blglobal.co.uk

the main services that are increasingly being outsourced to specialist thirdparty administrators. But what are the key motivations driving fund managers to outsource these functions? The decision to outsource is not a straightforward one and can be driven by many factors. However, a need for cost-efficiency and a focus on core competence, underpinned by constrained in-house expertise or capacity, makes outsourcing a priority for many. The scale of investment of both

time and money required to build and maintain an administration platform is significant and outsourcing frees up a significant amount of bandwidth for the manager. Other benefits include: • Access to specialist expertise and systems • Asset-class-experienced boards of directors • Investor reassurance (no conflict of interest) • Reduced risk (regulatory compliance) • Stability (no need to scale back office).

October/November 2020 15


Market trends Interview

The

Funds landscape As the Channel Islands funds sector goes from strength to strength, monterey insight Managing Director Karine Pacary gets behind the numbers in her firm’s recent reports on the UK, Luxembourg, Jersey, Guernsey and Ireland – providing a clear overview of the funds space in each jurisdiction Words: Jon Watkins Photos: Jérémie Souteyrat KARINE PACARY HAS more than 20 years’ experience within the investment fund industry, having served as Senior Data Analyst at Fitzrovia International and Head of Encyclopedia Productions at Thomson Reuters company Lipper. She co-founded Monterey Insight with the ambition of creating the definitive reference for funds in the jurisdictions of UK, Luxembourg, Jersey, Guernsey and Ireland – in her words, bringing together “a team that has a blend of capabilities, from traditional data analytics to advanced software engineering”. “We provide the only comprehensive report of service providers for all investment funds serviced in the UK, Luxembourg, Ireland, Jersey and Guernsey,” she explains. “Based in London,

16 October/November 2020

our research covers around 37,000 investment funds within these jurisdictions. “Each work provides a manually cleansed, wide-ranging and unique source of information on all promoters, administrators, sub-administrators, custodians, auditors, legal advisers, management companies/AIFM, transfer agents and sponsoring brokers, their client lists and their market shares,” she adds. “Continuing the Thomson Reuters legacy, each report is produced annually to be the reference point of the entire fund industry in the UK, Luxembourg, Ireland, Jersey and Guernsey.” Here, Pacary shares the insights for the latest available Monterey Insight reports on each jurisdiction – painting a picture of the funds landscape in each.

www.blglobal.co.uk


Market trends Interview

JERSEY JERSEY FUND INDUSTRY TOPS 17% GROWTH

THE SPECIFICS For fund administration services across both domiciled and non-domiciled funds, the Aztec Group maintained the largest market share for fund assets under administration – for the fourth consecutive year – with $167bn in assets. It was followed in second place by Saltgate, with $48.4bn, and Intertrust climbed to third position with $26.8bn. Among transfer agents and serviced funds, Aztec Group also maintained its lead, with total net assets of $169.1bn. Intertrust took the second spot, with $26.6bn, ahead of Computershare Investor Services, ranked third with $22.8bn. The custody ranking of serviced funds remained unchanged for the first two positions: BNP Paribas Securities Services again secured top position as the largest custodian by assets, with $22.2bn, followed by JP Morgan, with $11.9bn. Sanne Trustee Services took third place with $11.7bn. Among legal firms, Mourant remained the number one legal adviser, advising on 733 funds, followed by Carey Olsen, with 714 funds. Ogier, with 443 funds, maintained its third position. PwC took the leading position among auditors, with 433 funds, ahead of KPMG, with 361 funds. This year, Deloitte climbed to third position, with 190 funds. In terms of assets, Deloitte led, with $121.3bn, followed by PwC and KPMG, with $96.6bn and $78.5bn respectively. Among fund management companies of both domiciled and non-domiciled schemes, SoftBank took the first position, with assets totalling $70.5bn, followed by Ardian, with $47.7bn, and CVC Capital Partners, with $45.9bn.

www.blglobal.co.uk

GUERNSEY A RETURN TO STRONG GROWTH FOR GUERNSEY Guernsey demonstrated strong returns last year and managed to once again attract major players to launch their private equity funds on the island. We also noticed a strong increase of infrastructure schemes, which has been the trend for a few years now. Those positive results were of benefit to a select group of service providers but, in an overall context, the Guernsey Fund Industry has strengthened. Although, overall, the number of group and funds slightly decreased, 94 funds and sub-funds domiciled in Guernsey were launched during the year – accounting for $26.3bn in assets. Of these products, 49 sub-funds were private equity/venture capital, with a total net asset of $17.3bn, representing 65.8% in assets of the newly launched product. Overall (for domiciled and non-domiciled funds), the most popular product remained private equities funds, accounting for $242.3bn, followed by infrastructure funds with $43.5bn. This brought the total for private equity schemes (including infrastructure) to $285.8bn, which represented a 10.3% increase compared with the previous year.

THE SPECIFICS Fund assets serviced in Guernsey increased to $412bn last year, when our most recent report was published – up 3.2% compared with the previous year. The number of serviced schemes stood at 1,065, while the total number of sub-funds reached 1,289. This was slightly down on the previous year, when there were 1,077 and 1,363 respectively. For fund administration services across both domiciled and non-domiciled funds, as has been the case for a number of years, Northern Trust remained the largest by total net assets ($65bn) and by number of sub-funds (185). Aztec Group rose from fourth position in 2018 to second, with $50.7bn of assets. They were followed by Apex Fund Services, which ranked third with $44.2bn. Northern Trust also maintained its lead for custody and transfer agency services, with $25.7bn and $56.6bn respectively. BNP Paribas Securities Services preserved its second position in the custody table of serviced funds, with $10.7bn, ahead of Kleinwort Hambros, with $6.4bn. Among the transfer agents, Apex Fund Services maintained second position, with $44.2bn, and Aztec Group Partners climbed to third, with a total of $43.9bn. The ranking for auditors was unchanged last year, as has been the case for several years. PwC maintained its lead position, auditing 355 funds and sub-funds, ahead of KPMG, with 261 funds and sub-funds, and EY in third position. The positions in the ranking table are reversed for the auditors ranking by assets: KPMG leads with $132.9bn, followed by PwC with $111bn and Deloitte in third. Among legal advisers, Carey Olsen held onto its lead, offering legal advice to 798 funds, followed in second place by Mourant, with 157 funds, and Ogier in third. On the market-share ranking of assets, Carey Olsen also took the top spot, with $307bn, ahead of Mourant. Among fund managers, the largest promoter/initiator of funds serviced in Guernsey was Apax Partners, with $37.2bn, while Cinven climbed to the second position, with $26.3bn, followed by Permira, with $19.9bn.

October/November 2020 17

Our 25th annual Jersey Fund Report highlighted that fund assets serviced in Jersey rose to $481.2bn in 2019 – the latest report available – up 17.1% from 2018. The number of serviced schemes increased to 1,336, up 4.5%, and the total number of sub-funds recorded was also up to 1,807, representing a 5% increase. The Jersey funds industry has maintained its momentum for three consecutive years now, enjoying an impressive 17% average growth. As expected, private equity products, including infrastructure, are the main drivers of this asset inflow. They remain a crucial element to the attractiveness of the island’s funds business and the consolidation of its funds industry. In fact, private equity/venture capital and infrastructure funds rose to $320.1bn, with a total of 826 funds and sub-funds. This trend remained the same for Jersey-domiciled funds, where private equity products reached $194.2bn, with a total of 381 funds and sub- funds. For Jersey-domiciled funds and for all types of products, 125 new schemes were launched during the year to June last year, totalling $16.0bn.


Market trends Interview

UK UK FUND INDUSTRY FACES CONTINUED UNCERTAINTY Our analysis revealed continued concerns around uncertainty in the UK market, with a decrease in assets of 6.14% from last year. Despite this, and challenging market conditions in the UK, a number of service providers managed to perform well. Fund assets of UK-regulated funds reached $1,909.1bn at the end of December 2018, down from $2,034bn in 2017, a decrease of 6.14%. The total number of funds and sub-funds reached 3,398, an increase of 3.9% from last year. The amount of new UK regulated standalone and sub-funds launched during the year amounted to total assets of $62.3bn from more than 200 sub-funds. From this, total assets of $42.7bn from circa 100 subfunds were generated from the creation of entirely new schemes. Among UK-regulated fund structures, open-ended investment companies (OEICs) led, with the highest number of new funds launched and more than 120 sub-funds, followed by authorised contractual schemes (ACSs) with more than 30 sub-funds. ACS schemes led, with total assets of $38.4bn, followed by OEIC schemes with total assets of $15.2bn. Equity funds represented the largest asset class by assets ($874.7bn) followed by mixed equity/bond funds ($417.7bn) and bond products ($245.5bn).

State Street continued to rank in first place by assets ($461.1bn), followed by BNY Mellon ($328.2bn), while HSBC ($234.5bn) was ranked third ahead of Northern Trust. The leading administrators by product types were State Street, with $286.1bn for OEIC, and $157.6bn for Unit Trust. Among custodians, State Street moved up to first position, having the largest assets under custody with $443.3bn, ahead of BNY Mellon ($412.8bn) and Northern Trust ($263.8bn).

UK open-ended investment companies had the highest number of new funds launched and more than 120 sub-funds

The top three positions for management company/AIFM among UK-regulated schemes, including UK UCITS and UK non-UCITS, placed BlackRock Investment Managers in top position ($146.4bn) last year, with St James’s Place second ($116.6bn) and Aviva third ($92.9bn). For fund administration services (fund accounting) across UK-regulated funds,

18 October/November 2020

â–ź

THE SPECIFICS

www.blglobal.co.uk


We’ve helped fund opportunity for years

No matter where our technology goes, relationships will always be at the heart of our business. For day to day banking, for borrowing, for keeping your assets safe – all through one point of contact. We’ll bring you ideas to help manage your money and protect your investors, and be there when you need a financial sounding board. Always thinking about what more we can do for your business now, and in the future.

Working with: • Private Equity • Private Equity Real Estate • Infrastructure and Renewable Energy • Private Debt • Asset Managers • Corporate Service Providers

Visit rbsinternational.com to find out more The Royal Bank of Scotland International Limited (“RBS International”) is incorporated in Jersey and registered on the Jersey Financial Services Commission (“JFSC”) company registry as a private company with limited liability. It is authorised and regulated by the JFSC with registration number 2304. Registered and Head Office: Royal Bank House, 71 Bath Street, St. Helier, Jersey, JE4 8PJ. Tel. 01534 285200. RBS International London Branch is registered in the United Kingdom as a foreign company with registration number FC034191 and branch number BR019279. United Kingdom business address: 1 Princes Street, London, EC2R 8BP. RBS International London Branch is authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority (reference number 760675) and limited regulation by the Prudential Regulation Authority. Details about the extent of RBS International’s regulation by the Prudential Regulation Authority are available on request. Guernsey business address: Royal Bank Place, 1 Glategny Esplanade, St. Peter Port, Guernsey, GY1 4BQ. Tel. 01481 710051. Regulated by the Guernsey Financial Services Commission and licensed under the Banking Supervision (Bailiwick of Guernsey) Law, 1994, as amended, the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002 and the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. Isle of Man business address: 2 Athol Street, Douglas, Isle of Man, IM99 1AN. Tel. 01624 646464. Licensed by the Isle of Man Financial Services Authority in respect of Deposit Taking, Investment Business and registered as a General Insurance Intermediary. The Royal Bank of Scotland International Limited, Luxembourg Branch, (RBS International Luxembourg Branch). Business address: Espace Kirchberg, The Square, Building A-40 Avenue J.F. Kennedy, L-1855 Luxembourg. Tel. + 352 270 330 355. Authorised and supervised by the Commission de Surveillance du Secteur Financier. NatWest International is the registered business name of The Royal Bank of Scotland International Limited under the Business Names Registration Act. Gibraltar business address: National Westminster House, 57 Line Wall Road, Gibraltar. Tel. 200 77737 or 200 73200. Regulated and authorised by the Financial Services Commission, Gibraltar to undertake Banking and Investment Business from 55 and 57 Line Wall Road, Gibraltar. Our services are not offered to any person in any jurisdiction where their advertisement, offer or sale is restricted or prohibited by law or regulation or where we are not appropriately licensed. Calls may be recorded. Internet e-mails are not necessarily secure as information might be intercepted, lost or destroyed. Please do not e-mail any account or other confidential information.


Market trends Interview

ogier.com

Inn vative We understand funds. Ogier’s specialists have been at the forefront of fund set-up, structuring and finance since the inception of the industry with many actively involved in drafting the key laws that underpin fund structures across our international jurisdictions. We act for investment fund managers, banks, financial institutions, funds, investors and promoters, working with blue chip clients with established track records and the most innovative and entrepreneurial new sponsors entering the market. We pride ourselves on providing responsive and practical advice, while our hands-on, partner-led teams ensure a consistent approach.

Legal Services British Virgin Islands Cayman Islands Guernsey Hong Kong Jersey London Luxembourg Shanghai Tokyo

20 October/November 2020

www.blglobal.co.uk


Market trends Interview

nearly all products in luxembourg increased in assets during the year. The overall number of regulated sub-funds reached 14,991

IRELAND WITH 6.2% GROWTH, THE IRISH FUNDS INDUSTRY CONTINUES TO FLOURISH

LUXEMBOURG HEALTHY GROWTH FOR LUXEMBOURG The total net assets for regulated collective investment funds domiciled in Luxembourg increased to $5,351.9bn from $4,680.0bn last year. This represented an increase of 14.4% in US dollars and a euro increase of 16.7%, from €4,094bn in 2018 to €4,777.3bn in 2019. Taking a closer look, nearly all products increased in assets during the year. The overall number of regulated sub-funds reached 14,991, a negligible increase of 0.6% on the 14,903 of the previous year. In addition to the regulated structures, reserved alternative investment funds (RAIFs) and Luxembourg limited partnerships (LuxLPs) continued to enjoy a great increase and proved to be popular products for investment. RAIFs doubled their total net assets to reach $122.2bn with 1,048 sub-funds, while LuxLPs reached $167.8bn with 1,303 sub-funds. With this increase in popularity, RAIFs became of greater importance than SICARs in terms of assets and number of sub-funds. More than 1,350 funds and sub-funds were launched during the year, reaching $175bn. Some 74% of these new sub-funds were invested in traditional investments, such as bonds, equities and mixed products. Alternative funds were in second position, with 18%, including alternative investments, private debt and private equity/venture capital. Of the newly launched funds, as expected, ESG made considerable progress, covering 13% of assets and 10% in number of sub-funds. As in the previous year, equity fund products were once again the most popular by assets under management ($1,647.9bn), exceeding bond funds, which had assets of $1,480.6bn. This represented an increase of 23% and 13% respectively. Equity funds were also the most popular product in terms of number of sub-funds, reaching 4,677 compared with bond funds, which had 3,294 sub-funds.

www.blglobal.co.uk

Fund assets serviced in Ireland rose by a strong 6.2% in our last analysis, reaching $3,903.4bn at the end of June 2019, up from $3,677.1bn the previous year. The total number of sub-funds reached 9,249 (an increase from the 8,982 of the previous year). Looking at Irish-domiciled funds only, the number of funds and sub-funds grew by 7.2% to 5,607 (from 5,229), reaching a market size of $3,001.1bn, an increase of 5.4% of total fund assets. The amount of new Irish schemes launched during the year rose to $27.3bn, with in excess of 200 sub-funds (this does not include new sub-funds launched within existing umbrellas). Altogether, 859 Irish groups and sub-funds were launched during the year, representing total assets of $117.8bn. State Street continued to be the largest player for administration, custody and transfer agency services, increasing its assets for each role – assets under administration $1,313.4bn, custody $1,186.3bn and transfer agency $1,109bn. In more detail, for fund administration services across both domiciled and nondomiciled funds, State Street Fund Services ($1,313.4bn) was followed in second place by BNY Mellon ($510.4bn), then Northern Trust ($509.3bn) in third and JP Morgan in fourth position with $345.1bn. Among custodians of serviced funds, the ranking remained unchanged, with State Street Custodial Services having the largest assets under custody ($1,186.3bn), ahead of BNY Mellon. In the transfer agents’ ranking of serviced funds, State Street Fund Services secured first position, with total net assets of $1,109bn, followed by Northern Trust ($510.9bn) in second position and BNY Mellon ($389.6bn) in third place. For the market share ranking of legal advisers by assets, Matheson continued to rank first for Irish-domiciled funds, with $921.5bn, followed by Dillon Eustace, with $578.7bn, and William Fry, with $460.6bn. Among domiciled and nondomiciled funds, Matheson and Dillon Eustace were also first and second respectively, with $926.9bn and $587bn. However, Maples Group took third position with $536.6bn. Similar to previous years, money market funds remained the largest asset class, although they decreased by 1.5% to $579.6bn, followed by bond and equity products. Bonds were up by 6.1%, reaching $549.2bn, and equities rose by 9.0% to $539.4bn. n

October/November 2020 21


Capital markets

London calling

Are the Channel Islands still the place to go for non-UK London Stock Exchange listings? We explore the pros and cons – and how the changing landscape may or may not change the islands’ standing

Words: David Burrows

22 October/November 2020

THE CHANNEL ISLANDS have developed significant expertise for listing vehicles on capital markets, including the London Stock Exchange (LSE). This capability has been built up over the past 20 years, with enthusiasm for capital-raising gathering pace from 2003/04 onwards. It is true that activity dried up around 2007/08, when the financial sector went into meltdown, but it was a temporary blip as companies reassessed their position and investors licked their wounds. The attraction of capital markets would build once again and, as the Channel Islands had already laid down a marker

as the go-to place for such listings, the outlook looked good. But are the Channel Islands still jurisdictions of choice for non-UK LSE listings? Ben Morgan, Partner and Head of the Corporate team in Carey Olsen’s Guernsey office, believes the islands – particularly Guernsey (see table) – will continue to maintain their dominant position for the foreseeable future. Morgan points to several reasons for this strength – proximity to London; same time zone; well-established legal, accounting and banking expertise; similar company law to the UK; and a trusted regulatory regime. Raulin Amy, a Partner in the Corporate

www.blglobal.co.uk


Capital markets

companies being used to list elsewhere, particularly in New York, with Amcor and Clarivate being recent examples. “In addition, we have certain European-based businesses – such as Glencore and Wizz Air – that are restructuring prior to IPO to insert a Jersey holding company at the top of the structure. So we know that using a Jersey company works from a European perspective.”

