BL Magazine, Issue 74, August/September/October 2021

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The funds Edition • ESg reporting • mega-funds • shadow banking • private lenders • wine investment • outsourcing



Funding the future Can funds and finance save the planet?


Funds soar WHILE THE PAST 18 months have seen the financial sector grappling with the double impact of Brexit and Covid, resulting in turbulent markets and a global recession, one sector has stayed steadfastly solid. In fact, the funds sector is positively booming. The first half of 2021 was the strongest first-half performance in a calendar year for the hedge fund sector since 1999, for example. More broadly, funds in general have performed remarkably well across domiciles, with US funds returning an average of 7.9% in the first seven months of the year and European, Asian and African funds returning 6.8%, according to Morningstar. Meanwhile, Guernsey and Jersey specifically remain the second and third largest domiciles for private equity and venture capital funds in Europe (setting aside unclassified funds), according to analyst Preqin. For the funds sector – the good times are rolling on. In this dedicated funds edition of Businesslife, we explore the driving forces behind that performance, as well as identifying and addressing some of the challenges and changes facing the sector in the coming years.

MEGA-DEALS RISE One part of the sector that is seeing particularly strong growth right now is that of mega-funds. With the share prices of many major companies – including huge household names such as Morrisons and Asda – eroded by a turbulent few years, mega-funds have been circling, ready to ship these high-street giants from public to private ownership. A startling statistic highlighted in our feature (page 46) is that the number of listed companies in the UK has fallen by around 40% compared with 2008. But it’s not just the mega-funds that are winning big. As our article also finds, activity in the market is also creating opportunities for other, smaller, players too.

PRIVATE FINANCE On the subject of corporate finance and ownership, another area that is currently flying high is direct private lending. With corporate banks seemingly reluctant to lend to anyone but big blue-chip firms right now, and businesses seeking greater access to financial support in the wake of the Covid pandemic, direct private lending is stepping up to seize the opportunities on offer. As our article on page 58 highlights, direct lending

funds represent 53% of the funds in the market and 56% of the capital being targeted in private debt, while the proportion of investors targeting private direct lending has risen from 38% in Q2 2020 to 68% a year later. Of course, it’s rare these days that discussions about huge profits and success in the financial sector can be had without the topic of environmental responsibility being addressed. Therefore in this issue of Businesslife (page 52) – and with the COP26 meeting of environmental minds set to take place in November – we look at the role the finance sector has to play in helping the world meet its emissions targets. The article certainly provides some food for thought, not only in terms of how the transition to carbon-neutral can be funded, but also how the sector must reduce its own impact. After all, UK banks and asset managers were responsible for financing 805 million tonnes of CO2 in 2019 – 1.8 times the UK’s net annual emissions, according to a recent Greenpeace report.

POWER BEHIND THE SCENES Among the things contributing to the thriving funds sector, not least in Jersey and Guernsey, are its flexibility and adaptability. That is powered by a strong fund administration sector – and our article starting on page 34 explores how, as the funds landscape becomes more and more complex, fund managers are outsourcing increasingly large chunks of their operations to bespoke fund administrators. As one industry figure tells us: “[Moving forward], we may even see new services being outsourced, such as ‘routine trades’ and ESG reporting.” Also in this issue, we take a look at the role of shadow banking in the financial ecosystem – in the wake of the collapse of Greensill Capital. While the case has seen criticism of Greensill’s activities, and questions around the role of such ‘alternative’ lenders – operating as they do outside the regulations faced by mainstream players – our article finds there is a growing appetite for new routes to finance. Enjoy the issue. n

For the funds sector – the good times are rolling on

Jon Watkins is Editor-in-Chief of Businesslife

August - October 2021 3

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INSIDE Wading through the complexities of IFPR



The Financial Conduct Authority’s new UK Investment Firms Prudential Regime (IFPR) will mean significant changes from 1 January 2022

here is no doubt that the introduction of the IFPR will present a more streamlined and simplified prudential regulation regime for investment firms in the UK. Held in a single MIFIDPRU rulebook, the IFPR will have an impact on any firm able to conduct MiFID business from 1 January 2022. The extent to which it will impact you, however, will depend on whether you fall in the category of a small and non-interconnected firm (SNI) or not (non-SNI) – which depends on your activities and the scale of those activities. Generally, IFPR will apply in relation to the MiFID business that firms conduct. For example, if you are an alternative investment fund manager (AIFM) operating as a collective portfolio management investment (CPMI) firm that has permission to conduct MiFID activities, the IFPR will still apply. A CPMI firm would still be subject to Chapter 11 of the IPRU-INV (Interim Prudential Sourcebook for Investment Businesses) as well as relevant parts of the MIFIDPRU rules. One of the key changes to the regime is that base requirements will rise to £75,000, £150,000 and £750,000 depending on firm type, with variable requirements being either a quarter of fixed annual costs or a sum of the K-factors. K-factors are a mix of activity and exposurebased requirements that non-SNI firms need to calculate that capture potential harm in a firm’s business activities. They will apply to firms that hold client money and/or assets, deal on their own account or enter into a transaction in their own name as agent for the client. For investment firms in a group structure with a UK parent or subsidiary, the parent company – regulated or not – will need to meet certain consolidated regulatory requirements in relation to capital, capital requirements, concentration risk, liquidity, disclosure and reporting. Regulated firms will also need to meet capital requirements on an ongoing basis.

MONITORING HARMS Notably, ICARA replaces the Internal Capital Adequacy Assessment Process (ICAAP) and is seen by the FCA to be the centrepiece of a firm’s risk management process. It will be a continuous process through which firms should: identify and monitor harms; outline how harm is mitigated; perform business model assessment, planning and forecasting; outline recovery plans and triggers; and outline wind-down planning. The result of the ICARA should be the determination of a firm’s liquid asset threshold and own funds threshold requirements – to ensure that the firm can remain viable and address harm from its activities, as well as enabling an orderly wind-down. The IFPR will also bring about a change in reporting obligations. A single suite of reporting forms will be introduced and all firms will have a quarterly reporting obligation in relation to own funds, liquid assets, SNI threshold monitoring, balance sheet and income statements. Annual returns will be required on remuneration and ICARA. Firms that deal on own account will need to report quarterly on concentration risk. Certain FSA0xx returns and common reporting (COREP) returns will be retired. CPMI firms will also still be bound by the AIFMD remuneration code for its material risk takers. IFPR will introduce basic remuneration requirements for all staff involved in MiFID activities. Non-SNI firms will be subject to standard remuneration requirements, with the largest population being subject to enhanced remuneration requirements. There is a lot to digest, and notable changes to get to grips with, but as 1 January 2022 edges ever closer, the time to act is now. As that implementation date approaches, it is important to carry out an assessment that undertakes a gap analysis of a firm’s systems and controls against the new requirements, identifying any remediation actions to be undertaken. Failure to do so may have a hard-hitting impact when January comes around. n

12 August - October 2021



Businesslife is published quarterly by Chameleon Group, with special editions covering the City, Middle East and Asia +44 1534 615886

Managing Director, Newgate Compliance, an Ocorian company


An important point to note is that investment firms will no longer be able to use tier 3 capital, and will only be able to use tier 2 capital up to a maximum of 25% of a firm’s capital requirement. Furthermore, the IFPR also introduces new ‘basic liquid asset requirements’, which require firms to maintain a minimum of one-third of their fixed overhead requirement in core liquid assets. If their liquid assets fall below this, the FCA will expect the firm to wind down the business. Through the Internal Capital and Risk Assessment (ICARA) process, firms will also need to determine their liquid asset threshold requirement, which informs the FCA of the additional liquid assets they need to fund their ongoing business and ensure they can wind down in an orderly manner.

FCA Image: Shutterstock/ Ascannio





6 News

26 funds landscape

52 climate change

Recent developments in Jersey and Guernsey

10 Appointments

The Channel Islands’ funds sector is thriving despite the impact of the pandemic

Senior job moves across the Channel Islands

34 fund management

Alarms are sounding over the world’s net-zero targets – so how will the carbon transition be financed?

18 interview Marie McNeela, MD for Intertrust in Guernsey, tells us about her plans to grow the company’s funds business

As managers outsource parts of their ever more complex operations, we assess the pros and cons of outsourcing

58 corporate financing

40 governance

What does the collapse of Greensill Capital tell us about the future of shadow banking?

Fund managers are under mounting pressure to prove their ESG worth, so what reporting tools are available?


46 private equity


As mega-fund deals gather pace, there are opportunities for smaller players too


Matthew Hazell, MD of Ocorian business Newgate Compliance, on the Financial Conduct Authority’s new UK Investment Firms Prudential Regime

Direct private lending looks set for growth in the post-Covid world

62 alternative finance


66 passion investing

The knowledge

Although the world of wine remains an attractive investment prospect, those buying into it must keep a clear head about the risks

Space in numbers, Bitcoin’s carbon footprint, how to get a pay rise, and campaigner Gina Miller in profile

contributors The BL Global Discussion Forum


Follow us @blglobalnews Office: 7 Castle Street, St Helier, Jersey, JE2 3BT © 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.

David assesses how well equipped fund managers are for an increasingly complex and active funds sector of the future, and finds that increased outsourcing is likely to become the norm.


James looks at a controversial form of ‘alternative’ lending, shadow banking, and whether the Greensill scandal might result in greater regulation of non-mainstream banking firms.


Sophie raises a glass to an age-old passion investment – wine – which is once again growing in popularity, as people look to take full advantage of tax breaks and a low-risk market.


With corporate banks seemingly reluctant to lend to anyone outside the blue-chip firms, Alex explores how the direct private lending sector is stepping in to fill the void.

august - october 2021 5

in the NEWS The board brings together businesses, legislators and other stakeholders in monthly meetings to act as an official conduit between the industry and government. It provides input to government on commercial industry development issues, with a view to further regulation in the British Isles. Board members so far include medical cannabis cultivation business Northern Leaf, production company Cicada and cannabinoids group Tenacious Labs. The board has been set

up with support from the government to represent all interested parties in the emerging sector, from growers to financial services. It will promote Jersey worldwide as a financial centre for the sector. The board has already engaged with the Government of Jersey to update legislation, providing input to recent updates to the Proceeds of Crime (Jersey) Law 1999. On 30 June, the States Assembly passed an amendment which, for the first time, allows businesses CANNABIS BODY SET UP on the island to have direct A cannabis trade organisation or indirect involvement for Jersey – the Cannabis with legal cannabis sectors Services Advisory Board – overseas without it or its has been launched to help directors falling foul of the shape the next phase of the Proceeds of Crime legislation regulated cannabis sector in – unlike elsewhere across the the British Isles. UK or US.