London legal clients tend to recommend Guernsey,” he says. “Jersey does better than Guernsey in the establishment of non-investment companies – essentially holding companies. “The way it’s worked out has been more by accident than by design – both islands offer similar advantages.” Alex Adam, Partner, Advisory, at Deloitte in Guernsey, agrees that this is the way business has been shared between the two islands. HAVING THE EDGE He is also keen to point out another But couldn’t Ireland claim similar key attraction of the Channel Islands. credentials to the islands, particularly in “In the past few years, the focus for relation to its proximity to London and many investors has been on income. establishment as a financial centre? Companies raising money via a Guernsey Morgan believes the Channel Islands listing are able to distribute income back to offer something different and have investors much earlier.” continued to build strong relationships This is because boards in the Channel with the City of London over the years Islands can authorise a distribution on – which has led to their taking the lion’s reasonable grounds that the company, share of business. immediately after the distribution, will “Unlike Ireland, Guernsey and Jersey satisfy the solvency test. are not in the EU. As Brexit rolls on, there The same rule does not apply in the will be concerns over the impact on market UK. Dividends can be made only out access. We are already outside the EU, so of ‘profits available for distribution’ as we know what our market access looks shown in the relevant accounts – which like.specialist We are able to access LSEservicing after Brexit, can take time to be recognised and delay Guernsey is a leading centre in the of alternative asset just the same way as before.” distribution to investors. classes such as private equity, infrastructure and alternative debt. to Adam, this ‘income’ He adds: “In terms of auditing, tax According team at Ogier’s Jersey office, agrees that reporting and compliance specialists, the element has been a significant factor Guernsey is a tried and tested fund domicile, which offers the perfect environment these credentials are important and that level of expertise in the Channel Islands in recent years, which has contributed for both start-up big-name more than £250 billionflow of alternative the case in favour of the Channeland Islands is is fund widelymanagers, understoodand and boasts has either to a steady of income-producing strong – and continuing to build. been developed organically or brought investment companies investment funds and more than 100 entities listed on the London Stock Exchange. listing via the “Where a company may be targeting in from the UK.” Channel Islands. European investors on an IPO, there Morgan insists that there is little “In general, Guernsey has, and continues is certainly a preference for a Channel difference between Jersey and Guernsey in to build on, its reputation for expertise Islands-based company if an English terms of the quality of service and support in the alternative investment sphere. The company is not to be used,” he says. they offer clients. more alternative the investment, the more Total listings by jurisdiction “We are also seeing more Jersey “When it comes to listing companies, Guernsey is seen as the place to go.” Number of non-UK companies and securities listed on the LSE by jurisdiction, 31 December 2018 GUERNSEY

113

JERSEY

72

IRELAND

51 37

BVI 34

ISLE OF MAN BERMUDA

30 29

CAYMAN 19

UNITED STATES LUXEMBOURG CHINA

6 4 10

20

30

40

50

60

70

80

90

100

110

120

130

Source: Guernsey Finance

LSE listings 2www.blglobal.co.uk

This document provides statistical information and analysis for the number of non-UK companies and securities listed on the LSE at 31 December 2018.

October/November 2020 23

the global leader for London Stock Exchange listings


Capital markets

THE CHALLENGES Are there any disadvantages to an LSE listing via the Channel Islands? Raulin Amy at Ogier explains that for larger listings, where the company may wish to be included in the FTSE indices, there is a slight disadvantage as opposed to English companies. The free float requirements are different and a larger percentage of the shares in the company will need to be in the hands of the public for a Channel Islands company. However, the same applies for all other foreign companies looking to list – it’s just that there is a preferred regime for English companies applied by the FTSE committee. The other challenges for Channel Islands companies, Amy adds, relate to the lack of international tax treaties, including bilateral investment treaties – which provide protection for companies that operate in the relevant foreign country. While these are not major considerations for those looking to list on the islands, they may be part of the equation.

LONDON CONNECTION Understandably, much is made of the Channel Islands’ proximity to the City of London, as well as their longstanding, trusted relationship with the Square Mile. But if London’s star is on the wane post-Brexit, where does that leave Jersey and Guernsey?

24 October/November 2020

There is an argument that the UK will point to its own expertise and say: ‘We are not part of the EU now, so we can change our rules’

“A successful City of London is undoubtedly important for Guernsey and Jersey. If the City becomes less important, that has an impact on the Channel Islands,” Morgan warns. “Anything can happen. Look at what’s occurred in Hong Kong. There could be a land grab from London, but I think most people would not bet against the City of London continuing to grow. “There has been a gravitational pull of human capital from all over the EU to the City. There are a lot of talented people in London who don’t plan to leave. There has not been the drift back that some

predicted and there’s unlikely to be one.” If there is a threat to the Channel Islands from a changing landscape, Adam believes it is more likely to come directly from London itself – with the City taking business away from the islands. “There is an argument that the UK will point to its own expertise and say: ‘We are not part of the EU now, so we can change our rules’ – and compete directly with the Channel Islands.” Certainly, the Singapore-on-Thames idea has been put forward as a post-Brexit model for London – embracing East Asian laissez-faire, low tax, low spend and low regulation. However, Adam believes that this is highly improbable, because the UK is more likely to want to maintain close alignment with the EU in support of market access. As things stand, nobody knows how things will pan out regarding Brexit because the goalposts are being moved so frequently. Are we looking at worst-case scenarios or 11th-hour compromise? Amy suggests that if the UK does thrash out a deal with the EU, this will only enhance the attractiveness of the Channel Islands to businesses and investors looking to access the capital markets via London. It could also mean that Channel Islands companies will be considered as an option for more listings in the EU or elsewhere. Time will tell. n

www.blglobal.co.uk


Advertising feature

20 years of impact UBS Jersey Branch Client Advisor Marc Nightingale shares highlights of the UBS Optimus Foundation 2019 Annual Review1, celebrating 20 years of impact TWENTY YEARS AGO, we established the UBS Optimus Foundation to partner with our clients and employees and help them to improve the lives of the most vulnerable around the world. Since that time, we’ve raised more than half a billion US dollars. For the past two decades, our foundation has focused on the health, education and protection of children – as these are some of the most essential factors to ensure a successful future. We have supported innovations from inception to scale, working with social entrepreneurs and enabling social finance to tackle some of the most pressing global issues. The foundation has a limited set of collective portfolio areas focused on long-term impact. We engage with philanthropists and social organisations, gathering evidence and experience from our frontline work to identify best-in-class programmes that we have selected for their impact and scalability. We review our collective portfolios regularly and periodically exit and add new areas. Funds raised through the foundation have been split between the following worthwhile programmes: • 45% invested in healthcare • 24% invested in education • 20% invested in child protection • 11% invested in emergency relief.

CHILD TRAFFICKING AND MODERN SLAVERY: A CASE STUDY Slavery, unfortunately, has not been consigned to the history books. In 2017, more than 41 million men, women and children were victims of modern slavery

– four million of these people enslaved in the sex industry and 16 million working in business supply chains to provide the goods that power the global economy. If slavery were a company, it would have made more profits in 2016 than the top four profitable companies in the world – more than $150bn2. Philanthropy has been at the forefront of tackling slavery, supporting innovative work to strengthen the resilience of communities at risk, to strengthen law enforcement and justice systems and to work with businesses to effectively uncover and monitor labour abuses. That is why we came together with our partners The Freedom Fund, International Justice Mission, and Survivor Alliance to start Justice, Hope, and Liberty (JHL). JHL is a ground-breaking collaboration that aims to build a comprehensive, scalable and portable model that mobilises government, communities and survivors to end commercial sexual exploitation of children in Bangladesh. This initiative offers the opportunity to invest collectively to tackle commercial sexual exploitation of children, not just in Bangladesh but also to develop an effective model that can be replicated globally.

1

www.ubs.com/global/en/ubs-society/philanthropy/optimus-foundation/driving-change/annual-review-2019.html

2

www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_243201/lang--en/index.htm

URGENT CALL FOR ACTION The UN has established 17 Sustainable Development Goals that it describes as an ‘urgent call for action’ for all countries, both developing and developed, to lift hundreds of millions out of poverty, create safe and equitable work environments, and protect our planet. Yet with a $2.5trn annual investment funding gap, it’s clear that a new, more collaborative approach is necessary. We believe that philanthropy at scale is best placed to catalyse the profound change that is required to meet these goals. By investing with fellow philanthropists – and with UBS matching funding – donations are leveraged to have an outsized impact. n

FIND OUT MORE

If you would like more information on the UBS Optimus Foundation, please contact Marc Nightingale: Marc Nightingale, Client Advisor, UBS AG, Jersey Branch 1 IFC St Helier, Jersey JE2 3BX T: 01534 701173 E: marc.nightingale@ubs.com

UBS AG, Jersey Branch is authorised and regulated by the Jersey Financial Services Commission for the conduct of banking, funds and investment business. UBS AG, Jersey Branch is a branch of UBS AG (a public company limited by shares, incorporated in Switzerland whose registered offices are at Aeschenvorstadt 1, CH-4051, Basel and Bahnhofstrasse 45, CH-8001 Zurich) with its principal place of business at 1 IFC, St Helier, Jersey JE2 3BX. Terms and Conditions are available upon request. © UBS 2020. All rights reserved. www.ubs.com/jersey

www.blglobal.co.uk

October/November 2020 25


Technology

Is blockchain the answer? Its ability to help deliver speed and transparency means blockchain is well placed to overhaul the funds sector. Concerns over security and a focus on other tech developments such as robo-advisers have so far made progress slow. But is blockchain finally ready to step up?

26 October/November 2020

www.blglobal.co.uk


Technology

THERE IS NO doubt that, since the pain of the 2008 financial crisis, the global fund management landscape has been reshaped through a series of fundamental shifts spanning regulation, geopolitics, and the transition to a digital world. MiFID II, the legislative framework implemented by the EU in an effort to better regulate financial markets and restore confidence in the industry, has been the poster child for a period of intense regulatory change that has been further complicated by Brexit and now Covid-19. While these regulatory efforts have succeeded in bringing greater stability back to the market, they have also somewhat fragmented the asset management sector. Many firms, as they look to comply with multiple regulatory obligations, are dealing with far too many different vendors, which racks up costs and negatively impacts operational efficiency. So, could the long-hailed blockchain technologies, which have for so long promised to revolutionise the financial industry, finally provide the solutions to these problems? A blockchain, or distributed ledger technology, works as a database that is managed by servers belonging to a peerto-peer network. These computers in the distributed network each keep a copy of the ledger, with the aim of preventing a single point of failure. Initially, blockchain technology was associated with digital currencies, but it’s now being tested in many industries, with companies using it to create and manage distributed databases and keep verifiable records of their digital transactions. So, how exactly how could it benefit the funds industry in particular?

FUND MANAGEMENT 2.0 “It’s not an easy question, to talk about the impact of the technology on fund management, especially since fund management is a very broad term,” explains Markus Franke, Partner at Celo, an open platform that explores use cases for blockchain technology. “Fund management – or asset

www.blglobal.co.uk

management – can mean anything from strategic asset allocation to asset selection, to active or passive investment decisions until execution, risk management and reporting,” he adds. The fund management space is indeed notoriously complex, but blockchain does have the potential to touch every element. If you take the underlying asset as a starting point, the many stakeholders in an asset’s lifecycle – from manufacturers to transporters to operators – each have their own disparate system for managing the asset. It is therefore notoriously hard to establish and maintain a single version of the truth, and this lack of standardisation leads to limited traceability and higher costs for compliance. In the highly regulated aviation industry, for example, modern aircraft consist of millions of parts, and it is always crucial to know the provenance of these parts in order to ensure that they are genuine and safe. It is also important that the entire maintenance history of these parts is accessible and transparent. It is easy to see how blockchain can be applied here. Asset and fund managers are also looking carefully at the value they are giving to investors, and if they are able to introduce new technologies to generate greater value for money, and improve efficiency, then that’s a very attractive proposition. Research from technology firm Calastone suggests that blockchain could save asset managers $2.7bn a year if the investment industry moved away from the laborious manual practices involved in buying and selling funds and instead use online ledger technology. Blockchain can be used to automate a range of operational activities, especially those in the back-office, including trade reconciliation, regulatory reporting and investor onboarding. “In general, I would say that, similar to any other area where transactions are involved, blockchain technology can help with making transactions faster, cheaper,

October/November 2020 27

Words: James Tall


Technology

safer, auditable, and more efficient,” adds Franke. “Therefore, the technology will also bring disruption to fund management. “When looking at the whole supply chain, I think we will see first adoption of this technology in the operational parts, in trade execution and more specifically in clearance and settlement. “In this area, we traditionally see high costs and very long settlement times due to old infrastructure, and blockchain can certainly improve on this. “But I think we will see longer adoption times regarding the asset allocation process, due to the tokenisation of assets and the far more complex regulatory questions that need more consideration.” The issue of tokenisation is an interesting one. Breaking assets down into tradeable digital tokens can provide investors and sellers with greater liquidity, especially when it comes to traditionally illiquid assets such as alternatives and property. These tokens can then be traded on a secondary market of the issuer’s choice. This lays the foundation for the democratisation of investment: access to a broader base of traders. Also, because the transaction of tokens is completed with smart contracts, much of the exchange process is fully automated. This automation reduces the administrative burden involved in buying and selling, with fewer intermediaries needed, leading to faster deal execution and considerably lower transaction fees. A token-holder’s rights and legal responsibilities are firmly embedded directly onto the token, along with an immutable record of ownership. These characteristics add transparency to transactions, allowing you to know exactly who you are dealing with, and who has previously owned each token.

28 October/November 2020

TOKEN REGULATION As Franke says, there is much to do in terms of regulation before security tokenisation becomes mainstream, but moves are being made. In Germany, for example, the Finance Ministry published a statement in August to advise that the institution will be working on a draft law with the goal of creating a legal framework for digital securities, including the issuance of tokenised assets. There are noticeable signs that the digital asset space is becoming more institutional in nature, with more robust custodial solutions being introduced to the market, institutional-focused exchanges springing up, and next-generation provenance tools being developed by forward-thinking innovation labs and financial institutions. “There are now third parties who will

be a custodian to a fund’s assets and in the process guarantee, with a registration and a balance sheet, the integrity of the whole process,” Manuel Anguita, Founder of Silver 8 Capital, explained in a recent Hedge Week article. At Copper Technology, for example, they have built a state-of-the-art infrastructure to protect fund managers when trading digital assets across multiple exchanges, in addition to the Copper Unlimited custody application: an offline server-less, optically air-gapped application. “Our custody application is part of the Walled Garden trading infrastructure we’ve built, which provides full protection of a company’s assets,” said Boris BohrerBilowitzki, Partner and Head of Business Development at Copper, in the same article. So a fund manager might have their custody address with Copper whitelisted on various exchanges and if they then want to move assets away from one of the exchanges, and into custody, all they have to do is click a button.

OVERCOMING THE OTHER CHALLENGES

Blockchain could save asset managers $2.7bn a year if the investment industry moved away from the laborious manual practices involved in buying and selling funds

Blockchain is still waiting for its real break-out moment in the fund management space, and is held back somewhat by regulatory and legal unknowns. While blockchain technology certainly presents the investment industry with numerous exciting opportunities, its adoption has been relatively slow, especially when compared with the emergence of robo-advisers and other artificial intelligence applications that are shaking up the sector. One key reason for this is the lack of market familiarity with the technology. Another is the limited experience of managing large amounts of data. The market is also restrained by the fact that regulatory framework is at an embryonic stage and needs to grow. Market participants are still wary. Even though there haven’t been any significant data breaches of blockchain to date, there have been errors and deficiencies in the implementation of smart contracts, mostly due to coding failures. However, more and more market players are starting to experiment and collaborate with industry peers to see how they can best leverage the benefits of blockchain technology. They are keen to challenge traditional business models and reinvent asset lifecycles amid the huge disruption ushered in by the Covid-19 pandemic. Ultimately, blockchain stacks up well with the major pillars of the financial markets – speed, security and transparency. It is for this reason that we are likely to see an increasing number of blockchain applications arriving in the fund management scene. n

www.blglobal.co.uk



BL

BUSINESS LIFE

Follow us on LinkedIn Follow Businesslife on LinkedIn to be the first to hear about Channel Islands business news and features from the islands’ financial services sector. https://www.linkedin.com/company/bl-global


Advertising feature

Investing in life sciences for a healthier future Trend-spotting during a global pandemic can be challenging for those of us not immersed in the world of alternative investments. The markets are less predictable, access to credit is reduced and some asset classes are just non-starters. Gareth Morgan, Senior Associate at Collas Crill, highlights one asset class that has seen little to no adverse effect – life sciences LIFE SCIENCES IS an amalgam of sub-areas of the health sector, with exciting-sounding names like genomics, neuroscience, bioinformatics, histology and digital health. It has been a growth sector over the past few decades, generally correlating with global expenditure on healthcare, which itself has trended upwards year on year almost without faltering. An ageing population, particularly within developed countries such as the UK and US, has led to an explosion of spending on healthcare. In the UK alone, total healthcare expenditure more than doubled in real terms, adjusted for inflation, between 1997 and 2018, topping £214bn in 2018. The general consensus in 2019 was that the outlook would be for steady to modest growth over the next three to five years. But there can be no doubt that the Covid-19 pandemic will have resulted in a significant spike for 2020 as both the public and private sectors invest not only in looking for a vaccine for this virus, but also in preventative measures for future potential pandemics.

WHY INVEST? From a purely economic perspective, why invest in the life sciences and health sector? A few key drivers are: • The sector’s potential for substantial capital growth • The benefit to the local/global community – for example, through new products or improved processes and adding to the overall pantheon of medical and technological expertise • A lessened effect on life science companies by broader economic conditions than equities in other more traditional sectors • To diversify or balance an investment portfolio • To satisfy a demand for ‘high-risk,

www.blglobal.co.uk

high-reward’ investments. The last point is particularly noteworthy. The sector is indeed not without its risks. The types of investment being looked at are often companies looking to commercialise new, often bleedingedge technologies and products they have developed. As a result, relative to other sectors, there can be a lower-thanaverage success rate, and those that do succeed tend to do so over a longer period of time. Tolerating this high risk can lead investors to high returns – whether through the individual success of the investee company or through the acquisition of some key intellectual property by a larger competitor. However, investors will generally need to wait longer for those potential returns than the traditional ‘seven-plus-two-yearfund cycle’ – patient capital, as it is often referred to, is required. Much like investing in environmental and social endeavours, besides the potential for significant profit, investing in life sciences is also arguably something of a moral imperative, with institutional investors increasingly considering it a key component of their broader portfolios. Here in Guernsey, we have seen a significant uptick in clients coming to us wanting to set up life sciences investment structures, as incubators for new innovations, ideas and technologies and to invest in the growth of tried and tested products. Guernsey’s protected cell company structure is an ideal vehicle for such

structures. Originally created in Guernsey, the protected cell company has in recent years become a flagship investment vehicle, recognised and adopted in multiple jurisdictions around the world. By operation of law, the protected cell company is a single legal entity able to create several separate and distinct ‘cells’ which, while not being legal entities in their own right, are capable of holding assets and liabilities. The main selling point of the protected cell company – in the context of the highrisk, high-reward cycle of investing in life science projects – is straightforward: creditors of one cell will be unable to claim against or seek restitution from another cell (and that cell’s assets). The resulting legal segregation of assets and liabilities between cells in a protected cell company allows the success stories to remain unaffected by those investment projects that never become viable. If recent global events have taught us anything, it is that the need to invest in health, wellbeing and preventative medicines and technologies has never been more important, or timely. With the right legal structure in place and a well-regulated jurisdiction to house these investments, we can help our clients to innovate, profit and succeed in these crucial areas. n

FIND OUT MORE

Visit www.collascrill.com/services/ investment-funds-private-equity-venturecapital for further information.

October/November 2020 31


Advertising feature

Answering the ESG Call There are a lot of acronyms in the investment industry. And there’s one that has a lot of momentum right now – and which has been increasingly fascinating to Michael Bull (pictured), Executive Director, Jersey office, at Quilter Cheviot and his colleagues – ESG

ESG STANDS FOR environmental, social and governance, and it is having a huge impact on both investing and the wider corporate world. These three little letters represent a momentous shift in attitudes and business practice. But what does it all mean? This is the starting point for understanding how the responsible investment process works in practice. ESG issues are data points that can be used as an additional input into the investment analysis process. This information can often be qualitative and is not the kind of information that tends to be discerned from traditional financial statements or three-year earnings forecasts. So what does this mean in practice? From an environmental perspective, it could be looking at how an oil company is creating a climate transition pathway and the targets and timeline that has been set for this. From an S (social) perspective, this might involve – as it has done so far in 2020 – thinking about how a company is treating its employees in a Covid-19 environment. For example, are there proper social distancing measures in place where employees don’t have the luxury of working from home? From a governance perspective, this would include the remuneration policy for the executives and board diversity (is it all the same school tie?). When these factors are taken into account within the investment process, we call this ESG integration. The key message is that this is a process that analyses ESG data to help inform investment decisions, to ensure that all relevant factors are accounted for when assessing risk and return. This is an extra source of information, an additional input that supplements the

32 October/November 2020

traditional analysis of financial data, and should ultimately lead to better informed investment decisions – when done effectively.

HOW DO SUSTAINABLE INVESTMENT FUNDS DIFFER FROM ‘NORMAL’ FUNDS? Morningstar reports that there are now nearly 4,000 sustainable investment funds, reflecting the many different approaches to sustainable investing. Some funds focus on themes, such as the environment or education – or a combination of different ESG-related themes. Other funds give a higher weight to companies with better sustainability profiles and a lower weight to companies with weak ESG practices. Other funds look to invest in companies that make a positive contribution to the environment or society. Some sustainable funds exclude certain areas, such as tobacco, armaments, alcohol and fossil fuels. Others invest across

not considering ESG factors in investment processes determines whether a fund is billed as a sustainable investment fund or a ‘normal’ fund

industries. There is no one definition for what investing sustainably means. Sustainable investment funds can be quite similar to ‘normal’ or mainstream funds in how they are structured and managed. However, the investment objectives of these funds can be different. A sustainable investment fund may, for example, have a dual objective, targeting both a positive contribution to society and the environment, as well as a traditional benchmark. Or the fund may have a customised benchmark to reflect the universe of companies it is targeting – or perhaps the fund will only target a positive contribution. Meanwhile, many ‘normal’ funds now incorporate ESG factors within their investment process as well. This does not mean that they are sustainable investment funds or that they exclude parts of the market on value-based considerations, such as avoiding animal testing or armaments. The growing number of these funds that are integrating ESG factors into their investment processes is being driven by the soaring popularity of sustainable investments, new regulations relating to ESG that lie ahead for the investment industry, and the growing appreciation of why ESG factors are important risks to consider. In the end, it is not considering ESG factors within investment processes that determines whether a fund is billed as a sustainable investment fund or a mainstream/‘normal’ fund. Instead, it is whether the fund manager then uses that ESG data to be fully informed of the potential risks to an investment (a mainstream fund); or uses it to bias or focus the fund towards companies that score well on whatever ESG metric is being favoured; or to favour companies with products or services that reflect the fund’s chosen sustainable themes (a sustainable investment fund).

www.blglobal.co.uk


Advertising feature

HOW QUILTER CHEVIOT APPROACHES ESG IN ITS FUND RESEARCH PROCESS To date, 2020 has helped add weight to the view that there is no need to sacrifice financial returns to invest sustainably. Sustainable funds have performed relatively well in the downturn, as well as in the subsequent market rally. At Quilter Cheviot, we firmly believe that integrating ESG considerations into our investment process helps us protect and enhance long-term investment outcomes for our clients. Therefore a growing consideration within our fund research team’s investment process has been how third-party fund managers approach ESG risks and opportunities as part of their investment decision-making. The fund research team is assessing its list of Buy and Monitored rated fund managers, as well as new managers, on the extent to which ESG factors are being incorporated in an explicit and systematic way. The approach will often vary by asset class and whether the investments are active or passive. Our analysts also assess the extent to which the fund managers are engaging with company management teams on ESG issues.

www.blglobal.co.uk

There is a high degree of variation in progress made to date on ESG integration. Some third-party fund managers are only just acknowledging the importance of ESG issues within their investment process. But many fund managers are adapting their investment processes rapidly to include ESG factors within their analysis, valuation and stock selection. Others have been formally incorporating ESG considerations into their investment process for years. This means the task for the fund research analysts is not just to assess the extent to which the fund manager and analysts are thinking about ESG issues today, but also to consider how well they will be doing it in a year’s time. With many fund houses racing to establish their ESG and sustainable credentials, the fund analysts use their one-to-one meetings with fund managers to try to get past the persuasive marketing and potential greenwash – when funds are made out to be greener than they are – and understand the true drivers of investment decision-making.

practices, and for companies with products or services that offer solutions to environmental or societal problems, is only going to accelerate. Whether or not companies producing environmental solutions will always outperform benchmarks is a different question. But the increasingly evident need to include ESG factors alongside traditional financial criteria in order to make fully informed investment decisions is only going to bring ESG issues more and more under the spotlight. I see this as a welcome area of development in the industry that is only set to continue. n

WHERE WE SEE ESG GOING FROM HERE

FIND OUT MORE

Given the massive implications for the global economy of issues such as climate change, we think the growing demand for companies to have better sustainability

For more information please contact: Sophie Gorman, Quilter Cheviot E: sophie.gorman@quiltercheviot.com T: +44 (0) 20 7150 4246

October/November 2020 33


Covid-19 response

Wave of optimism

34 October/November 2020

www.blglobal.co.uk


Covid-19 response

From New Zealand’s swift response to Singapore’s high-tech methods, countries around the world have tackled the Covid-19 crisis in a range of ways and with varying degrees of success. what impact did the Channel Islands’ approach have on its funds sector? And has it increased the overall appeal of the islands?

WHILE JERSEY, GUERNSEY and the Isle of Man deployed different approaches to quelling the spread of coronavirus, each has been a relative Covid-19 success story. At the time of writing, as the majority of the UK grapples with further restrictions and threats of a second nationwide lockdown, those in the islands are experiencing a near-to-normal life. Many offices have reopened, social distancing is largely a thing of the past, and Guernsey even hosted a music festival in late August – one of the few to take place around the world this year. So, how did the islands respond so well, and what impact has that had on the funds sector? Paul Smith, Chair of the Guernsey branch of the ICSA, the Chartered Governance Institute, and Group CEO of The House of Green, says legacy disaster recovery protocols explain the strong performance of the Channel Islands’ funds sector throughout this turbulent period. “This sort of planning has been on people’s radars for a long time – 30 years or more,” he says. “I remember when I was MD of Bank of Bermuda’s fund administration in the 1990s, we had a risk manager drawing up plans for what would happen in the event of a pandemic. “Everyone else was looking at business continuity and disaster recovery sites in case there was a fire or a flood. But he was looking into what would happen if there was an illness and no one could go to work. I thought it was bizarre at the time, but here we are.

www.blglobal.co.uk

“Lockdown reminded me of soldiers who are constantly in training. Eventually, when they get to fight, their mentality is: ‘This is what we’ve been training for’. “It was a bit like that with Covid-19 – we had all of these plans in place and immediately everyone’s mindset was: ‘OK, fine, let’s just do it’.” Smith believes this is why the transition was so smooth. “We used to test our disaster recovery and continuity protocols all the time,” he says. “We’d call some people and say: ‘You can’t come into the office today, you need to work from home’, and then see how it worked out. “This also meant that we had all the systems in place to allow people to request to work from home for, say, a week, which was still quite unusual elsewhere.

Come what may, if you’ve got a trust, you still need to be the trustee

October/November 2020 35

Words: Sophie McCarthy


Covid-19 response So, we were used to this set-up, albeit on a much smaller scale. I think that’s why the industry here was generally very well prepared for this scenario.”

WINNING FORMULA

In July, August and September there’s been significantly more activity than there would usually have been

36 October/November 2020

The idea that both islands have agility and resilience built into their systems crops up time and again when analysing their response to the pandemic. Tim Clipstone, Group Partner at Ogier, points out that, for many of those based in the Channel Islands, the experience of dealing with clients didn’t change much. “The focus was on making sure the service we delivered carried on being delivered as seamlessly as possible. “That’s a huge testament to the business culture here. The clients don’t care about your personal life or your island life – they want what they need and we’re very used to delivering that, no matter what’s going on around us.” That’s a sentiment echoed by Jonathan Smith, Partner at Wyvern Partners. “When it comes to administering a fund or administering someone’s trust, this doesn’t just stop because there’s a pandemic. “In fact, we saw a lot of people, particularly private clients, taking the opportunity to get their affairs in order and think about inheritance planning. “Clients still need their services, regardless of what’s happening in the world. Come what may, if you’ve got a trust, you still need to be the trustee.” Theo Brennand, a Partner at Deloitte, agrees that in many instances there was an uptake, not a decrease, in demand. “At the outset, around March, there was uncertainty in the markets and therefore there was also a slight slowdown in terms of new structures being launched and people looking at redomiciling. “But through July, August and September, my understanding is that there’s actually been significantly more activity than there would usually have been during those months – indeed, a lot more than people were forecasting when they did their budgets earlier in the year.” It’s apparent that, owing to their location and history, the islands were

particularly well placed to respond to the crisis with greater speed and ease than some other jurisdictions. But what’s life like on the islands now? And what impact has the islands’ response had on their appeal? “I wouldn’t say it’s like nothing has happened, because that’s obviously not the case,” says Paul Smith. “But, walking around the place now, it’s no different to how it was prior to Covid-19. And I think that has created an impression among those looking in. “People look at us and think: ‘Wow, what have they done right that others have done wrong? Is Guernsey the place to be now, because it seems to be getting these things right?’.”

COMMUNITY SPIRIT The islands’ sense of community has played a huge part in getting the virus under control, he believes. “When the government told us to lock down, by and large everybody did. We haven’t seen demonstrations; we didn’t see people flocking to the beach – even though the weather was fantastic. “There’s been huge community engagement as well as very impressive, informative and effective communication campaigns from the government. “And all of this means people are recognising that this is an impressive place. That’s done wonders for our profile and it got people thinking: ‘This might be a good place for us to put our business, because they don’t falter when something like this happens’.” Brennand believes another factor may have had a positive impact on the islands’ funds sector. “This isn’t linked to Covid-19, but I imagine the challenges that some of the other jurisdictions, such as Cayman and Mauritius, have been facing around Know Your Customer and AML have meant people were looking to move tier activities to Jersey.” Brennand continues: “From a tax and regulatory perspective, Jersey has been strong, and I guess the uncertainty that Covid-19 has created has meant people have placed more value on that than they might have done in the past.” With all of this in mind, what does the future of the funds sector look like? “It’s always been a little bit sniffed at, although admittedly less so with the recent IPOs of JTC and Sanne,” says Jonathan Smith. “A year ago, you’d have struggled to promote admin companies against more glitzy, attractive alternatives. But with the performance during the pandemic, this sector is underscored. “Its resilience and its cash management ability, even in downtimes, means a lot of people will be thinking that this is a good place to put their money.” n

www.blglobal.co.uk



Advertising feature

Tried and tested The Channel Islands’ asset management industry has ably met the resilience test posed over the past six months by the global Covid-19 pandemic. And it continues to thrive, with its global reputation further enhanced. Mike Byrne, Partner and Asset Management Leader, PwC Channel Islands, asks what inherent strengths have enabled the funds and managers operating from the islands to weather the storm so well, and how this positions them for the challenges and opportunities ahead THE HUMAN TRAGEDY and economic turmoil of Covid-19 continue to challenge us, with no clear end in sight and a possible second wave to come as we enter winter in the northern hemisphere. Having lived with so much disruption and challenge in much of 2020, we can reflect on what we’ve learned from these difficult six months, and what the future holds for our asset management industry. Globally, asset managers have faced intense market volatility and resulting investor anxiety. Yet the nature of the assets under administration here in the Channel Islands has largely cushioned them from the instability. In contrast to many other centres worldwide, we’ve certainly not seen any significant level of fund redemption requests – if anything, there have been increased allocations to the alternative asset classes the islands support. One of the main reasons for this is that the return horizons for Channel Islands funds are largely long term – most are closed-ended (typically seven to 10 years). So investors can ride out the kind of shortterm market fluctuations we’ve seen in the past year, both the highs and the lows. The main focus is ‘alternative’ assets, especially private equity and real estate. The hard-to-monetise nature of such assets makes them less susceptible to disruption, as investors seek to generate liquidity by selling more liquid fund positions. Nonetheless, the impact on the underlying investments has been challenging. While the slowdown has affected all sectors, it is travel, hospitality

38 October/November 2020

and entertainment – a key focus for many of the Channel Islands’ private equity funds – that have been especially hard hit. Fund managers have been working around the clock to help shore up portfolio companies and protect the safety and wellbeing of their employees. As oil prices have fallen and only partly recovered, this has been an especially trying time for funds with significant exposure to the oil industry and services that support it. In turn, many areas of real estate have come under pressure. They include the office, retail and hospitality premises that have spent much of 2020 lying virtually empty, and with little confidence in these sectors as to when a corner will be turned. The impact on funds is heightened by the fact that rental income is often linked to the performance of tenants. With many occupiers facing severe falls in turnover, renegotiating tenant agreements can often be the only way to stave off default. Further challenges are evident in recent growth areas such as student housing, which, given the travel restrictions and lockdown rules, faces significant short-term disruption and questions over the longterm prospects for foreign student numbers.

LESSONS FROM THE FINANCIAL CRISIS Yet if some investments have faced shortterm difficulties, a key lesson from the financial crisis was that quality assets invariably outperform, even if others falter. As a mature centre for alternative investment, the Channel Islands is home to many of Europe’s leading managers, each with great talent, considerable

financial resources and excellent investor connections. In a mirror of the 2008-09 global financial crisis, managers of Channel Islands funds have been able to draw on these advantages to secure significant capital to support their investments and ensure they are well placed to capitalise on opportunities as the market turns. The importance of quality can also be seen in the investments themselves. Private equity portfolios that are weighted towards companies with strong long-term performance and potential will continue to deliver over the long term. Similarly, high-quality real estate assets, such as commercial developments in prime locations or student housing serving elite universities, will continue to sustain strong demand. The other big lesson from the financial crisis is the importance of robust governance and regulation in attracting and sustaining investment in times of market instability. This is one of the inherent strengths that have attracted funds to Guernsey and Jersey and will be more important than ever in the years ahead. Alongside the investment challenges, Channel Islands funds and fund service providers have had to deal with the operational upheaval of the rapid shift to remote working. Again, it’s really good to see how well they’ve taken this in their stride, with activity levels remaining high. The response of the government in each island has been different, but equally effective, in supporting this important sector, and has ensured ‘business as usual’ through a period of significant disruption.

www.blglobal.co.uk


Advertising feature

This is testament to well-established business continuity plans, the adaptability of employees and the strong controls and tech infrastructure needed to support this. One of the particular advantages in a time of travel restriction is that Channel Islands fund boards, asset management operations and service support are all here on each respective island, rather than being stretched out over multiple locations.