6 august - october 2021

Done Deals Bedell Cristin has provided Jersey legal advice on Constellation Automotive’s underwritten financing arrangements. The financings closed on 28 July and will be partly used to refinance existing debt. The Bedell Cristin team was led by Jersey Partner Alasdair Hunter and included Senior Associate Malcolm Ellis, Associate Louise Ridgway and Legal Assistant Donna Watts. Ogier has advised PizzaExpress on the Jersey law aspects of its offering of £335m of bonds and entry into its new super senior revolving credit facility. The proceeds from the new bonds were used to refinance the group’s existing debt, representing a significant milestone for the restaurant chain, which has 363 sites across the UK, Ireland and the Channel Islands. The Ogier team was led by Partner Bruce MacNeil, with assistance from Managing Associate James Lydeard and Associate Sophie Treanor. The Jersey office of Collas Crill has assisted administrator FRP’s UK restructuring advisory team as part of the sale of the Debenhams brand and assets by advising on the creditors’ winding up of two connected Jersey companies. Under the £55m cash transaction, Boohoo Group acquires the global rights to Debenhams’ brands and websites. The Collas Crill team involved included Group Partners Simon Hurry and Mike Williams and Associate Caitlin Bruce. A cross-jurisdictional Carey Olsen team has advised West China Cement on its issuance of $600m 4.95% senior notes due 2026, which have been listed on the Stock Exchange of Hong Kong. The company, incorporated in Jersey, will use the proceeds for refinancing, replenishing working capital and general corporate purposes. Carey Olsen, working as an integrated team across its Hong Kong and Jersey offices, acted as British Virgin Islands and Jersey legal advisers to the company. The team comprised Partners Simon Marks (Jersey) and James Webb (Hong Kong) with support from Counsel Matthew Ecobichon (Jersey) and Daniel Moore (Hong Kong) and Associate Lucy Robbins (Jersey). Aztec Group has supported northern European private equity investment firm FSN Capital on the launch of its latest midmarket fund, FSN Capital VI. The fund was oversubscribed, closing above its original hard cap with commitments of €1.8bn. It will continue FSN Capital’s investment strategy of targeting control buyout investments of mid-sized companies in northern Europe. Aztec Group supported the establishment of Fund VI and will continue to provide ongoing administration and accounting services to the fund and its investment structures from its Jersey office. n

TISE TO ATTRACT SPACS The International Stock Exchange has revised its Listing Rules to attract special-purpose acquisition companies (SPACs). SPACs activity has surged in 2021, especially in the US, and the UK has launched a SPAC listing regime. TISE introduced rules for listing SPACs in 2015 and has revised them to align with trends in the US and Europe, and where there may be an institutional investor base. The key changes are: • Dual share class structures (and founder shares) are permitted, subject to certain provisions and disclosure requirements. • Issuers seeking to complete qualifying acquisitions must give shareholders the option to redeem or otherwise acquire shares from the shareholders for a pre-determined value or price per share. • A SPAC issuer may not need to obtain prior shareholder approval for the completion of a qualifying acquisition, subject to certain exemption provisions. • Any proposed qualifying acquisition must be announced to the market within three business days. • A SPAC issuer need not suspend dealings in its securities on an announcement being made in relation to a proposed qualifying acquisition.

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MERGERS AND ACQUISITIONS Ocorian is to acquire Trust Corporation International, subject to regulatory approval, allowing it to improve its service to private clients and international corporates in Guernsey. All Trust Corporation staff will continue in their roles, and the timing of any rebrand is yet to be determined. Alternative assets analytics provider Preqin has acquired Colmore, a private markets technology, services and administration business. Colmore will be fully owned by Preqin but run as a standalone business, with CEO Ben Cook staying in post. Following the acquisition, Sanne sold its minority shareholding in Colmore. Sanne is in advanced discussions with Apex over a potential £1.5bn takeover. Apex’s offer is 920 pence per Sanne share in cash. Having considered the offer with its financial advisers, Sanne has indicated it will recommend the offer. Apex must confirm its intention to bid for Sanne by 5pm on 30 August. Meanwhile, Sanne is to acquire the European fund administration business of PraxisIFM Group for £54m. The deal is expected to complete during Q4. Sanne said the acquisition boosts its presence in the European listed funds administration sector, especially for the UK market, while adding to its footprint in Guernsey. The deal adds more than 80 staff and £25bn of assets under administration to Sanne. MJ Hudson Group has acquired Guernsey-based Saffery Champness Fund Services (SCFS) for a cash consideration of £2.8m. Completion of the transaction, subject to approval by the Guernsey Financial Services Commission, is expected to double MJ Hudson’s fund administration revenues in Guernsey, with a 50% increase in local staff. Seven SCFS staff will transfer to MJ Hudson and the business will be managed by MJ Hudson’s outsourcing division. IQ-EQ has acquired Davy Global Fund Management (DGFM), part of Irish financial services business Davy Group, which serves an international client base from its offices in Dublin, London and Luxembourg. The transaction, subject to regulatory approval, is set to complete by the end of 2021, when DGFM will rebrand to IQ-EQ. The combined business will offer corporate administration, fund administration, fund management and portfolio management services, and employ 110 staff in Dublin and Shannon. n