CHANGES AHEAD, PROSPECTS STRONG So what does the future hold? Well, we’re not out of the woods by any means and the future remains uncertain on many fronts. Globally, economic recovery will take time. In turn, disrupted earnings mean that valuations could remain volatile through the remainder of 2020 and into the future. Public markets may also take time to fully factor in the current crisis, and concerns exist as to whether the ‘real economy’ is fully reflected in current index levels. But, having demonstrated their resilience, Guernsey and Jersey are in a strong position to sustain the longterm growth in alternative assets under management (AUM). In 2018, we at PwC forecast that AUM would double to reach $20trn globally by 20251. There’s no indication that this crisis

1

will alter this growth trajectory. If anything, it could heighten the attractions of the returns and diversification of risk that alternatives can provide. Yet the world has been changed and investment strategies will need to reflect this. For example, recent experience has accelerated the shift to remote working and online retail. Such trends have clear implications for real estate demand, but also create openings for innovation. The already growing focus on environment, social and governance (ESG) factors is also set to increase. Immediate priorities include supporting the economy and sustaining investment, as businesses and jobs come under threat. In the longer term, the lessons from the emergency could increase attention on other threats, including climate change and its impact on health. The Covid-19 crisis has been a bruising experience. Yet it has also underlined the stability, capabilities and adaptability of the fund management industry here in the Channel Islands. We have a tried and tested model that has shown that it can perform well in tough times as well as good. These firm foundations should give us considerable confidence in the future. n

We’ve not seen any significant level of fund redemption requests – if anything, there have been increased allocations to the alternative asset classes the islands support

www.pwc.com/gx/en/industries/financial-services/asset-management/publications/asset-wealth-management-revolution.html

www.blglobal.co.uk

October/November 2020 39


Digital transformation

Digital evolution Words: Imogen Rowland

Five leaders from across the fund management field share their experiences of how digital advances have shaped the sector in recent years – and what further digital development might mean for operating models, risk management, analytics and transparency in future THE DIRECTOR OF FUNDS: RICHARD HANSFORD, OCORIAN The 2008 financial crisis triggered a huge shift in investors’ appetites. All of a sudden there was a huge demand for robust, scalable technology and systems to support fund structures and their underlying investment activity. Since then, there has been a steady movement towards what can be added to that capability, providing end-to-end solutions to clients in a digitised format. Having solid institutional technology is now a must for fund management. Clients want on-demand access to granular information, and expect us to continue to deploy and develop technology around our administration platforms to streamline data flows from the asset, up through the structure and then back to the investors and the general partner themselves. Given the increase in regulation and investor scrutiny, it’s only going to continue growing in importance. As a provider, Ocorian embraced this shift towards digital technology very early, so despite the challenges caused

40 October/November 2020

by Covid-19, moving to a decentralised way of working was a relatively straightforward exercise for us. But in future, the challenge firms will have is that clients will want to use these digital technologies in different ways. So having an agile platform is really important to ensure that it has the flexibility to adapt to each individual’s requirements. Among their advantages is the speed of information delivery, but also, importantly, the accuracy of the data. Using dedicated smart technology helps us to expedite processes and enables our team to spend more time actually talking to the client – understanding what they’re up to, what their plans are for the next quarters, industry trends that may be impacting their development – and analysing the information rather than actually keying it all in. Essentially, going digital has changed the dynamic, so we can provide more of a partnership mentality and become an extension of their own operational team. Going forward, while it’s important for companies to have a roadmap, the most

Going digital has changed the dynamic, so we can provide more of a partnership mentality

important thing is that it must always be evolving. Technology is not standing still: nor should your technology strategy.

www.blglobal.co.uk


Digital transformation

THE INVESTMENT STRATEGIST: RUSSELL NEWTON, COINSHARES

www.blglobal.co.uk

There’s an adoption curve: you need buy-in from multiple sectors

better, faster and cheaper. But we’ve got to get the regulators on board too, which will involve letting go of old, trusted methods. There’s an adoption curve: you need buy-in from multiple different sectors – your regulator, your customers, your compliance department – and in financial services it can be incredibly tricky to implement solutions that could very clearly save hundreds of millions of dollars for large institutions. However, together with other, broader blockchain uses – such as the introduction of zero knowledge proofs – digitisation will make the industry safer as well as more efficient and profitable in the long term.

October/November 2020 41

My business partner Danny Masters and I have always been very pro-digital. After working together as oil traders, we set up our own hedge fund in the commodities space. Then, 10 years ago we moved the business to Jersey and began to look for inspiration for a new venture. Danny stumbled across the Satoshi Nakamoto white paper and saw that Bitcoin looked very much like some of the areas we were already trading in. It had limited supply, it was likely to be quite volatile, and it sometimes felt like it was a currency, while at other times it behaved more like a store of value or a commodity. We realised that there was a potential opportunity here to be at the bleeding edge of a new asset class, and what was needed was a way for investors who were curious to work with a trusted partner who was going to take care of all the complicated stuff. So, we approached the Jersey Financial Services Commission and said we wanted to be the world’s first regulated Bitcoin hedge fund. It quite bravely agreed to run with it. Today, we have broadened out and find ourselves actively trading again, using highly automated trading systems to provide liquidity to customers alongside a corporate ventures arm. The digitisation of this industry is undoubtably a good thing. A lot of companies now are not really even flagging that something is powered by a cryptographic protocol, or utilises cryptocurrency – they’re simply highlighting to their customers that it’s


Digital transformation

Fund management is an innovative sector, and we have seen a lot of investment funds already using robotics and algorithms for their trading portfolios, embracing machine learning. There’s also the potential to offer new tools that could help active investors outperform the traditional indexes. But that’s just the tip of the iceberg. Look at the things we help with – bespoke robotic process automations, robotic desktop automation, artifical intelligence and machine learning, creating purposebuilt automations for our clients to meet their specific needs. That includes everything from automating administrative processes to completely overhauling old, antiquated systems. The whole fund management space has changed dramatically over the past 10 years. Since the crash in 2008, regulations and due diligence have rightly ramped up, and this growth in the risk and governance space has massive cost implications for businesses. Before this, it was very difficult to see all of a financial institution’s exposures at any one time because they were just so vast, with millions of transactions happening every day. That’s where technology and robotics really come into play: they can act as a supercharger to individuals, making data instantly available wherever you are in the world in an accurate and meaningful way. The time that bots can save us is a huge factor. Millennials are now earning more disposable income and are looking to invest – but they want everything instantly. Tech can swoop in and revolutionise a company’s processes quickly, putting them on the cutting edge digitally and enhancing customer service and controls,

42 October/November 2020

Technology and robotics can act as a supercharger to individuals

thereby ensuring there’s a quick ROI. One of the big misconceptions about robotics is that it is going to completely replace human roles. But the reality is, most of the time, robotics is simply speeding up processes and ensuring a better level of accuracy and security. This year’s pandemic has proven how difficult labour-intensive administration roles are, especially when you’re not working in the office. Our view is that these digital developments unlock the workforce’s potential and allow them to focus in on the high-skill areas where the human touch is irreplaceable, such as relationship building. But working alongside humans, there’s no doubt that technology has a colossal opportunity to add value to the fund management proposition.

THE DIGITAL PIONEER: MARTIN KEELAGHER, AGILE AUTOMATIONS

www.blglobal.co.uk


“The Carey Olsen team is truly first class.” THE LEGAL 500

No.1

1500+

We advise six of the seven funds to have gained Guernsey Green Fund status.

We advise more investment funds in the Channel Islands than any other offshore law firm.

10/10 We advise all of the world's top 10 banks.

1st

1st

We work with all of the world's top 25 law firms.

10/10

We have 18 Tier One rankings in The Legal 500 UK - more than any other offshore law firm.

600bn

US$

We advise 96 LSE-listed clients - more than double the number of the next nearest offshore law firm.

25

We advise more Channel Islands funds by asset value than any other offshore law firm.

We advise all of the world's top 10 private equity real estate firms.

No.1 We are the leading adviser for listings on The International Stock Exchange.

For further information, please contact one of our partners at careyolsen.com

O F F S H O R E L AW S P E C I A L I S T S B ER MU DA CA PE TOWN

BR I T I S H VI RG I N I S LANDS H O N G KONG

LOND ON

CAYMAN I S LANDS S INGAP ORE

GU ERNSEY

JERSEY

careyolsen.com


Digital transformation

THE CONSULTING DIRECTOR: SIMEON MOSS, DELOITTE As an industry, fund management has predominantly been relationship-led, and until recently it’s lagged behind the rest of the financial services sector when it comes to digital adoption. However, recently, and especially throughout the Covid-19 pandemic, we have seen that digital transformation is

We advise clients to think big in terms of strategy and roadmap

THE HEAD OF TRUSTEE AND DEPOSITARY SERVICES: MARK CRATHERN, NATWEST NatWest was digitising processes before the pandemic hit, but we were still using 1.8 million pieces of paper a year. When our offices closed, we had to transition to a paperless environment overnight. Now, we know we can’t – and we won’t – go back to using that amount of paper. Instead, we’re accelerating our migration to cloud-based technologies with the Microsoft Azure suite, which will enable us to deliver sustainable efficiencies that will ultimately benefit fund investors. It’ll also give us the ability to thoroughly interrogate data and identify insightful themes and trends that will benefit fund managers and investors. Demising old legacy core platforms can be exceptionally expensive and some institutions can’t justify that outlay, instead relying on application programming interfaces to communicate between old and new technologies. But that’s never going to be able to compete with the latest cloud technology,

44 October/November 2020

very firmly on the agenda. And given that a large number of fund management middleand back-office processes are delivered through third parties, this transformation will need to happen along the value chain for the full benefits to be realised. Deloitte’s 2019 European Investment Management Survey demonstrated that while price points and expertise within asset service providers rated highly, around 55% of asset managers were dissatisfied with the digital capabilities of their service providers. Respondents felt this needed to be a strategic priority going forward and, as such, digital capabilities are becoming a premium criteria and differentiator when selecting a fund administrator. Now, together with the momentum brought about by Covid-19, there is a critical mass that will put digitisation at the top of people’s agendas, both for productivity reasons and in order to build operational resilience and manage cyber threats. It seems reasonable to suppose that the firms that lead the way with digitisation could not only achieve improved operational efficiencies but also consolidate their lead through future acquisitions or organic growth if asset managers switch service providers.

which is more agile and efficient to deliver change and benefits. For us, it’s an investment that should deliver returns in just two years. We’re also exploring and experiencing further uses for AI and drones. The bank already uses various forms of AI, but now it will also enable us to review and extract data from prospectuses, ensuring that we always have the latest, most accurate information to hand. In time, it’ll be a lot easier to read the new standardised blockchain agreements and identify any anomalies, but it’ll also mean investors will be far better informed, not just of their investment status but also the reasons behind any changes. Even drones are beginning to be utilised by financial institutions. In the property funds space, independent surveyors called a material uncertainty event when the pandemic hit because they couldn’t go out to value properties. In turn, that meant you couldn’t value the funds, and investors couldn’t make informed decisions about whether to invest or to set up a fund. So in some instances,

And, while many organisations go about digitisation on a piecemeal basis, at Deloitte we advise clients to think big in terms of strategy and roadmap while still implementing in measurable achievable projects. In the Channel Islands we’re seeing this not only as a development for cost efficiency, but to free up talent to undertake other value-added activities and create new business opportunities. Becoming cloud-native and considering data is an essential component, and a modern data architecture, will also make a big difference when it comes to new reporting areas such as ESG criteria, because it will enable companies not only to better measure and track their own performance, but also those of their third-party partners. Likewise, it will better equip companies to manage third-party risks. The Channel Islands are well positioned to be at the forefront of this digitisation. The size and proximity of the industry here lend the sector to fast adoption, and there is a synergy between businesses, the local government and industry bodies that has helped further progress. Having a joined-up ecosystem that promotes the digital agenda, in turn makes it attractive for fintech companies and investment.

Drones have been sent out to at least perform external checks and keep information flowing

drones have been sent out to at least perform external checks and keep that information flowing. That’s only likely to continue – and develop – in the future. n

www.blglobal.co.uk


Advertising feature

Jersey Private Fund: why it’s the simpler, faster, cheaper option Figures recently released by the Jersey Funds Association show that more than 350 Jersey Private Funds (JPFs) have been established since the 1 launch of the regime in 2017 . Simon Page, Hawksford’s Global Head of Fund Services, explains why the JPF has been a success, and how this can be attributed to three factors: simplicity, speed and cost-effectiveness WHAT IS THE JPF? As one of the leading international finance centres, Jersey has a thriving funds industry. The JPF is lightly regulated, cost-effective, has no requirement for an audit or prospectus and provides a quickto-market regulatory authorisation process for structures meeting the eligibility criteria. Through the National Private Placement Regimes (NPPRs), a JPF can be marketed into the European Union for those promoters targeting a European investor base2. Its success stems from the fact that it caters specifically for managers who are not targeting a broad investor base, focusing only on professional investors, and thereby allowing a lighter-touch regulatory environment. The removal of some of the usual regulatory burden results in a streamlined product that can be quick to set up while still having the Jersey hallmark of quality. The resultant cost efficiencies are obvious, even more so when coupled with the fact that non-EU managers raising funds in Europe can utilise NPPRs – thereby minimising the regulatory impact of AIFMD. The numbers back this up: there are now more than 350 JPFs and they have contributed significantly to the Jersey fund industry’s record high of fund assets under administration – £346bn in 2019. This included a 19% year-on-year increase in private equity alone1. The JPF lends itself to capitalising on the increased allocation of institutional money to alternatives – specifically, PE. But we have also seen particular interest from new-to-market managers, venture

capital managers and family offices. These smaller and newer fund managers often tend to find it easier to work with a regulatory incubator as an Appointed Representative rather than become FCA-authorised in their own right. The FCA application process can take time, money and effort and it subsequently imposes a significant ongoing cost and compliance burden. For these managers, then, the JPF and its key selling points marry up perfectly.

COVID IMPACT By and large, the sector has proved itself to be well equipped to deal with systemic shocks. The investments made over the past 10 years, by managers, regulators and third-party providers, specifically in technology, have allowed the industry to function seamlessly. We have seen that larger fund managers have been able to weather the storm well. Going into 2020, the levels of dry powder (funds available globally for deployment into VC and PE) were estimated to exceed $1trn. A proportion of this may have moved to the ‘risk-off’ bucket, but depressed valuations have also driven an increase in transactional and onboarding activity after the initial tremor as the pandemic began. Although some smaller managers have struggled in these challenging times, both from an investor sentiment perspective and the management of their existing portfolios, we have also seen managers looking at new opportunities in sectors or geographies that have performed well or recovered quickly/managed the crisis. More frequently, in the VC sector

specifically, we have seen that the asymmetric information available to the managers in respect of their existing portfolios has resulted in follow-on investments or new vehicles structured for further investments. We have seen that good-quality businesses have not been impacted in their ability to secure additional funding and VC managers and their investors have been quick to spot and capitalise on these opportunities. Investment strategies evolve with the economic landscape, particularly in the closed-ended funds space. What is seen as a challenge for one sector can present opportunities for others. Liquidity requirements and shifting risk appetite may result in differences in the way in which funds are allocated and invested. Distressed assets may become a buying opportunity. In the current environment, speed can be a determinant factor for such buying opportunities – and the Jersey Private Fund can be a facilitator.

VERSATILITY AND FLEXIBILITY Alternatives are often viewed as a safe haven for investors seeking yield in volatile markets and stability of income. Jersey has already, and rightfully, made its name for expert administration for alternatives. In uncertain times, and particularly the current environment, flexibility is key – as is the ability to be nimble and quick to market. Thankfully, these attributes are central to the JPF, which has proved itself to be successful in recent years. n

1 Jersey Funds Association, www.jerseyfunds.org/news/jersey-funds-association-chair-delivers-virtual-update 2 Offer document is required where the JPF is an AIF

www.blglobal.co.uk

October/November 2020 45


Wealth Management


It’s never too soon to talk about your legacy. Not just with us, but with the people who really matter. You’ve always been well prepared when it comes to managing your wealth. Now you want to ensure that your family benefits from financial security. At Royal Bank of Canada, we understand that our clients have different goals for their legacy planning. That’s why we take the time to really listen to you and your aspirations. Our collaborative approach, combined with our global expertise, means we strive for the best result for each client. Tell us what matters to you. Not all investments services are suitable for all investors. If you have any questions regarding the services mentioned please speak to a financial advisor.

To learn more visit rbcwm.com/vision New clients +44 (0) 1534 501 111

This advertisement is issued by Royal Bank of Canada (Channel Islands) Limited (“the Bank”) on behalf of RBC® companies that comprise RBC Wealth Management in the British Isles (“the BI Subsidiaries”). The Bank is regulated by the Guernsey Financial Services Commission in the conduct of deposit taking and investment business and to act as a custodian/trustee of collective investment schemes in Guernsey and is also regulated by the Jersey Financial Services Commission in the conduct of deposit taking, fund services and investment business in Jersey. The Bank’s general terms and conditions are updated from time to time and can be found at www.rbcwealthmanagement.com/ global/en/terms-and-conditions. ® / ™ Trademark(s) of Royal Bank of Canada. Used under licence.

RBC 1796


Fund structures

LanD of opportunity Channel Islands fund regimes promise speed to market, robust regulation and straightforward banking common law. With their focus on real estate, private equity, debt and infrastructure asset specialisms, the uncertain regulatory and political landscape is creating opportunities in Jersey, Guernsey and beyond Words: Alexa Robertson

48 October/November 2020

www.blglobal.co.uk


THERE ARE JUST over 150 miles between London and the Channel Islands, but as the British government continues to wrangle with the EU over what life could look like post-Brexit – and struggles to get a handle on the global pandemic – the Channel Islands and London feel, on some levels, much further apart. The islands’ flexible funds regime and their pragmatic regulation – as well as their independence from both the UK and the EU – already hold a strong appeal for investors. “Part of Jersey’s success is being able to develop and adapt to changes in the industry,” explains James Mulholland, a Partner in Carey Olsen’s Investment Funds team in Jersey. “A key feature is its flexible funds regime.” Mulholland points to the Jersey Private Fund, which has proved popular with managers looking to develop their products and investment strategy. Jersey’s accessibility has, he says, created a thriving investment community. “A key attraction for many fund managers is our position outside the EU,” Mulholland continues. “It means that managers of Jersey funds are not subject to all the onerous and expensive provisions of the Alternative Investment Fund Managers Directive, but have the ability to market within the EU on a selective basis.” And, rather than competing with European funds, the Channel Islands have developed an offering that often complements them. “If a manager wants to market on a pan-European basis or to the retail market, they will need to go to an onshore European jurisdiction,” says Elliot Refson, Head of Funds at Jersey Finance. “However, if they are one of the 97%

www.blglobal.co.uk

of all managers who do not market into more than three European countries, then Jersey offers a cheaper, faster and more efficient alternative. “In today’s environment, businesses and investors are operating across borders and need specialist centres like Jersey to help them operate on a global scale.”