8 august - october 2021

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JERSEY ECONOMIC UPDATE Jersey’s Fiscal Policy Panel has revised its forecast for Jersey upward, with the economy now expected to grow 2.2% this year, 2.8% in 2022 and 3.3% in 2023. This follows an expected fall of more than 9% in 2020, the sharpest economic contraction on record. A large element of the contraction in gross value added is the impact of low interest rates on the profitability of Jersey’s banking sector. With interest rates likely to grow very gradually, Jersey’s economic output is not expected to return to pre-pandemic levels in the near future. The Panel has also updated its inflation forecast and expects a temporary period of high inflation to gradually fall back in 2022. TRUST COMPANIES RANKED Chambers and Partners has ranked trust companies in the Channel Islands in its latest High Net Worth Guide. In Guernsey this includes: • Aquitaine Group • Butterfield Trust (Guernsey) • IQ-EQ • New Street Management • Oak Trust (Guernsey) • PraxisIFM • Saffery Champness Registered Fiduciaries • Sequent (Guernsey) • Trust Corporation International • Zedra. Meanwhile, in Jersey, ranked trust companies include: • Hawksford Group • Intertrust • IQ-EQ • JTC Group • Oak Trust (Jersey) • R&H Trust Co (Jersey) • RBC Wealth Management • Stonehage Fleming.

UK ECONOMY SURGING The UK’s economic growth prospects have been upgraded in the latest EY ITEM Club forecast. With Covid-19 restrictions lifting and vaccine roll-out progressing, the EY ITEM Club Summer Forecast said the economy will grow 7.6% this year rather than the 6.8% predicted in April. The economy is set to return to its pre-pandemic peak by the end of 2021 – two quarters sooner than expected in April. Growth of 6.5% is expected in 2022, followed by growth of 2.1% in 2023 and 1.6% in 2024. Quarter-on-quarter growth in Q2 2021 is expected to be 5.1%, followed by growth of 3.2% in Q3 and 1.9% in Q4. EY Channel Islands Managing Partner Andrew Dann (pictured) said: “The Channel Islands financial services sector has remained resilient. After 18 months of disruption, businesses are beginning to have space to plan ahead and invest with confidence.” According to EY, the UK’s improving growth forecast is being driven by a strong bounceback in consumer spending. The delay in lifting Covid-19 restrictions until 19 July is unlikely to have had a big impact on economic growth, it says. With June seeing a faster than expected rise in prices, the EY ITEM Club forecasts consumer price inflation of 3.5% by the end of 2021 before falling again in 2022. Consumer spending is set to rise 4.8% in 2021 and 7.4% in 2022, the highest annual rise since 1945. n

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Appointments Ocorian has promoted Charlotte Cruickshank to the position of Global Head of Fund Onboarding and Solutions, based in Jersey. Charlotte joined Ocorian as Executive Director, Funds, in 2018. She has an extensive background in fund administration and accounting, working with clients to define their requirements and build tailored administration solutions. Prior to joining Ocorian, she spent five years with Langham Hall Fund Management, following senior roles with Mourant and Ipes. Charlotte reports to Ocorian’s Global Head of Service Lines and Business Development Mike Hughes.

Deloitte Partner Adam Cichocki has been appointed to lead the firm’s assurance and advisory teams across Jersey, Guernsey, the Isle of Man and Gibraltar, following Deloitte’s decision to create a single audit, assurance and advisory offering across the four jurisdictions. Adam has relocated to Jersey from Gibraltar to take up the role. He has almost 20 years of professional services experience. He has spent 17 years with Deloitte. After almost six years with the firm at the start of his career, he returned in 2010 to take up management roles in London, and has spent the past three years as Managing Partner of the Gibraltar office.

Suntera Global has named Ryan Taylor as Head of Funds for Jersey, responsible for developing and managing the new fund administration team and growing its client base. Ryan has worked in Jersey’s fund, trust and fiduciary sector since 2005. He has expertise in fund administration, accounting and governance, as well as operational and systems experience. Before joining Suntera, Ryan spent more than four years with Zedra, latterly as a Director of Fund Services in Jersey. Prior to this, he led the funds and corporate services team for Vistra and has also acted as a Director on a number of corporate and fund client boards.

Tristan Maultby and Sarah Ash (pictured) have been promoted to Group Partner at Walkers. Tristan, part of the Jersey banking and finance team, advises borrowers and lenders on real estate issues, including Islamic financing and enforcement matters. He has practised in Jersey since 2013, having worked at Norton Rose Fulbright in London. Sarah, who leads Walkers’ Guernsey employment law team, advises on employment law, particularly discrimination matters and issues in regulated financial services businesses. She has been in private practice since 2003 and joined Walkers in 2018 as Senior Counsel.