JOINING THE COLLECTIVE The Channel Islands have historically been a popular location for inward investment into the UK, both from non-UK entities and from UK entities joining forces in club-like funds. Philip Hendy, Head of Real Estate at Intertrust, says the

jurisdiction offers excellent opportunities for such collective schemes. “Many pension funds want exposure to certain kinds of property assets, but some of them come in fairly large monetary sizes,” he says. “Even if you’re a large company, you probably don’t want to put millions of pounds into a single asset. “If you join forces with lots of other pension funds, you can collectively own parts of these types of properties.

October/November 2020 49

Fund structures


Fund structures

You probably have better access from Jersey and Guernsey into the UK and EU nexus than you have from the UK into the EU

“Jersey and Guernsey, through the funds regime, provide an opportunity for those types of pension investors. They have a fitfor-purpose regulatory environment where you’re dealing with sophisticated investors, with no double tax leakage on the way through.” Company law in the Channel Islands is also based on solvency rather than capital structure rules, as it is in the UK, thereby reducing restrictions around distributable and non-distributable capital. “From a corporate point of view, it makes the process a lot easier because you’re not having to worry about maintaining certain capital accounts or having to go to court to get permission to distribute them,” explains Norman Amey, a Director at Ocorian. “It is purely about making a distribution in some way, shape or form, but making sure it is done in a strong judiciary environment where the directors are personally liable if a distribution is made insolvently. “That in itself is a big plus point for Guernsey, particularly for a fund structure that involves – usually – quarterly distributions. It makes the process a lot more straightforward and streamlined.”

TAX REFRESH One area of growing opportunity on the Channel Islands is in debt funds, as a result of the refreshed Double Taxation Agreement set up between Jersey, Guernsey and the UK. The renegotiated treaty came into effect in 2019, bringing changes to the previous withholding tax requirements. “Going forward, you’ll start to see Jersey and Guernsey being looked at as a more favourable jurisdiction for these kinds of debt funds,” says Hendy. “While there’s an increasing amount of interest in debt, with

50 October/November 2020

interest rates being so low, people aren’t sitting on cash but are looking at different types of investment media.” In late 2019, in the face of Britain’s looming exit from the EU and before coronavirus had even hit the headlines, Jersey Finance commissioned a survey exploring the key trends in fund domiciliation. While Brexit, BEPS, substance and transparency had all climbed up the agenda, there was one clear concern among fund managers. “The number one takeaway was that investors want jurisdictions that can offer expertise and political and fiscal stability with a no-change outlook from a regulatory, legal or economic perspective,” says Refson. Hendy agrees, illustrating the strong position of the Channel Islands as a result of an agreement drawn up between the UK’s Financial Conduct Authority (FCA), the Jersey Financial Services Commission {JFSC) and the Guernsey Financial Services Commission (GFSC) in 2019. “It provided a level of certainty that funds from Jersey and Guernsey would still have access to UK investors and capital after Brexit, when effectively EU law would then cease to apply throughout the UK,” says Hendy. “If you look at where everyone sits in the Brexit scenario, you’ve got funds in the UK that might only be able to access the UK; funds coming from the EU that might be able to access the UK subject to complying with certain changes; or funds

from Jersey and Guernsey that have a memorandum of understanding between the FCA, JFSC and GFSC. “And these funds already have a wellestablished route into the EU through the national private placement regime. “What it means is that you probably have a better level of access from Jersey and Guernsey into the UK and EU nexus than you have from the UK into the EU, and vice versa.”

SUSTAINABLE FUTURE With political upheaval ahead and an uncertain regulatory future for both the UK and the EU, investment specialists in the Channel Islands believe the jurisdiction is in a position to tap into unique – and possibly unprecedented – opportunities. “In a post-Covid world,” Refson says, “the importance of centres like Jersey is becoming only more evident. “We have seen how governments worldwide have had to take extraordinary measures to support their economies with emergency support. And the question those governments will now need to answer is how to finance future growth. “These measures were necessary but, over the longer term, unsustainable. Investment through equity is clearly what is needed, and our funds industry will be able to demonstrate its important role and will help economies grow. “Businesses are facing unprecedented challenges and will need expertise and investment. Jersey’s fund sector is ideally placed to help achieve this.” n

www.blglobal.co.uk


MORE THAN AN ACCOUNTING MACHINE Our people are wonderfully complex. They harness experience, insight and intelligence to uncover the full story behind the analytics. bdo.gg


Advertising feature

A tale of three funds

From fraud to unforeseen financial crises, there are any number of reasons why funds collapse. Ogier Partners Craig Cordle and Bryan de Verneuil-Smith take a look at three high-profile cases and explore the lessons for directors and fund managers

THE REASONS BEHIND the collapses of 1MDB, Carlyle and Abraaj and

Bryan de Verneuil-Smith

52 October/November 2020

Craig Cordle

the high-profile cases that followed them are very different, but in each case the lessons that can be learned are broadly similar – and rooted in robust corporate governance. 1MDB (1Malaysia Development Berhad) was founded in 2009 as a Malaysian state investment fund, established to develop the nation’s tourism and green energy by the then Prime Minister, Najib Razak. It raised billions of dollars from the Middle East and leading banks such as Goldman Sachs, ostensibly for infrastructure projects. However, the US Department of Justice has alleged that from 2009 to 2014, $4.5bn was diverted to shell companies and offshore accounts to enrich corrupt government officials. The money was spent on an array of eye-watering purchases, including $275m on luxury goods including watches and jewellery, $100m into funding Hollywood movie production The Wolf of Wall Street and $85m in Las Vegas gambling.

www.blglobal.co.uk


Advertising feature A number of techniques were used to defraud the creditors. Funds were transferred back and forth through different legal entities with the same beneficial owner to obscure the nature, source, location and control of the original funds. Bank accounts whose names mimicked those of legitimate companies, such as BlackRock, were created and money was transferred into the client accounts of US law firms to avoid due diligence/antimoney laundering checks. 1MDB’s articles of association allowed the management team to control transactions in priority to the board of directors. The board was kept in the dark regarding the key details of deals and, on other occasions, management ignored instructions and queries from the board.

The board of directors must be involved in the checks and balances of decision-making to prevent management misconduct

IGNORANCE NO EXCUSE While it appears that management hid its fraudulent actions from the board – and the structure of the company allowed management to do this – ignorance does not exonerate directors from breaching their duties. There are criminal investigations in more than 10 jurisdictions, including the US, Singapore and the UK. Carlyle Capital Corporation (CCC) was an investment fund set up as a Guernsey company by the US private equity group Carlyle. It went into insolvency in 2008, losing all of its $1bn of capital. CCC had invested mainly in US residential mortgagebacked securities (RMBS). The directors were accused of breaching their duties to CCC because they failed to insist or recommend that CCC take urgent steps to sell down its RMBS assets or to raise additional equity capital or conduct an orderly winding down of CCC from the end of July 2007. Ogier acted for three of the defendants in the Royal Court of Guernsey, which concluded (and the conclusion was upheld by the Guernsey Court of Appeal at which Ogier acted for the investment manager) that there was no breach of the duty of care of the directors or the investment managers. It also ruled that, without the benefit of hindsight, their actions had been rational and reasonable. The failure was beyond the control of any board of directors and the result of unforeseen and unforeseeable circumstances. They were cleared of all 187 charges brought by the liquidators. The Abraaj Group was the largest private equity investment house in the Middle East and at one point purported to manage more than $14bn in assets across emerging markets. In 2018, Abraaj Holdings, the holding company of the group, and Abraaj Investment Management, the central investment manager entity, were placed

www.blglobal.co.uk

into provisional liquidation, after a group of investors commissioned an independent audit into the alleged mismanagement of its $1bn healthcare fund. According to PwC, the liquidator of Abraaj Holdings, the group’s expenditure exceeded its revenue for years and debt was used to fund the operating expenses. Pleadings filed by the US Department of Justice and the Dubai and US regulatory authorities included allegations that money from certain funds had been misused to try to alleviate cashflow problems and that assets had been overvalued and investors’ funds misappropriated to hide the dismal financial condition of the group accounts. The allegations also cited weak governance, especially a lack of adequate oversight controls. Two Abraaj Group companies were fined a combined $315m for deceiving investors and misappropriating funds. The founder denies intentional wrongdoing and is fighting extradition to the US on charges of the theft of hundreds of millions of dollars and misrepresenting the value of the Abraaj Group’s holdings.

FUND RED FLAGS Ogier acts in respect of a substantial Abraaj fund and, particularly, for its independent director appointed during the immediate fall-out of the Abraaj collapse. These three funds collapsed for different reasons but red flags, which could indicate problems in the management of any fund, were apparent from the allegations (or judicial findings), including: • One dominant individual in a key decision-making role • No clear management structure and no chain of accountability (or any such processes not adequately adhered to) • Poor communication between those running the fund, its investors and other relevant parties

• Delays in responding to requests for clarification and responses inadequate or lacking in any substantive independent verification • Defensive or secretive senior management • Too much emphasis and focus on the outcome for the fund, rather than the process of running it. Maintaining strong corporate governance is vitally important. The board of directors must be involved in the checks and balances of decision-making to prevent management misconduct and the misappropriation of assets. In light of the directors’ fiduciary obligations to the fund, the board of directors should always be the ultimate decision-maker, not management. Good corporate governance will provide directors with a strong defence when funds collapse due to unforeseen financial crises and they are sued for having allowed the fund to collapse. Fund directors concerned that their funds are approaching the zone of insolvency, should seek independent legal and accountancy advice to mitigate the risks of facing allegations for having breached their duties. Early transparency with the regulatory authorities of funds and managers that are facing difficulties is also of paramount importance. Fund managers and directors should: • Ensure decision-making is subject to systematic (and, where appropriate, independent) checks and balances • Insist on visibility on cash flows and the deployment of drawdowns • Ensure there is fund manager due diligence and that it is kept up to date • Where appropriate and possible, obtain external third-party reviews of valuations • Maintain good and timely communications with all relevant parties and investors • Consider undertaking periodic governance reviews conducted by an independent third party • Ensure cohesive and contemporaneous records are kept of all meetings and decisions. While the intention is not to stifle the ability of fund managers to do what they do best, they should seek to conduct their affairs defensively. The courts, regulators and investors will always have benefit of hindsight when reviewing a fund and its manager’s actions, and so managers are well advised not to overlook the importance of maintaining strong governance procedures. n

FIND OUT MORE

For further information or to find out more about our investment funds expertise, go to www.ogier.com or contact one of our team.

October/November 2020 53


Fund management

The Woodford scandal has raised concerns about the measures in place to ensure effective management of investors’ money. Few would argue against the investment sector being built on trusted oversight – but those close to it acknowledge it has some way to go

Rebuilding

54 October/November 2020

www.blglobal.co.uk


Fund management

Words: Gill Wadsworth

IT WAS THE fund implosion that no one saw coming but perhaps should have. When investment management superstar Neil Woodford closed Woodford Equity Income last June, several hundred thousand investors were left wondering how such a collapse could have happened. Not only was Woodford one of the most recognisable names in investment management, but his track record was also one of the best. Yet the Financial Conduct Authority (FCA) mantra that ‘past performance is no guide to the future’ exists for a reason. Just because Woodford was once gifted with

the golden touch did not mean he always would be. Investors were certainly given a sharp reminder that nothing in the world of investment is certain. But Woodford’s fall from grace also brought into sharp focus the sometimesshaky governance foundations on which fund management is based. What went wrong at Woodford raises questions about oversight throughout the fund management system. And, given the series of global financial crises that have plagued the markets since the turn of the century, an effective investment management sector has never been more important. Andy Agathangelou, Founder of the Transparency Task Force, says: “The world needs an investment sector that can be trusted; and the evidence suggests we’re not there – yet. Effective fund governance is an absolute prerequisite if the sector is going to deliver on its true potential as a prudent steward of the world’s capital markets.” He adds: “While there is a great deal of best practice around that’s being authentically applied in the interests of investors by many funds, the challenge is to get all funds to be governed to a sufficiently high standard. Calling out poor practice will help.”

In the case of Woodford Equity Income, best practice appears to have been sorely missing. The fund was unable to cope when large numbers of investors wanted to withdraw their money following poor performance. However, the fund had invested significant sums in illiquid assets, which meant that investors could not realise their assets and many lost thousands of pounds. But why was an equity income fund investing so much in illiquid assets in the first place? And why did the fund’s authorised corporate director (ACD), Link Fund Solutions, which was supposed to act independently and in the interests of investors, fail to intervene? The ACD’s role is to represent retail investors who may have little means of having their voices heard in the running of the fund. Since September 2019, the FCA has tightened the ACD governance, insisting that two non-executive directors sit on ACD boards to ease conflicts between the board and investment manager, and challenge decisions on behalf of investors. Jon Beckett, a Director of the Association of Professional Fund Investors and an independent non-executive director (INED) at an asset manager, says: “It is through the appointment of independent non-executive directors to fund boards that customers can look to gain some fund insight.

www.blglobal.co.uk

October/November 2020 55

INDEPENDENT OVERSIGHT


BL

BUSINESS LIFE

The digital issue 2020 Publishing in december FOR EDITORIAL QUERIES, CONTACT jon.watkins@blglobal.co.uk FOR ADVERTISING, EMAIL CARL.METHVEN@BLGLOBAL.CO.UK


Fund management

“INEDs are the customer champion and are there to represent fund holder rights.” While this looks like a robust way of protecting investors, the governance starts to look a little unsteady when it becomes apparent that, rather than the ACD appointing the investment manager, it is in fact the other way around. It was Woodford who appointed and remunerated Link Fund Solutions, and it was he – or at least his asset management firm – that had the power to sack the ACD. For all its apparent oversight, the only thing Link could do in the event of malpractice was raise concerns with the regulator or step down. Bill Prew, CEO of depository INDOS Financial, says such a situation gives rise to significant conflicts of interest, which undermine the checks and balances designed to safeguard investors. “The Woodford [collapse] raises broader questions of alleged conflicts of interest,” he says. “People are asking if [ACDs] can act independently and in the interests of investors. The regulators are looking at that.” According to Harcus Parker, which is just one of several law firms bringing legal action against Link for its involvement in the scandal, the ACD made £35.5m in profits from its role in the Woodford fund. Investor losses currently stand at more than £1bn. Link Fund Solutions was not the only player supposed to be protecting investor interests. Northern Trust was the depository for the Woodford fund and was tasked with safekeeping assets and monitoring the ACD. Northern Trust is currently being investigated by the FCA for its response to the level of illiquid assets held by Woodford, which at one point had an 18%

People are asking if authorised corporate directors can act independently and in the interests of investors

allocation. The legal maximum investment in illiquid assets for such funds is 10%. Beckett believes that the current governance system does not encourage effective communication between key stakeholders and is reactive rather than proactive. “There are times when [depositories and ACDs] don’t talk to each other enough; issues aren’t raised to the correct board and committee before things go wrong,” he says.

COMMUNICATION BREAKDOWN In the Woodford case, it was only once the illiquid asset limit had been breached that any party started to raise the alarm. In their defence, depositories argue that they may not be heard. Roberta Robustelli-Diederich, Director for Depositary, EMEA Alternatives, at Sanne, says: “The depositary’s request should be taken more seriously from fund

parties, and regulators should enhance this message to managers, initiators and fund accountants.” While there are inherent flaws in the ways in which stakeholders interact, Beckett also raises concerns about the way in which mistakes are dealt with. When savers and investors lose money, they are repaid – up to £85,000 – through the Financial Services Compensation Scheme (FSCS), which is funded through levies from providers and advisers. Beckett argues that this does not share the burden of blame equally across the industry. There has been an increase in advisers leaving the industry, driven out by rising levies and insurance premiums. He adds that the compensation response further undermines governance. If advisers are being forced out of the market, they will not be readily available and affordable to the man or woman on the street when it comes to making a good decision. “Currently, the system shares the pain of malfeasance across the whole industry but not necessarily proportionately,” says Beckett. “So advisers are struggling to meet their levies. It feels like the system needs a really good shake-up.” As the Woodford scandal trundles through the legal system, and disgruntled investors await their FSCS payments, there is an opportunity to tighten up fund governance. Regulators have rightly focused on protecting investors following the devastation of the 2008 global financial crisis, but there are obvious flaws in the existing system that need further attention. If investors are to regain their confidence, the cornerstones on which fund governance are built must be reinforced – before another Woodford undermines the whole structure. n

Cornerstones of good fund governance • Authorised corporate director (ACD) Under UK regulations, each fund must have an ACD to carry out crucial tasks. These include ensuring the fund complies with rules, produces regulatory documents, maintains fund administration, oversees investment and liquidity risk, and deals with key stakeholders, including the regulator, endwinvestors, auditors, depositories, custodians and distributors. • Depository The depositary is responsible for the safekeeping of the fund’s assets, which must be kept separately from the fund manager. The depositary also has oversight of the manager’s operations and monitoring the fund’s cash flows, including that the fund is investing assets in line with the rules and the fund’s investment objective. The depositary is not responsible for making investment decisions or for performing the operation and administration functions of the fund.

www.blglobal.co.uk

October/November 2020 57


Advertising feature, in association with Locate Jersey

Why Jersey is right for fund managers:

Systematica Investments With a track record of providing alternative fund services stretching back several decades, Jersey has become home to a growing community of fund managers too, including across the hedge fund, private equity and real estate fund space. Jersey was, therefore, the ideal jurisdiction for innovative investment management firm Systematica Investments to base its headquarters LAUNCHED IN 2015 as a spin-out from BlueCrest Capital Management – one of the world’s largest hedge funds – Systematica Investments applies science, research and technology to its investment management process. As well as its Jersey headquarters, the company also has an international presence, as a result of operations in London, Geneva, New York, Singapore and Shanghai. Paul Rouse, its Chief Operating

58 October/November 2020

Officer/Chief Financial Officer, moved to Jersey from London, and explains why Jersey has proved to be an attractive proposition. “Given its reputation for alternative investment funds, Jersey was a good fit for us,” he says. “There is great support here, not just in terms of the business infrastructure, professional capabilities and regulatory environment, which are all second to none, but also personally.

“There is a real community feel about it and people are very generous in offering advice and support.”

SUPPORTIVE INFRASTRUCTURE Ben Dixon, the business’s General Counsel, also relocated to Jersey from London – and was impressed with the supportive infrastructure he found. “The whole process was made very smooth by the various networks in place,” he recalls. “I relocated in early 2015 and

www.blglobal.co.uk


Advertising feature, in association with Locate Jersey

It has made sense to hire from the islands where we can, as there is such a wealth of talent available

Pictured: Paul Rouse (left) and Ben Dixon quickly found Jersey incredibly supportive on every level – from the Jersey Financial Services Commission [JFSC] as regulator to Jersey Finance and Locate Jersey. “The platform Jersey has provided us with has enabled our business to perform very well in the almost six years we’ve been here. “We have added 10 people locally to the company in that time – quite a rapid growth. It has made sense to hire from the islands where we can, as there is such a wealth of talent available. “Our HR, tax and corporate finance teams are all here, and three-quarters of our legal team are based in Jersey.” Rouse adds: “To begin with, we were operating out of an incubator space and I was still commuting over from

www.blglobal.co.uk

London while we finalised our set-up. The authorities here really did understand our ambitions and what we were trying to do. Dialogue with the JFSC and the government has been so efficient. “The good connections to London are also helpful in terms of running the business from here. London is a key gateway for us, so that’s important.”

QUALITY OF LIFE For both men, it’s not just the benefits to the business that make Jersey an attractive place to work – it has helped them personally too, as Rouse explains. “The outdoors lifestyle here is fantastic and it’s a really strong sell for Jersey. It’s refreshing to be able to go for a run along the seafront during your lunchtime or head to beach in the evenings, for instance – quite different from London.”

Rouse continues: “I came to see Jersey initially in October-time and was sold straight away with the beautiful views of the countryside and coast. “Moving here with my family and finding a good school was really important too. My daughters absolutely love their new school and friends, and they both go to surf school at the weekends. “One of the greatest gifts for me in moving here has been the ability to take my children to school and see them in the evenings thanks to the much shorter commute compared with London.” n

FIND OUT MORE

This advertising feature was produced in association with Locate Jersey. Visit www.locatejersey.com

October/November 2020 59


Green funds

The coronavirus pandemic has sharpened the focus on green, ESG and impact funds, and industry experts believe demand will continue to grow as governments respond to the climate change crisis

Words: Steve Falla

A COMPELLING DEVELOPMENT in the investment fund space is gaining significant traction for the Channel Islands – green, environment, social and governance (ESG) and impact investing. Practitioners involved in this enlightened approach, which focuses on purpose as well as profit, have rapidly gained expertise and, given the contemporary global and societal issues around climate change and the environment, they say it’s here to stay. But, as with any new wave of financial services business, there are challenges to be addressed and infrastructure to put in place so that Jersey and Guernsey can continue to reap the rewards of their innovation. Although ESG has been more of a focus for Jersey, Guernsey has led the way with green finance. The two issues are not the same thing, but there is considerable overlap around their overall objectives – to do good as well as generate a return for investors.

Going green for

60 October/November 2020

www.blglobal.co.uk


Green funds

High-profile campaigners have put the spotlight firmly on the impact on the planet of unchecked climate change. Their actions have captured the attention of the population, particularly young people, and governments are beginning to sit up and take notice. Mourant LP Partner Felicia de Laat says: “It began with climate change, the general environmental crisis, and particularly the impact of plastic on oceans and our wildlife. Sir David Attenborough has really brought this issue to the fore. “This has escalated to climate change now being recognised by business and regulators as requiring change to the way in which business is conducted. It’s no longer niche.” Mark Cleary, a Director at Zedra, adds: “The impetus for the industry was a speech by Mark Carney at Lloyd’s of London just before the Conference of the Parties (COP

21) in Paris in 2015, entitled Breaking the tragedy of the horizon – climate change and financial stability. Then the momentum simply grew from COP 21.” Carney’s speech highlighted one of the three main risks to planet – progress towards a calamitous temperature increase. “That was the start of more widespread recognition that, as finance providers in society, we need to do more to finance the transition towards a 2ºC increase in global temperatures,” says Cleary. “That’s from a perspective that not long ago we were predicted to be on target for a 3.5ºC to 4ºC increase in temperature, which would create insurmountable societal and environmental damage. This transition to 2ºC or less cannot be tackled through the public purse alone. “There’s a massive need for private capital investment through pension funds, private equity funds and a whole variety of organisations to channel funds towards this

problem for good financial returns but with the wider objective of doing good for the planet and society in general.” Alongside the green and environmental investment focus, there has been a rise in the number of funds with an asset class associated with social impact as well as financial return, in areas such as social housing and mental health.

ESG INVESTING Jennifer Strachan, Sustainability and Business Development Manager at IAM Advisory, says: “Fund managers are just starting to get their head around ESG investing. Some are piling their expertise into one fund, so that if people are interested in ESG they will invest in that portfolio. “A lot of them are very new without a strong track record; others are embedding ESG principles into their investment process around their entire fund suite.”

global good

ORIGINS OF THE CONCERN


Collaborative thinking At Grant Thornton we have an instinct for growth and are continuously looking for ways that can help your business grow. Our deep local knowledge is supported by a global expertise which combined can help you grow your business. The services we offer include: Audit, Assurance, Tax, Corporate Recovery and Advisory Services to businesses locally and globally.

grantthorntonci.com

Audit | Tax | Advisory

© 2020 Grant Thornton Limited. All rights reserved. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton International Ltd (GTIL) and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.


Green funds

Another complementary approach is ‘patient capital’, where a fund’s or portfolio’s performance objectives take longer to achieve, so investors need to be patient about reaping returns.

TAXONOMY ON TRACK Fundamental to the maturing of green, ESG and impact funds will be developing a taxonomy and a standardised form of measurement and reporting. Strachan says there is no agreed set of metrics to report against and it is difficult to obtain data when there are inconsistencies in approach. “The more data we get, the more understanding we have, not only of risks, but impact. Data agencies are a little bit purist. What is interesting is that the data does not reward impact in the way that I would argue it should,” she says. De Laat agrees: “It is important that these investments can be benchmarked against credible standards. The need to avoid greenwashing is key. “The islands are well regulated with high standards and have a lot of expertise in administering and operating funds generally. Rather than develop our own benchmarks, however, it is important that we follow and converge with the regulations and standards being developed globally, particularly by the EU.” Cleary concurs that a standardised taxonomy will boost the credibility of managers who take heed of market trends in this space. “Over time, companies that don’t move towards a 2ºC rise at best are not going to have capital allocated to them and their shares may be repriced very quickly – a Minsky moment [where investors suddenly lose all faith in them].” Kevin Smith, Director at Ocorian, says traditional private equity funds will have to concentrate more on their green credentials and be transparent in what they are investing in if carbon-neutral targets are to be achieved. “Most of the managers we see are scaling up on that side and having to employ ESG specialists or outsource to a growing number of specialist ESG advisory services,” he says. Cleary adds: “You do see some of the managers degree-rating their portfolio – a

www.blglobal.co.uk

Rather than develop our own benchmarks, it is important we converge with regulations and standards being developed globally

portfolio of assets producing 4ºC of climate change moving down to 2ºC from where they are now by 2030.”

TALKING THE TALK The Jersey Financial Services Commission has launched a consultation on sustainable investments, and its proposals include disclosure and monitoring requirements specifically to counter the risk of greenwashing. Another focus will be the upskilling of the workforce to deal with this emerging sector. Professional organisations are already launching specialist training to equip practitioners. “We need a pool of very well educated people who are knowledgeable about ESG, green and impact. You cannot expect everybody to be climate experts but they need to be aware of the issues,” Cleary says. “Some professional bodies have begun to launch specialist qualifications, and we need to up our game so that when presented with clients who want ESG or green, we have the vocabulary to converse

with them. That will reassure them that we do know what we’re talking about.” De Laat predicts a strong future for sustainable investment in the islands. “This is something that is regulator-led, not just something investors are asking about. Coming from the Bank of England, it will become part of the new normal,” she says. Smith agrees. “Green and ESG funds will increase. Pure green funds as an asset class will increase because of the need for governments to have private funding to do it. Funds invested into no-no asset classes – fossil fuels and the like – will peter out. Some big investment managers are moving out of these areas.” “What Guernsey has done is fantastic,” enthuses Cleary. “The launch of the Guernsey Green Fund was on point. Since then, green private equity principles have been published and they are on point too.” Strachan is equally optimistic about the future. “The Channel Islands could be for ESG what Luxembourg is for microfinance,” she concludes. “I would love the islands to be the go-to for ESG.” n

October/November 2020 63


How will Covid-19 impact the housing market in Jersey this autumn? Geri O’Brien from Savills Jersey reflects on a busy summer market and whether Covid-19 will leave a lasting impression on the housing market The experience of lockdown has caused many people to reassess what is important to them and reconsider where and how they might now prefer to live. In Jersey, there is an appreciation for island life, with beautiful beaches and countryside as well as a vibrant community. Many have valued spending more quality time with immediate family throughout lockdown, with older children returning from university and in some cases deciding to stay here long term. With the prospect of continued flexible working, people are no longer anchored to a specific

location and for some the experience of working from home could lead to less off island travel when normality resumes. Those with holiday homes elsewhere are deciding to stay on the island, having spent their time here during lockdown, and others who have been renting are now committing to buying. Since lockdown restrictions have eased, we’ve witnessed a very buoyant market across all property types. Over the typical holiday season, we’ve experienced a huge increase in activity, including buyers registering with us, sales completing and new properties

We have seen an increase in enquiries from the UK, particularly for unqualified properties, which don’t require Jersey residency, and we anticipate this continuing as buyers are drawn by the unique lifestyle offered here. There is an element of pent-up demand, not just since lockdown but due to factors before that, for example Brexit. Many who were considering a move earlier in the year, from a flat to a house with a garden for example, are now much more committed to making that move. More space, both inside and out, and room for home working are all at the top of the list for buyers. This was echoed in a survey carried out by Savills among 1,400 registered buyers and sellers in the UK. The survey showed that Covid-19 has increased the desire to move home and that buyers’ determination not to compromise on lifestyle factors intensified over the summer.

SOLD Floriana, St Brelade

coming to the market. Many have also resolved to improve their existing homes.

Guide £3.5 million


Some 62% of respondents said that the amount of garden or outside space had become more important, up from 49% in our April survey, and rising to 71% in London. Over threequarters of those with preschool or school aged children now place more importance on the amount of outside space available. Over half (56%) of respondents said they are more inclined to work from home more regularly, up from 49% in April, including the vast majority of those working in finance and insurance services (83%) or the media, information, tech and science sectors (81%). Twothirds of those anticipating working from home more think that they will do so for three or more days a week. This translates into a desire for a separate space to work from home, which 57% state is now more important than prelockdown, rising to 70% in London, 79% for those with children, and 84% amongst the under 40s. Many predicted that the immediate shift in priorities seen in April was just a response to lockdown and would be short-lived, but our latest survey highlights greater commitment from people to make real changes.

SOLD Chalet Herault, St Helier

Guide £2.5 million

SOLD Beauvoir, St Helier

Guide £1.75 million

Keeping buyer and seller expectations on pricing aligned will be key to maintaining the summer momentum through the autumn and beyond. If you would like to find out more about the property market in Jersey, we’d be delighted to hear from you.

Talk to us today Geri O'Brien Director Savills Jersey 01534 722 227

gobrien@savills.com

SOLD Meadowlands, St Saviour

Guide £765,000


Co-investments

A desire among investors to be closer to the action, to have more of a say in where their money is invested and for greater agility around investment decisions has led to the rapid emergence of co-investment. And that could offer something for everyone

Rise of the co-investment Words: Alexander Garrett

66 October/November 2020

www.blglobal.co.uk


Co-investments

www.blglobal.co.uk

holds a strong appeal for investors of all sizes and levels of sophistication and has become increasingly popular over the past decade. Research by Preqin in November 2019 – the Preqin Investor Outlook: Alternative Assets H1 2020 – showed that the proportion of limited partners expecting to make co-investments in the next 12 months was 37% – up from 35% a year earlier. And as businesses look for extra capital in the wake of the Covid pandemic, those numbers could rise further. Co-investment can take different forms. In its most common form, private equity funds offer their bigger investors the opportunity to take direct stakes in some of their deals, alongside the fund’s own investment. Alex Henderson, a Senior Associate at Mourant in Jersey, explains why they are willing to do this. “First, some funds have concentration limits,” he says. “The fund documents might say you can’t invest more than 10% of the fund in a single portfolio company. The manager finds a great deal they really like but it accounts for 13% of the fund. “At that point, they still want to make the acquisition but they decide they’ll put 10% through the fund, and find co-investors for the other 3%.” A second reason, he says, might be because the fund manager wants to bring in a strategic investor who can help with that particular portfolio company because of their expertise. Meanwhile, a third reason may just be a case of trying to build a relationship with an investor the fund manager wants on board. “For a relatively new manager,” says Henderson, “perhaps with a limited track record, offering attractive

Offering attractive co-investment opportunities can be a great way to develop a relationship and showcase a new manager’s ability

co-investment opportunities can be a great way to develop a relationship and showcase the manager’s ability to a key target investor – ultimately with a view to securing a larger investment from that investor in the manager’s next fund.”

PERFORMANCE DRIVE One of the key reasons big institutional investors are attracted to co-investments is that they often get better performance than in the fund itself, says Kees Jager, Head of Funds at Intertrust in Guernsey. The reason for that is simple. “The usual fund structure is that you’re paying 20% carried interest – the manager’s commission on profits – and up to 2% management fees,” says Jager. “Through co-investment, deals are sometimes offered for free, depending on the relationship between the manager and the investor. In any case, they are usually lower than via the fund structure.” Institutional investors also relish the opportunity to have direct exposure to the company, understanding how it operates and its view of the market, and in some cases putting someone on the board. Often, these investments are structured through a special-purpose vehicle into which each of the investors making co-investment invests. But Jager says a relatively recent innovation has seen some investors taking an alternative approach. “What we have seen in the past 12 to 18 months – and I think it is continuing despite Covid-19 – is that some limited partners are setting up their own structures,” he explains.

October/November 2020 67

PICTURE THE SCENE. You enter a casino and, on arrival, hand over your betting money to a manager, who puts it in with everyone else’s. At the end of the evening, he gives you back your (much smaller) share of the proceeds, with little indication of which particular one-armed bandits and roulette wheels your money has disappeared into. Doesn’t sound like much fun, does it? But that’s pretty much what investors do when they put money into a private equity fund – the obvious difference being that when the fund eventually winds up, they expect to have made a considerable profit rather than a loss. How much more interesting, though, would it be if you had been able to choose where at least some of your money went, and to directly buy shares in companies you liked the look of? Co-investment offers precisely that element of direct exposure to shares of privately held companies. As a result, it


Co-investments “It is still a GP/LP structure, and the manager still controls the GP so the fund maintains the control. But for the investor, it means they can be nimbler when deal opportunities arise. “It’s a more efficient way and it takes out some of the cost. We are doing more and more of these at the moment.” Intertrust has a track record of administering and helping investors to create these standalone structures, Jager points out. Co-investment is usually offered by private equity funds on the way in, at the time when the fund manager is sourcing deals, and the terms would be broadly the same as those the fund itself has negotiated. Capital raised by the investee company is typically needed to fund the next stage of its growth. However, the pandemic is seeing a variation on this, as some companies are already seeking extra capital because their

as managers assess the effects of the pandemic, we will see an increase in restructurings coordinated by fund managers

68 October/November 2020

cash reserves have been depleted by the impact of lockdown and the subsequent economic downturn. “At the moment, those capital needs are generally specific to the portfolio company,” says Henderson. “For example, a company in the retail sector that has been forced to close and needs cash to resume operations.” In some cases, co-investment may be offered in the form of preferred equity, where investors get their return first, with fixed upside. However, there is no limit on the downside – they can still lose their money in the same way as a traditional equity investment. In the next six to 12 months, as managers fully assess the effects of the pandemic on their portfolios as a whole, Henderson predicts that we will see an increase in restructurings coordinated by fund managers. For example, there may be an increase in continuation vehicles – where a fund that is due to wind up has valuable assets that it doesn’t want to dispose of too cheaply given the market conditions. Fund managers may seek to transfer these assets into a longer-term vehicle, which may also raise additional capital to support the next phase of growth for the portfolio companies – presenting another set of co-investment-type opportunities for investors. Smaller investors such as wealthy individuals and family offices, which don’t have the same financial clout as the big institutions, would struggle to get access to the co-investment deals offered by fund managers – but that doesn’t mean they don’t also have an appetite for taking direct stakes in private companies.

Aidan O’Flanagan, Head of Funds at Highvern in Jersey, says: “These investors are becoming increasingly sophisticated, and more and more they are attracted by the ability to invest directly. “But direct investing is expensive, it’s difficult to scale, and access to institutional investment opportunities is unlikely unless they have a substantial portfolio and inhouse investment team, and annually can commit large amounts to deals.”

POOLING RESOURCES However, there is a solution at hand, says O’Flanagan. Specialised co-investment managers are bridging the gap by bringing together a number of these smaller investors to pool their resources outside any fund structure. He explains: “These deal-by-deal managers will sign up 20 investors, for example, and they can bring deals and ask if you are interested. “If you are, they’ll have a vehicle just to co-invest into that one deal, alongside the lead investor, which could be a fund.” It’s like a fund but not, adds O’Flanagan. From an implementation point of view, he says, each deal vehicle can be built using a copy-and-paste approach, drawing on the same Know Your Client data and limited partnership agreement – in the latter case with slight adjustments. “It’s very quick to market; we can set one up within a week, and it’s not regulated like a fund,” O’Flanagan points out. A back-office technological benefit is that each investor is given exclusive access to their own investor portal showing only the deals into which they’ve invested – all their holdings, calls, distributions and documentation. Looking forward, O’Flanagan believes some of the managers doing this may decide to become funds, because of the advantages in terms of the fees that can be charged and the ability to secure all the investment at the outset. In any case, the demand from smaller investors isn’t going to disappear, so new managers are likely to come in to take their place. Whatever form it takes, co-investment has become an established part of the private equity landscape and is likely to continue to grow in popularity as investors seek to maximise the value they get out of their relationships with fund managers. Henderson notes that some managers are already establishing dedicated vehicles for co-investments alongside their main fund vehicles right from the outset – and seeking to charge fees to those participating in those opportunities. Everyone, it seems, wants to be part of the deal. n

www.blglobal.co.uk


Secure Offshore Cloud Co-investments

Bespoke

Solutions designed around your business needs

Sure have all the options you need Create the perfect hybrid solution; highly secure co-location in our offshore data centres, private cloud installations and access to the major public clouds via high speed connections. Discuss your public or private cloud requirements today with our experienced consultants..