IQ-EQ has appointed Andy Mallet as Jersey Head of Operations. Andy joins from Apex Group, bringing with him over 15 years’ experience in Jersey financial services. This has included senior roles with Pentera Trust, JTC and Link Group. He has extensive experience across business transformation and improvement, technology enablement and digitisation, as well as risk management and corporate governance. In his new role, Andy will help steer IQ-EQ Jersey’s operations and drive business improvement initiatives, process efficiencies and technology enablement.

Investec Bank (Channel Islands) has appointed Andy Smith as Manager of its Jersey branch. Andy brings to the new position more than 35 years’ experience in banking and lending. He joined Investec in 2014, having spent the previous 11 years with RBS International in the Isle of Man and Jersey. Prior to this, Andy held a range of management roles with NatWest Life and NatWest Offshore over an eight-year period. In addition to his new responsibilities at Investec, Andy will retain his role as Head of Trust and Corporate Banking covering Guernsey, Jersey and the Isle of Man.

12 march/april 2017


Brooks Macdonald International has promoted James Hollowell to Head of Guernsey, focusing on building the firm’s profile in the Channel Islands and the UK. James has been with the firm for the past 10 years, most recently serving as Business Development Director, but he has more than 25 years’ experience in international financial services across the offshore banking and investment management sectors. Before joining Brooks Macdonald, James was Business Development Director at specialist insurance broker Baronsmead Partners, following five years with the Bank of Ireland.

Barclays has appointed Paul Savery (pictured) to the new role of Head of Crown Dependencies, to allow the bank to bring together the leadership of Barclays across the Crown Dependencies and drive consistency across all business segments. Having worked for Barclays Private Bank since 2016, Paul will retain his role as Jersey Country Head for the bank. He has also served as Deputy Chairman of Jersey Finance since 2013. In addition, Adele Bohlen has become Isle of Man Country Head, relocating from St Helier. Adele has been with Barclays in Jersey since 2016 and remains Head of Fiduciaries for the bank.

The Institute of Directors Guernsey Branch has appointed Bob Moore as Vice Chair. Bob, an IoD member for more than 20 years, has a 40-year career in financial services. From 1979 to 1997, he worked for Lloyds Bank in South America, the US, UK and Luxembourg. Moving to Guernsey, Bob then led the Butterfield Group’s operations on the island, becoming Executive Vice President and Head of Group Trust in June 2011. He has also served as a Commissioner of the Guernsey Financial Services Commission, a chair of the Guernsey International Business Association and the Association of Guernsey Banks, and a Director of Guernsey Finance.

Collas Crill has appointed Fritha Ford to the position of Of Counsel based in Jersey. Fritha joins the law firm after five years with Walkers as a Senior Associate. Prior to that she spent seven years as an Associate at Mourant. Fritha is an experienced litigator who has specialised in contentious and semicontentious trust work, often with a crossborder element. She has more than a decade’s experience working offshore, advising trustees, beneficiaries and protectors. Serving as a Jersey Advocate since 2012, Fritha was called to the Bar of England and Wales in 2008.

Kleinwort Hambros has named Phil McIlwraith (pictured) as CEO of CI Bank. Phil has 31 years’ experience with Kleinwort Hambros, having served as CEO and Group Head of Trust and Fiduciary Services for SG Kleinwort Hambros Trust Company for the past three years. David Bromley takes over Phil’s previous role, having been Group Chief Risk Officer for the bank, based in Guernsey, since 2018. And Christophe Huchet, who has been CEO of Kleinwort Hambros Bank CI for the past four years, is now Group Chief Risk Officer of Kleinwort Hambros Group in London.

Sionic has appointed Scott Lee as a Partner in the firm’s wealth management and private banking practice. He also becomes part of the leadership team for Sionic’s Jersey practice. Scott joins the firm from KPMG, where he has served as Investment Management Director in the wealth and asset management practice for the past three years. In addition, he has held senior roles at Citigroup, Genpact, Aviva and Aegon Asset Management, and in 2003 founded wealth and asset management consultancy Assiso, which he led for nine years. march/april 2017 13

Wading through the complexities of IFPR

Managing Director, Newgate Compliance, an Ocorian company

The Financial Conduct Authority’s new UK Investment Firms Prudential Regime (IFPR) will mean significant changes from 1 January 2022


here is no doubt that the introduction of the IFPR will present a more streamlined and simplified prudential regulation regime for investment firms in the UK. Held in a single MIFIDPRU rulebook, the IFPR will have an impact on any firm able to conduct MiFID business from 1 January 2022. The extent to which it will impact you, however, will depend on whether you fall in the category of a small and non-interconnected firm (SNI) or not (non-SNI) – which depends on your activities and the scale of those activities. Generally, IFPR will apply in relation to the MiFID business that firms conduct. For example, if you are an alternative investment fund manager (AIFM) operating as a collective portfolio management investment (CPMI) firm that has permission to conduct MiFID activities, the IFPR will still apply. A CPMI firm would still be subject to Chapter 11 of the IPRU-INV (Interim Prudential Sourcebook for Investment Businesses) as well as relevant parts of the MIFIDPRU rules. One of the key changes to the regime is that base requirements will rise to £75,000, £150,000 and £750,000 depending on firm type, with variable requirements being either a quarter of fixed annual costs or a sum of the K-factors. K-factors are a mix of activity and exposurebased requirements that non-SNI firms need to calculate that capture potential harm in a firm’s business activities. They will apply to firms that hold client money and/or assets, deal on their own account or enter into a transaction in their own name as agent for the client. For investment firms in a group structure with a UK parent or subsidiary, the parent company – regulated or not – will need to meet certain consolidated regulatory requirements in relation to capital, capital requirements, concentration risk, liquidity, disclosure and reporting. Regulated firms will also need to meet capital requirements on an ongoing basis.