Secure Robust and secure hosting and connectivity to the public cloud

Offshore Delivered in a fully regulated and compliant offshore environment

Contact Us business.sure.com www.blglobal.co.uk

October/November 2020 69


MORE PEOPLE H AV E B E E N I N TO S PAC E THAN H AV E PA S S E D THE MASTER OF WINE EXAM

Meet Pierpaolo, he’s one of three Masters of Wine here at Waitrose & Partners. He and his team spend their lives searching the planet to find the best wines for our customers. Think of them as your very own sommeliers. Because every single wine we sell has been hand-picked by them.

FOR US, IT’S PERSONAL

Pierpaolo, Partner & Head of Wine Buying


The

Knowledge Brain food for the busy business professional

The Knowledge is compiled by Alexander Garrett

Talking

points High-brid

Hybrid cars emit around two and a half times as much carbon dioxide as official tests show, according to new research by campaigning groups Greenpeace and Transport & Environment. Their study looked at the behaviour of 20,000 plug-in hybrid owners around Europe. It found that, on average, their cars emitted 120g of CO2 per kilometre driven, compared with the official figure of 44g. The researchers suggested that the main reason for the disappointing performance is that their drivers didn’t charge the battery often enough, relying instead on the petrol or diesel engine. And the petrol/diesel engine will also kick in if the car has a cold start, or if it is driven aggressively.

www.blglobal.co.uk

WFH on the up

Good to go

Food for thought

Our friends in the North

The number of people who regularly work from home is expected to double once the pandemic is over, according to the Chartered Institute of Personnel and Development (CIPD). The organisation surveyed employers and found that overall they expect 37% of staff to regularly stay away from the office following Covid-19, compared with 18% before the pandemic. And 22% are forecast to make their home offices a permanent fixture – up from 9% pre-lockdown. The study was conducted among 1,000 CIPD members, a quarter of whom said their productivity had increased since they had been working from home. They also reported improved work-life balance and better collaboration with colleagues.

Gen Z (18- to 25-year-olds) may be highly aware of the environment and animal welfare, but they are not yet ready to translate that into eating lab-grown meat, according to a survey in Australia. The research by University of Sydney and Curtin University found that 72% of this cohort said they were not willing to eat cultured meat grown in the lab from the in-vitro cell cultures of animal cells. This was in spite of the fact that 41% of those questioned agreed that lab-grown meat could be a viable nutritional source because of the need to transition to more sustainable food options and improve animal welfare. The grounds for rejecting the meat alternative were various: concern about it being heavily processed; a belief that we should eat a more plantbased diet; and viewing meat as being tied to Australian culture and masculinity.

Simply planning to go away on a trip can make you happier, according to the US Travel Association. In a poll carried out for the organisation by the Institute for Applied Positive Research, 97% of people reported that having a trip planned made them happier, with 82% saying it made them “moderately or significantly” happier. This conclusion is backed up by previous university research. A 2014 Cornell University study delved into how the anticipation of an experience (such as a trip) can increase a person’s happiness – much more so than the anticipation of buying material goods. And an earlier study, which was published by the University of Surrey in 2002, found that people are at their happiest when they have a vacation planned.

Vikings weren’t all blond-haired and blue-eyed after all, according to research published in Nature, which says that the Nordic invaders were far more diverse than previously thought. The Viking warriors who plundered northern Europe from the eighth century are widely reputed to have been tall, fair and Scandinavian. But the study, led by the University of Copenhagen, has highlighted the genetic diversity found in Scandinavia at the time of the Vikings. Ashot Margaryan, a lecturer at the University of Copenhagen, who co-authored the study, told news agency AFP that they had found the seaborne raiders “were not all Scandinavian”. Thanks to migration from southern and eastern Europe, he said, “Viking Scandinavia had more dark-haired people than present-day Scandinavia.” The researchers analysed 442 bone fragments from between the eighth and 12th centuries from all over Europe.

October/November 2020 71


THE KNOWLEDGE

New in… BOOKS

eastern rivalry

power play

The Last Kings of Shanghai by Jonathan Kaufman (Little Brown, £20, hardback) This tells the story of two Jewish families, the Sassoons and the Kadoories. Both are from Baghdad and both, unfeasibly, played a leading role in China’s emergence into the modern era. Dominating in both Shanghai and Hong Kong, they dipped their toes into business and politics for more than 175 years, profiting from the Opium Wars; surviving Japanese occupation; courting Chinese leader Chiang Kai-shek; and nearly losing everything when the Communists swept to power. And of course they were ferocious rivals. It’s also the story of how economic power shifted from Shanghai to Hong Kong, as the human capital migrated.

The Powerful and the Damned: Private Diaries in Turbulent Times by Lionel Barber (WH Allen, £25, hardback) The former FT Editor’s memoir from his 15 years in the hot seat, this spans 2005 to 2020, the financial crisis, Brexit, the tech boom and other global developments. It promises a ‘no holds barred’ account of meetings with international leaders including Donald Trump, Vladimir Putin, Tony Blair and Mohammed bin Salman, including private exchanges that took place off the record. The undercurrent to what’s taking place on the world stage is the media’s fight for survival in an era when the internet was destroying print media and fake news put the very truth into question.

lighting the way

THE weAKEST LINK

On Fire: The Burning Case for a Green New Deal by Naomi Klein (Penguin, £10.99, paperback) The latest blast from the author of No Logo: Taking Aim at the Brand Bullies, Klein has turned her sights to saving the planet. Her argument is that America – and the world at large – needs a new deal of Rooseveltian proportions, but this time focused squarely on greening the economy and combating climate change. It’s not her idea – the Green New Deal has powerful momentum behind it in US politics – but Klein puts the case with force and passion, reporting from the Great Barrier Reef, Puerto Rico after the hurricane, and the smokefilled skies of the north-western states, among others, linking climate to issues ranging from white supremacy to the building of walls.

The Wake-Up Call: Why the Pandemic has Exposed the Weakness of the West – and How to Fix it by John Micklethwait and Adrian Wooldridge (Short Books, £9.99, paperback). You’d struggle to find a more pressing topic right now; the Covid pandemic may have started in China but its damage has undoubtedly been wreaked more heavily in Europe and North America, and in the eyes of the authors, it has accelerated the shift of power from West to East. While the West has been bogged down in internal conflicts and infighting over the past decade or two, they assert, China, Korea, Singapore, Taiwan and other Asian countries were making great strides in terms of technology, economics and political leadership. The solution, they say, lies in three key steps: modernisation; hiring talent into public service; and reinforcing what the state is best at.

72 October/November 2020

www.blglobal.co.uk


The Knowledge

In numbers: Lithium RESOURCES

3

The atomic number of lithium. It is the third element in the periodic table Source: Royal Society of Chemistry

European Research Area hubs The EU is to revamp the European Research Area with a network of hubs that will boost collaboration between researchers in the EU. Better coordination of EU, national and regional policies will allow researchers to move more easily in the EU, access the best infrastructure and help develop their career. ec.europa.eu/commission/presscorner/detail/en/ip_20_1749

65

The estimated percentage of worldwide lithium production used for rechargeable batteries Source: US Geological Survey

Reimagine with Eric Schmidt In this podcast, former Google CEO Schmidt dives into the future of society post-Covid, asking world leaders how we can mobilise people and technology to build a brighter future. In the first episode, he talks to UN Secretary General António Guterres about the state of the world and the need to rethink US-China relations, education and equality. www.reimaginepod.org

77,000

Global 2019 production of lithium, in metric tons – up from 28,000 in 2010

Source: Statista

The Plant Based Business Podcast Created by London start-up Vevolution, this digital platform offers a hub for the plant-based business community, in partnership with entrepreneur Loui Blake. The podcast is for anyone interested in the vegan economy. Each episode focuses on a plant-based entrepreneur to explore what it takes to build a serious business in this niche economy. Guests in the first series include the founders of Form, Plenish, Moving Mountains, NIX+KIX, Spicebox and Jarr Kombucha. www.vevolution.co/podcast

QuickBooks Commerce Intuit has launched QuickBooks Commerce, which allows product-based small businesses to consolidate their sales channels into one hub and effectively run their own ecommerce operation. Businesses can access and integrate sales channels, manage orders, sync inventory and analyse profitability. This is an open platform, so small businesses can integrate existing channels while expanding to new ones – all within QuickBooks. Initial collaborations include Amazon, ShopKeep and Squarespace. quickbooks.intuit.com/quickbooks-commerce

www.blglobal.co.uk

21 million Estimated resources of lithium in Bolivia, in tons – the world’s largest Source: US Geological Survey

826,000 Capital raised in pounds sterling by Cornish Lithium in July 2020 to continue exploration for lithium in Cornwall Source: Proactive

October/November 2020 73


THE KNOWLEDGE

How to…

...avoid making redundancies Your business is struggling with the ongoing effects of Covid-19 and, as government support schemes end, it may seem the obvious step to make cuts to your workforce. But your people are your most valuable asset – and laying them off will cause inevitable harm to them and their families. So are there other things you could do first?

CONSULT YOUR WORKFORCE In the UK, if a company is planning to make more than 20 employees redundant, there’s a statutory obligation to consult staff representatives. But you should do it anyway. At the least, they can tell you how they would like the job cuts to be made, and it will be easier to show that you have been fair to all staff. At best, they may have viable ideas you haven’t thought of about how to avoid redundancies.

FREEZE EXTERNAL RECRUITMENT

“Career breaks or sabbaticals might also be a way to avoid some redundancies, if you make these available on favourable terms”

“Where possible, aim to avoid replacing employees who exit the business. Consider whether you can fill vacancies by redistributing work among existing staff or by accepting internal applicants, before advertising externally,” says Moira Campbell, a Senior Associate at law firm Kingsley Napley.

RETRAIN AND REDEPLOY You may find yourself with too many people in one part of your business, but not enough in other roles – perhaps even due to the way that Covid-19 has impacted your operations. “For example, many retail outlets are finding that their online offering is now being stretched and therefore

74 October/November 2020

may utilise redeployed staff,” points out Norton Rose Fulbright. Retraining people for the vacancies you have would avoid job cuts.

OFFER VOLUNTARY REDUNDANCY David Roath, Partner at law firm Paris Smith, says that as a result of lockdown, some employees “might not actually want to come back”. He adds: “If you offer employees voluntary redundancy, it gives these people the chance to move on quietly, professionally and amicably.” Career breaks or sabbaticals might also be a way to avoid some redundancies. If you make these available on favourable terms, it could be enough to save some jobs until a year or two down the line, when the situation is much better.

SHARE THE PAIN Rather than making some people redundant, you may be able to keep everybody on through a voluntary agreement to cut salaries or by imposing shorter working hours. “You might have two full-time employees who will agree to job share for a period of time to keep both in a job,” says Roath.

REVIEW BENEFITS Scaling back on discretionary bonuses, company cars, season ticket loans, medical benefits or other perks could all help to save money and avoid redundancies as a temporary measure. But be careful – many benefits are contractual.

MAKE SAVINGS ELSEWHERE Are there cost savings you could make throughout your business that would alleviate the need for redundancy without damaging the company’s longterm viability? For example,

www.blglobal.co.uk


The Knowledge

Business leaders on making it to the top

you could postpone building refurbishments or not renew leases on equipment that is no longer deemed quite so essential.

LOOK FOR TEMPORARY MONEY-MAKING IDEAS The classic example of this is the many restaurants, pubs and hospitality companies who found alternative ways to sell to their customers when they weren’t allowed to open. Many hotels offered accommodation to key workers when the public at large wasn’t allowed to leave their homes. In the US, on-demand car cleaning service Spiffy turned instead to sanitizing properties and other facilities, which enabled it to keep on many of its people.

TALK TO YOUR PARTNERS Perhaps as a final resort, see if any of your partnership companies would be willing to take on any of your skilled people until prospects improve. Peter Olszewski, Associate at law firm Boyes Turner, says: “Secondments allow employers to temporarily loan their skilled employees to other businesses who have a need for additional staff. This could be to other businesses in a group of companies, to contacts they work with regularly, or to unconnected companies. Under a secondment arrangement, the employee remains employed by your business, but the expense of the employee’s wages are borne by another company for the period of the secondment.”

www.blglobal.co.uk

Getting ahead Marc Le Cornu, owner of aerial photographer Bam Perspectives and former head of operations, Jersey Fire and Rescue Service How did you start out – a childhood ambition? I joined the Fire and Rescue Service at the age of 20 looking for a career that was varied and rewarding and not based in an office. I enjoyed a fantastic 27 years, which enabled me to meet great people and gain incredible experiences that have helped me form my business.

How hard was it to switch to photography? After growing up in the service, if you’d cut me open it would have said ‘fire and rescue’, so the decision to leave was hard. Prior to leaving in 2019, I had run my business for 18 months and it was becoming very busy – which made the decision easier. I had visualised a successful outcome and worked with a personal coach, but the fear factor of leaving a guaranteed income to be my own boss was hard to overcome. Projecting potential revenue streams and knowing business areas I had yet to break into gave me the courage to make the leap.

Should everyone have more than one career? I’ve been extremely lucky to have two careers I have loved. What I’ve learned is that if you have a true passion and you can make it work as a career, go for it. You’ll never know if you don’t try.

What’s been the hardest part of building your own business? The initial and ongoing financial outlay for equipment to run a techbased company, where drone and camera technology improve all the time, has been a challenge. But the hardest element is the weather. When we have a prolonged period of bad weather, I can lose work or it can cause a huge backlog of shoots.

What gives you the most satisfaction in photography? Receiving professional recognition for my work is a huge honour and capturing images never seen before so fulfilling. I get the most satisfaction from a three-letter word: “Wow!” When I hear people saying that after seeing one of my photos, it makes my day.

What advice would you give someone starting out? Believe in yourself and work harder than others. Success doesn’t drop into your lap. I’ve worked incredibly hard to reach senior levels in the Fire and Rescue Service and to establish a photography business, but I also believe in my ability to create ‘Wow!’ moments.

October/November 2020 75


THE KNOWLEDGE

GURU

WATCH

Faith Popcorn

I

n 1981, when she coined the term ‘cocooning’, Faith Popcorn to home working to robots acting as human companions. probably had no idea that that’s exactly what we’d all be Among her more recent forecasts, she claims to have predicted doing during lockdown almost 40 years later. Popcorn, who gender fluidity, the explosion in marijuana sales, virtual holidays grew up in Shanghai as Faith Plotkin, bills herself as “the original and humans forming relationships with robots – which she thinks futurist” and she’s made a career from predicting trends and will account for 25% of marriages by 2025. innovations, particularly in marketing – blazing a trail for many Popcorn has never been shy about claiming credit for her other self-pronounced trendspotters. visionary powers and has claimed a ‘success rate’ of no less Popcorn worked in advertising in New York than 95%. To continue staying on the ball – the crystal for a few years before founding her consulting ball even – she relies on a ‘TalentBank’ of 10,000 “Popcorn thinks company BrainReserve, which was itself highly visionaries and future thinkers around the world. humans and prescient, in that it anticipated the demand by large This year she’s been offering her perspectives corporations for insights into what was coming about the world post-coronavirus. Technology robots will over the horizon. will help us survive in an era of pandemics, she account for 25% Among her earliest tips, she is said to have says, anticipating holographic teleconferencing and of marriages by advised Kodak to go into digital photography (but avatars that can speak foreign languages. 2025” was ignored), and to have advised Coca-Cola, more Popcorn has also predicted that robots will successfully, to move into bottled water. replace humans in some jobs, as a way to deliver germ‘Cocooning’ was a term coined to describe how people free technology. Covid-19, she said in a recent interview would increasingly resort to staying at home for comfort and “has compressed the future”. It may be 10 years before the safety. She’s also made many predictions over the years that world recovers, and by then technology will have entered “our have been borne out to varying degrees, from home shopping workspace, our lifespace, our bodies and our hearts”.

Breadcrumbing

If you feel like you’re being strung along by your employer or even a potential customer, perhaps you’re being breadcrumbed. The term was supposedly coined on TV show Love Island, with one of the characters being led on in a relationship, but it has much wider usage. In the workplace, it could mean you’re not getting proper feedback, your ideas don’t get much encouragement, and promised promotions fail to materialise. Or maybe a recruiter never quite tells you you’re not getting the job, but keeps you dangling, dropping little breadcrumbs to keep you interested. The motivation may be that while you’re not considered top talent, the employer doesn’t want to go to the hassle of replacing you. In the case of the recruiter, they want to hang on to you just in case they can’t find someone better. If you think you’re being breadcrumbed, ask for honest feedback and a realistic timeline of when your job – or job application – will advance to the next stage.

76 October/November 2020

Avoision When you’re not sure how legal your tax situation is

Al desko Lunch without leaving your workstation

BUZZWORDS…

JARGON BUSTER

ALSO NEW IN THE WORLD OF

www.blglobal.co.uk


The Knowledge

Top tech WHAT’S

HOT

Tech hubs THE UK GOVERNMENT REPORTEDLY WANTS TO USE BREXIT TO CREATE A TECH POWERBASE TO RIVAL SILICON VALLEY. IT’S HARDLY A NEW IDEA; EVERY COUNTRY WOULD LIKE TO BE HOME TO A GOOGLE, AMAZON, APPLE OR MICROSOFT. SO WHERE ARE THE WORLD’S LEADING TECH HUBS AND WHAT DO THEY OFFER?

SILICON VALLEY, CALIFORNIA Not surprisingly, the Santa Clara valley just south of San Francisco is leading the charge with an estimated 225,000 high-tech jobs providing an average salary of $144,000. The roster of companies based there is literally a Who’s Who of tech firms – Apple, Adobe, Google, Cisco, Netflix and Oracle to name just a few. Annual output is $275bn, according to the Bureau of Economic Analysis.