12 August - October 2021

MONITORING HARMS Notably, ICARA replaces the Internal Capital Adequacy Assessment Process (ICAAP) and is seen by the FCA to be the centrepiece of a firm’s risk management process. It will be a continuous process through which firms should: identify and monitor harms; outline how harm is mitigated; perform business model assessment, planning and forecasting; outline recovery plans and triggers; and outline wind-down planning. The result of the ICARA should be the determination of a firm’s liquid asset threshold and own funds threshold requirements – to ensure that the firm can remain viable and address harm from its activities, as well as enabling an orderly wind-down. The IFPR will also bring about a change in reporting obligations. A single suite of reporting forms will be introduced and all firms will have a quarterly reporting obligation in relation to own funds, liquid assets, SNI threshold monitoring, balance sheet and income statements. Annual returns will be required on remuneration and ICARA. Firms that deal on own account will need to report quarterly on concentration risk. Certain FSA0xx returns and common reporting (COREP) returns will be retired. CPMI firms will also still be bound by the AIFMD remuneration code for its material risk takers. IFPR will introduce basic remuneration requirements for all staff involved in MiFID activities. Non-SNI firms will be subject to standard remuneration requirements, with the largest population being subject to enhanced remuneration requirements. There is a lot to digest, and notable changes to get to grips with, but as 1 January 2022 edges ever closer, the time to act is now. As that implementation date approaches, it is important to carry out an assessment that undertakes a gap analysis of a firm’s systems and controls against the new requirements, identifying any remediation actions to be undertaken. Failure to do so may have a hard-hitting impact when January comes around. n

FCA Image: Shutterstock/ Ascannio



An important point to note is that investment firms will no longer be able to use tier 3 capital, and will only be able to use tier 2 capital up to a maximum of 25% of a firm’s capital requirement. Furthermore, the IFPR also introduces new ‘basic liquid asset requirements’, which require firms to maintain a minimum of one-third of their fixed overhead requirement in core liquid assets. If their liquid assets fall below this, the FCA will expect the firm to wind down the business. Through the Internal Capital and Risk Assessment (ICARA) process, firms will also need to determine their liquid asset threshold requirement, which informs the FCA of the additional liquid assets they need to fund their ongoing business and ensure they can wind down in an orderly manner.

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“We may even see new services being outsourced, such as ‘routine trades’ and ESG reporting” Funds outsourcing



The growth in global alternative finance volumes in 2020 – signalling the rise of shadow banking practices

10.2% 70%

Channel Islands funds have performed better than many other key regions, returning 10.2% on average in the past year Funds landscape






The number of listed companies in the UK has fallen by around 40% compared with 2008 – as mega-funds circle


14 August - October 2021


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40% $364BN


The amount of dry powder – capital raised but not yet deployed – that worldwide private debt funds were sitting on in Q1 2021

PAGE 58 UK banks and asset managers were responsible for financing 805 million tonnes of CO2 in 2019 – 1.8 times the UK’s net annual emissions Financing a sustainable future







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This publication has been issued by RBC’s Wealth Management International division in the Channel Islands and United Kingdom which is comprised of an international network of RBC® companies located in these jurisdictions issued by Royal Bank of Canada (Channel Islands) Limited, PO Box 48, Dorey Court, Admiral Park, St Peter Port, Guernsey, GY1 3BQ, Channel Islands, registered company number 34375 and is regulated by the Guernsey Financial Services Commission and by the Jersey Financial Services Commission; and RBC Europe Limited, registered in England and Wales No. 995939. Registered Address: 100 Bishopsgate, London EC2N 4AA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. ® / ™ Trademark(s) of Royal Bank of Canada. Used under licence.

RBC 1828



interview Marie M Neela c

Words: Jon Watkins Pictures: Chris George

18 August - October 2021

As managing director of Intertrust group in Guernsey, Marie M c Neela has a front-row view of the island’s growing popularity and strength as a funds sector player. She tells us how she plans to grow her firm’s funds business further, and how both the sector and Guernsey can navigate the challenges ahead


What was it that you enjoyed so much in that early role with Coutts, and which made you so determined to carve your career in the funds sector? I loved how much variety there was in each day. I was in the fiduciary and tax advisory department and the quality of the clients and the type of work we were doing with them was amazing. Private wealth particularly is a people business – it’s a relationships business – and that just excited something in me. I still enjoy the people side of things. There are certainly some parallels between Cayman and the Channel Islands. Did the experience you had in Cayman play a part in you eventually settling in Guernsey? Absolutely. The nature of the work onshore is quite similar in some ways, but it can also be very different to offshore activity. We did a lot of offshore planning at Coutts and I felt I was doing that work without having the experience of actually administering and managing it on the ground. The chance to go to Cayman and see both sides was something I wanted to do and was something new. It helped me grow in my career because I could see all angles. I could see the positive impact of the funds, the private wealth and the corporate offerings for clients and it all became very relevant, I had a better holistic picture of what we were doing for our clients. There’s no doubt that played a part in me wanting to be offshore again, in Guernsey.