SILICON ROUNDABOUT, LONDON Also known as Tech City, the area around Old Street roundabout in London became one of Europe’s top tech hubs, spawning the likes of DeepMind, Shazam, Revolut and TransferWise before the tech start-up economy percolated out to other parts of the city. The cluster was firmly put on the map by the arrival of Google Campus but 2020 saw a spate of articles on its demise as companies moved out. In fact, London is still one of the biggest magnets for tech-focused venture capital money in Europe – but it no longer revolves around one junction on the corner of Hackney and Islington.

TEL AVIV, ISRAEL Sometimes known as Silicon Wadi, Tel Aviv is the tech epicentre of a country that’s claimed to have more start-ups per capita than any other country and attracts more venture capital per person. It’s particularly strong in cyber security and artificial intelligence. Arguably the most important tech start-up is Waze, which was sold to Google for just shy of $1bn. But there’s also software outfit Monday.com, ride hailing app Gett and online ad company Outbrain.

SHENZHEN, CHINA The city of Shenzhen has been dubbed China’s Silicon Valley and, according to one estimate, has

www.blglobal.co.uk

a staggering 14,000 high-tech firms, accounting for almost half of the city’s GDP. Shenzhen is classified as a special economic zone and has one of the highest standards of living in China. The biggest names to come out of the city so far are mobile maker Huawei – the subject of a bitter wrangle with the US government – and Tencent Holdings, a major investor in everything from social media to gaming. Together they employ over 200,000 people. Two other tech heavyweights, Baidu and Alibaba, have offices in the Shenzhen High-Tech Industrial Park.

BENGALURU, INDIA Commonly known as (you guessed it) India’s Silicon Valley, the country’s biggest high-tech hub has attracted many specialists returning from California to its start-up scene. It’s previously been forecast that the city would have two million high-tech jobs by 2020 and $80bn in IT exports, which could make it the biggest tech hub in the world. Among its most notable start-up successes are iD Fresh Food and Flipkart, India’s biggest online retailer.

STOCKHOLM, SWEDEN Outside the UK, Stockholm is arguably Europe’s most vibrant tech hub and centre for start-ups, edging it over Berlin. Stockholm gave the world Spotify as well as unicorns such as fintech firm iZettle, video game developer King. com (the company behind Candy Crush) and at least a hand in Skype. Among its hottest startups are Sana Labs, which uses AI to deliver education, and Noomi (now known as Nectarine Health), a smart wristband improving life for the elderly. And in Spotify – market capitalisation approaching $50bn and global market leader in the key category of music streaming – Stockholm has something most other budding Silicon Valleys would die for.

TAKING THE PULSE Whoop is a fitness tracker that monitors your heart-rate variations, giving a precise measure of fitness and performance. From £25 a month, www.whoop.com

PITCH PERFECT Flare Calmer earplugs change the shape of your ear to cut out the most annoying frequencies and reduce stress. They can be worn with headphones. £19.99, www.flareaudio. com

October/November 2020 77


Directory To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or carl.methven@blglobal.co.uk

Unleash the Power of Automations with Agile Automations Agile Automations specialise in developing bespoke Robotic Process Automations (RPA) and Robotic Desktop Automations (RDA), putting automation at the very heart of your organisation’s infrastructure. An organisation – where employees perform predictable, rule lead, highvolume, transactional processes and data manipulation – will boost their capabilities, increase accuracy, save money and time with RPA. Our robotics act with outstanding efficiency and accuracy, 24 hours a day, while offering enhanced Risk & Governance controls, sometimes eliminating the need for human engagement altogether. At Agile Automations, we do not use any robotics platforms, which allows us to offer a complete, yet flexible solution, for our clients; each automation is bespoke, designed to their unique individual requirements, without any need to compromise. This results in an enhanced Return on Investment. Just as we have seen robots revolutionise manufacturing – by increasing production rates, improving quality and cost savings – RPA is revolutionising the way we think about business processes. To find out how Agile Automations could automate your business, please do not hesitate to contact our CEO Martin Keelagher Email: rpa@agileautomations.co.uk Website: www.agileautomations.co.uk Twitter: twitter.com/AAutomations LinkedIn: www.linkedin.com/company/ agile-automations/ Facebook: www.facebook.com/ AgileAutomations/

78 October/November 2020

Great learning boosts performance It’s a simple fact of business that people who know how to use their IT systems properly are more productive and happier at work. At ALX Training, it is our mission to ensure that every person we work with can use their essential applications properly, saving time, smoothing processes and creating a more productive workplace. Our trainers are renowned for their product knowledge, and their friendly and energetic attitudes to training help them get the best from every person they teach. Learning starts at induction We are well-known for our range of Microsoft Office courses which includes Office 365, Excel, Outlook, PowerPoint, Word, Project, SharePoint and Visio but our clients know we can do much more.

Independent and Professional We offer a full range of management and fiduciary services to our domestic and international private clients and corporate structures: Family office - bespoke assurance Wealth management - your strategy l Trustee - impartiality with vision l Corporate services - attention to detail l Good governance - a helpful eye l Strategic guidance - controlled ideas l

l

Our team has many years of experience dealing with a wide range of clients in different countries. We look to provide good corporate governance to achieve your aim. Contact us: Tim Cartwright – Director tcartwright@baccata.co.je

Not only do we train on well-known accounting packages such a Xero and QuickBooks but we create courses on bespoke in-house systems. We design unique courses specifically for your organisation, so that your staff learn precisely the information they need to work efficiently and effectively.

Lisette Le Creurer – Associate Director llecreurer@baccata.co.je

We know there’s no better place for your new colleagues to start learning than during their induction programme, so we develop bespoke induction courses that give your new starters all the information they need to hit the ground running. We can even deliver content online, so training can be ongoing and continuous.

www.baccata.co.je Tel: 00 44 1534 870670

Contact us to discover great learning opportunities: T: 01534 873785 E : alex@alxtraining.com www.alxtraining.com

Wendy Warder – Associate Director wwarder@baccata.co.je Áine O’Reilly – Director aoreilly@baccata.co.je

We aim to assist in the provision of personal service to meet your requirements. Ask us. Being vigilant and proactive in the face of a fast changing legal, economic and fiscal landscape. We can provide the focus to your solution. Try us. Regulated by the Jersey Financial Services Commission

www.blglobal.co.uk


www.blglobal.co.uk

Deloitte LLP provides audit, tax, consulting and financial advisory services, bringing world-class capabilities and high-quality services to clients. The company has the broadest and deepest range of skills of any global business advisory organisation and is a world leader in the professional services industry. We advise and deliver for the public sector as well as global and local businesses across every industry. Deloitte employs over 200 professionals in Jersey and Guernsey and is part of Deloitte North South Europe (NSE). The NSE firm brings together 13 countries and over 40,000 talented people, giving the firm the expertise to solve organisations’ most complex challenges and make an impact that matters. John Clacy Partner, Guernsey D: +44 1481 703 210 jclacy@deloitte.co.uk Jo Huxtable Partner, Guernsey D: +44 1481 703 308 jhuxtable@deloitte.co.uk Alex Adam Partner, Guernsey D: +44 1481 703 214 acadam@deloitte.co.uk Martin Rowley Partner | Jersey D: +44 20 7007 7665 mrowley@deloitte.co.uk Siobhan Durcan Partner, Jersey D: +44 1534 82 4274 sdurcan@deloitte.co.uk Theo Brennand Partner, Jersey D: +44 20 7303 0035 tbrennand@deloitte.co.uk www.deloitte.co.uk

www.blglobal.co.uk

Fiduchi is a leading independent financial services company providing solutions to high-net-worth individuals and businesses around the globe. Our independence ensures we have the flexibility to deliver bespoke solutions - that’s what makes us different! Over 25 years, our director-led teams have built long-term valued relationships with clients and their professional advisors, ensuring a pragmatic and trusted approach to their wealth structuring needs. Using the latest technological cloud-based solutions ensures we have the flexibility to deliver timely and innovative solutions that our clients require. Visit our website to see the comprehensive range of services we provide in the following areas: l Private Wealth l Corporate Services l Fund Services l Yacht Services l Employee Services For more information, visit www.fiduchi.com Alternatively, you can contact: Robert Ayliffe - Executive Director Tel: +44 7700 349 750 Heidi Thompson - Executive Director Tel: +44 7797 966 408 Terry Northcott - Executive Director Tel: +44 7797 715 421 Follow us: Dubai / Jersey / London Fiduchi is regulated by the Jersey Financial Services Commission. Full legal, data and regulatory notices are published on our website. Fiduchi® is a registered trademark of Fiduchi Group Limited.

Highvern Trustees is a leading provider of wealth structuring, governance and advisory services to an international client base of high-net worth individuals, their families and businesses. It offers senior industry expertise and client focus, developing long term, sustainable client relationships by working closely with getting to know the individual ambitions of every client with whom it works. Highvern Fund Administrators provides a fully tailored suite of bespoke fund services to investment managers and family offices across private capital markets including renewables, private equity, real estate and debt. Both businesses are built on cutting edge technology, truly independent ownership and a team of experts with the shared vision of responding to clients’ needs in a flexible, timely and constructive manner. To discuss how Highvern can help you or your business achieve your goals please contact: Family Office Naomi Rive, Group Director +44(0)1534 480601 naomirive@highvern.com Private Client Philip Carlton, Client Director +44(0)1534 480610 philipcarlton@highvern.com Corporate Naomi Rive, Group Director +44(0)1534 480601 naomirive@highvern.com Funds Aidan O’Flanagan, Head of Funds +44(0)1534 480690 aidanoflanagan@highvern.com highvern.com Highvern is the registered business name of Highvern Trustees Limited & Highvern Fund Administrators Limited which are regulated by the Jersey Financial Services Commission.

October/November 2020 79


Directory

Intertrust is a global leader in providing techenabled corporate and fund solutions to clients operating and investing in the international business environment. The Company has more than 3,500 employees across 30 jurisdictions in Europe, the Americas, Asia Pacific and the Middle-East. Intertrust delivers high-quality, tailored fund, corporate, capital market and private wealth services to its clients, with a view to building long-term relationships. The Company works with global law firms and accountancy firms, multinational corporations, financial institutions, fund managers, high net worth individuals and family offices. In the Channel Islands we offer a comprehensive range of services to our clients and business partners:-

Julius Baer’s origins date back to 1890. From that time the renowned Swiss private banking group has been dedicated to serving and advising sophisticated private clients and family offices from around the world – going on 125 years now. Julius Baer employs more than 120 personnel in Guernsey and offers a full range of financial services, including discretionary portfolio management, investment advisory, structured products and credit services. There is also a dedicated team that supports the needs of External Asset Managers and the Branch works closely with the wider Julius Baer Group through the provision of administration and support services that are delivered from its booking centre.

Corporate Services Fund Services l Real Estate Services l Capital Markets l Private Wealth l Performance & Reward Management Services

Stephen Burt Branch Manager stephen.burt@juliusbaer.com

We pride ourselves on providing professional, personal and cross-border services to our clients across the globe, enabling businesses to grow sustainably.

Craig Allen Head of Investment Management craig.allen@juliusbaer.com

l l

For further information, please contact Jacob Smed Managing Director, Jersey +44 (0) 1534 504000 jacob.smed@intertrustgroup.com Marie McNeela Managing Director, Guernsey +44 (0) 1481 211275 marie.mcneela@intertrustgroup.com Intertrust Jersey is regulated by the Jersey Financial Services Commission and Intertrust Guernsey is regulated by the Guernsey Financial Services Commission.

Jean-Luc Le Tocq Head of Private Banking jeanluc.letocq@juliusbaer.com

Shaun Kelling Head of External Asset Management shaun.kelling@juliusbaer.com https://www.juliusbaer.com/gg/en/home/ Bank Julius Baer & Co Ltd, Guernsey Branch is licensed in Guernsey to provide banking and investment services and is regulated by the Guernsey Financial Services Commission.

Ogier provides legal advice on BVI, Cayman, Guernsey, Jersey and Luxembourg law. Our network of locations also includes Hong Kong, London, Shanghai and Tokyo. Legal services for the corporate and financial sectors form the core of the business, principally in the areas of banking and finance, corporate, investment funds, dispute resolution, private equity and private wealth. Ogier has strong practices in the areas of employee benefits and incentives, employment law, regulatory, restructuring and insolvency and property. We are a registered listing agent for The International Stock Exchange (TISE, formerly known as The Channel Islands Securities Exchange or CISE) and frequently advise companies listing on other exchanges whether offshore or onshore. We also provide pan-Island legal services for local Channel Islands businesses and individuals. Contact: Guernsey Redwood House St Julian’s Avenue St Peter Port Guernsey GY1 1WA T +44 (0)1481 721672 E gsy@ogier.com Jersey 44 Esplanade St Helier Jersey Channel Islands JE4 9WG T +44 (0)1534 514000 E jsy@ogier.com Website: www.ogier.com

www.intertrustgroup.com

80 October/November 2020

www.blglobal.co.uk


www.blglobal.co.uk To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or carl.methven@blglobal.co.uk

Specialty: Bespoke IT Development & Business Consultancy

Building trust in society and solving important problems

Redcoin – Your Cyber Security is our Priority.

Puritas is an award-winning provider of intuitive software and business solutions for the financial services industry.

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 390 staff in the Channel Islands you work with (or 225,000 people across the PwC global network of member firms), they’ll start by asking the following questions:

Redcoin are a Jersey based IT Security Distributor, providing Cyber Security Solutions, Services and Support across the Channel Islands and UK markets, through our established Reseller Channels.

Specifically designed to meet the increasingly complex accounting, compliance, and reporting needs of our clients, all software features robust audit and control capabilities which can be easily updated to reflect changes in the regulatory environment. Our products include: l PureFunds - a unitized product platform specifically designed to support many different types of asset class and fund structures and help fund administrators and portfolio managers better manage investor activity l P ureClient - an advanced customer due diligence/client management system which will maintain and update client records for any entity or relationship and provides the necessary transparency and look-through reporting that is needed to manage sophisticated structures l P ureManager - a bespoke software package for fund and investment managers which provides for effective control, analysis, reconciliation and reporting of daily trading activity. As well as software development, our services include: l Systems integration and implementation l Programme and project management l Project and business consultancy

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. For further information, please contact: John Roche, Partner, Guernsey Phone: +44 1481 752040 Email: john.roche@pwc.com Karl Hairon, Partner, Jersey Phone: +44 1534 838276 Email: karl.hairon@pwc.com Follow us: @PwC_CI

Our objectives are to deliver guidance, education and support to the Islands businesses, to enhance their protection and understanding of the ever-changing Cyber Security Treat landscape. Our Independent security reviews are designed to give a baseline understanding of the Companies current IT position, supported by an informative and high-level report summarizing areas of strength, areas that can be improved by optimizing existing IT investment, along with key areas for consideration when planning future IT spend. Our technology portfolio provides Industry leading technologies, at an affordable cost, for all sizes and requirements of our Channel Islands clients. We can supply and support local resellers with the implementation of chosen solutions or make unbiased recommendations of other more suitable offerings outside of our portfolio. For more information please visit – www.redcoin.co.uk or email sales@redcoin.co.uk Follow us on Linkedin – Redcoin Limited

www.pwc.com/jg

To find out more how Puritas can help your business. Contact: Mike Feighan - Director Phone: +44 (0) 1534 874100 Email: mike.feighan@puritas.co.uk

www.blglobal.co.uk

October/November 2020 81


Data Xxxxxfocus

ESG comes to the fore The growth of ESG-linked assets by region

Canada

europe Japan

2012 assets

$0.59 TRILLION

2012 assets

$8.8

2012 assets

TRILLION

$0.01 TRILLION

2018 assets

$1.7

TRILLION

2018 assets

$14.1 TRILLION

2012 assets

2018 assets

TRILLION

TRILLION

$2.2

$3.7

2018 assets

$12.0 TRILLION

2012 assets

$0.18 TRILLION

US

2018 assets

$0.7

TRILLION

2012 Assets

TOTAL $13.3 trillion

2018 Asssets

$30.7 trillion

Australia and New zealand

CORONAVIRUS FURTHER FUELS THE GROWTH OF ESG

As our feature starting on page 60 explains, the coronavirus pandemic has sharpened the focus on green, ESG and impact funds – and industry experts believe demand will continue to grow as governments respond to the climate change crisis. However, as data from the latest Credit Suisse Global Investment Returns Yearbook confirms, growth in ESG investment was already surging prior to the pandemic – up globally from $13.3trn in 2012 to $30.7trn in 2018, the most recent data available. Furthermore, since mid-February 2020, the majority of ESG funds have outperformed their benchmarks, with ESG and sustainability themes attracting strong fund inflows. As reported by Morningstar, in the first quarter of 2020, global investors poured a record $45.76bn into funds that invest in keeping with environmental, social and governance practices. As our chart shows, Europe leads the way – with the majority of sustainable funds located there. Source: Credit Suisse Global Investment Returns Yearbook 2020

82 October/November 2020

www.blglobal.co.uk


Corporate | Funds | Capital Markets | Private Client

Promoting and protecting investment worldwide Ocorian is a global leader in corporate and fiduciary services, fund administration and capital markets. Our global network delivers customised, scalable solutions providing the support our clients need: how and where they need it. • • •

Expert teams Trusted partner with flexible solutions Committed to your success

For more information on our services go to www.ocorian.com Bermuda | BVI | Cayman Islands | Guernsey | Hong Kong | Ireland | Isle of Man | Jersey | Luxembourg | Malta Mauritius | Netherlands | Singapore | UAE | UK Plus representative office in the US

Information about our regulators is available online


Are you preparing for the ‘new world’ of private equity?

As a leading provider of tech-enabled fund services, we’re experienced in helping private equity managers overcome their operational challenges. We work with 80% of the Top 50 PEI firms across our network of over 30 countries. Our local, expert knowledge and innovative technology combine to deliver a compelling proposition. By partnering with clients we transform and unleash the potential of their operating model. We deliver the power they need to succeed.

Private Capital Fund Administration • SPV and Loan Administration Middle Office and Shadow Accounting • Technology • AIFM ManCo AIFMD Depositary • Regulatory and Compliance INTERTRUSTGROUP.COM Regulatory information is detailed on intertrustgroup.com/legalnotice