What attracted you to Intertrust and your role there? I’d previously worked for Credit Suisse and Rothschild & Co in the islands. I was aware that Guernsey had a strong jurisdictional reputation in terms of quality and how nimble it can be, and Intertrust Group has always been at the forefront of that. The opportunity to work for another very good organisation, and one that was at the start of an exciting strategic journey, was too good to pass up. I also have a lot of international experience and, with Intertrust based in more than 30 countries, it felt like the perfect fit for me. You’re also an Executive Director of We Are Guernsey. Can you tell us a bit about that role and why you find it valuable to be involved? I joined the board a year ago because it felt like something I could add value to. We in the finance industry need agencies in our jurisdictions – in all offshore locations – to promote what we do in a positive way. It’s an exciting time for We Are Guernsey, with a lot of initiatives under way to demonstrate just how valuable Guernsey is as a jurisdiction. Clearly, I joined at the start of the pandemic, so most of my involvement to date has been virtual rather than physical but that’s been an interesting journey, too. As well as the great work We Are Guernsey does in promoting the jurisdiction, it has a wide scope and can be a great conduit for businesses in the industry. Tell us a bit more about Intertrust Group – the scale of the business and its USP in the market. We are a global specialised administration services business operating in more than 30 jurisdictions. We provide bespoke corporate, fund, capital market and private wealth services and we’re listed, which provides transparency of practices and strategy. Seven of the largest corporations in the world, about 40 of the top 50 PE firms and some of the world’s wealthiest families partner with us so that in itself is a great endorsement of our business. One of the great byproducts of that is it makes it really exciting and energising for our staff.

About 40 of the top 50 PE firms partner with us – that’s a great endorsement of our business

In today’s climate, I think it’s really important to be a successful player in intergenerational wealth transfer and preservation and that’s a big focus for us. We help manage the complexities that our clients are trying to navigate, whether it’s through their personal wealth, their business wealth or through their employees’ wealth, and that personable approach is really important. I think all of our people really understand that everything we do, at every level of the business, has an impact and a business development angle – because if we provide great service and clients feel like they can trust us, it provides the positive endorsement we need to grow. You’ve been in your role as MD of the Guernsey operation for nearly three years – and you caught this massive period of disruption. How has the past 18 months affected the Guernsey business? It’s been challenging for everybody in every business. I think at Intertrust Group we have been fortunate because we have managed to retain a pretty seamless delivery of client service. We’ve fasttracked some things, but in a way that has demonstrated that we can adapt and still perform at a high level. In some ways it has been an opportunity to strengthen relationships. Intertrust globally allowed each jurisdiction to

August - October 2021 19

Tell us about your early career and how you came to the Guernsey funds sector. I grew up in the UK and initially thought I would be a physiotherapist. But after finishing education and taking some time out to work in Africa, I spent what I thought would be a couple of months working for Coutts in London and absolutely loved it. As a result of that, I ended up staying for nearly 10 years. After a decade in London I took the opportunity to move to Cayman and spent three years working there before arriving in Guernsey. I only intended to be here for a short while before moving back to the UK, but that was nearly 20 years ago, I love island life and it’s a great jurisdiction to work in.


You’re right that the islands weren’t as affected as other parts of the world. Do you feel that has further enhanced the appeal of Jersey and Guernsey? I think that’s absolutely right. There’s been a lot of positive reporting around the way the Channel Islands have managed the pandemic in general, and especially so in Guernsey. I think it has benefited us in many ways – the client base, the number of businesses that have been setting up here, and the number of families moving to Guernsey. That is shown by having the best year in our housing market for decades. Do you feel that the funds sector specifically has been able to demonstrate its value and its stability during the response to the pandemic? Yes I do. I’ve been in this business for a long time now, and I think that across the finance industry – but particularly in Guernsey as a jurisdiction – we’ve always managed to evolve and adapt. That’s true in the funds, private wealth and corporate sectors. What’s especially telling is that our Guernsey funds business has doubled its assets under management over the past year, our private wealth service line has grown and we are continuing to see a lot more enquiries. I think part of the reason is that over the past 18 months, clients have had time to stop and think about their circumstances, think about their business strategy, and adapt where they see new opportunities. When you took on your current role, you set out a number of objectives – from enhancing the strength of the business to giving a platform to employees to develop professionally and personally, and leveraging tech for growth. How are those areas progressing? In terms of empowering people, that’s absolutely a priority and the past 18 months have brought that right to the fore. We’ve done a lot to make sure that people are comfortable and we have worked hard to understand the impact that the pandemic has had on staff – some people haven’t seen their families for two years, for example, so we try to support them accordingly. One of the keys areas of focus has been to ensure our staff don’t have some kind of hiatus in their career path because of the pandemic. As a result, we have

20 August - October 2021

Intertrust allowed each jurisdiction to manage the pandemic on a local basis – a global mandate might have been difficult to manage

continued to promote professional development by working with partners to ensure our people continue to have a defined career path, and that they continue to be motivated and excited by the opportunities available to them. In terms of the tech piece, we continue to develop the tech offering and that’s improving constantly. We don’t want to be fully reliant on third-party technology – we have that skillset within the business and that has enabled us to create client portals that many of our clients are now using. That skillset is also allowing us to take a look at how we use technology to manage risk and the increasingly complex regulatory landscape. All of these things are driving efficiency and effectiveness across our business. We certainly haven’t put anything on hold because of the pandemic. We’ve maybe changed the phasing slightly, to respond to changing priorities, but we haven’t lost sight of what’s important and we’re already planning for next year to ensure that we continue to evolve.

What will that evolution mean in terms of the services you offer going forward and how you plan to grow the business? The local board here is looking to grow the business, and our strategy is to grow it not just in terms of revenue but in terms of the services we offer as well. We’ve started to provide capital market services, which in the past hasn’t been done out of Guernsey, and we’re also working on a few SPACs (special-purpose acquisition companies) – and that’s all really exciting for us. We’re certainly focused on new revenue streams. We’re also looking at using that in-house tech capability I spoke about earlier to enhance our compliance and our reporting offering – and using our operational team in our centre of excellence in India to enhance the efficiency across all service lines. Efficiency is certainly a buzzword across the islands right now – and tech is clearly an enabler for that. What’s the driver for you seeking greater efficiency? Even before Covid-19 we needed to improve that as an industry. We’re a legacy industry and we’ve been around for a long time. This sector was historically paper-based and manual, but now the world is moving very quickly, so we are moving with it. We’ve recognised for a long time that our clients are much more mobile than they’ve ever been. What the pandemic has done is reinforce the journey we’re on and emphasised how important it is that we meet our clients’ needs around how they are served. Intertrust Group’s acquisition of [techenabled provider of middle and back-office services] Viteos in 2019 provides us with the tech to further enhance our proposition, and it’s important we don’t pause because that is how you get left behind. We want to stay at the top of the industry and that means equipping our clients with the tools to operate how they wish, with the technology at their fingertips, to communicate wherever they are in the world and to not have to wait for business hours to operate. What other challenges does the funds sector face right now – what else is high on the agenda? As is the case for many across the industry right now, ESG has become one of our core pillars. There’s a huge focus on that. We have been working with internal teams around the globe to drive initiatives that ensure we have the appropriate KPIs for improving our carbon footprint and also demonstrating ESG credentials. It’s absolutely at the forefront of everyone’s mind right across the finance industry. I also think there’s big competition for assets with high valuations right now – and

manage the pandemic on a local basis and I think this has been integral to our response. If a global mandate had been provided, it might have been difficult to manage at each office – especially as Guernsey hasn’t been in lockdown as much as many parts of the world. So I think that local approach was useful.


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© 2021 PricewaterhouseCoopers CI LLP. All rights reserved. “PricewaterhouseCoopers” and “PwC” refer to the Channel Island firm of PricewaterhouseCoopers CI LLP, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. PricewaterhouseCoopers CI LLP, a limited liability partnership registered in England with registered number OC309347, provides assurance, advisory and tax services. The registered office is 1 Embankment Place, London WC2N 6RH and its principal place of business is 37 Esplanade, St. Helier, Jersey JE1 4XA.

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Interview having that combined with ESG awareness is a challenge for the industry. People are looking at what they’re buying and considering what it might look like in five or 10 years’ time, and then they’re making sure that’s sustainable. We’ve seen businesses hiring heads of sustainability to do that – it’s a key focus for our industry. Other market trends that we’re keeping an eye on are things like the consolidation and rationalisation of business partners. There’s a lot of consolidation going on in the islands at the moment. Covid-19 may, of course, present more challenges and I think the one thing we are all mindful of is the increased regulatory burden on clients and on businesses. I don’t think of that as a negative, but we need to be very smart around how we balance what we do from a regulatory point of view. We need to make sure we are operating within those regulations while still providing ultimate service to the client at an appropriate price. Another hot topic you’ve written about in the past is the representation of women within the financial services sector – in particular at board level. What are your views on why we still face such a challenge in this area and your approach to tackling it? Yes it’s important to me. I don’t think approaching it by quota is the answer, as some do. For me, it’s much more important to make sure that you have the right skillset and that the right people have the opportunity to provide that skillset. I’ve built a really strong senior leadership team here in the Guernsey office, and it’s great we are fairly equal in terms of gender and diversity. But we did that by focusing on getting the right skillsets around the table – regardless of gender. I’m also really proud that, in Guernsey generally, women make up more than 25% of the directors on the island – which is a really strong statistic globally, even if it isn’t yet as high as we would like. We have some really good female leaders and role models on the island, including some who work in our office. It’s a small community, a lot of us know each other, which means we are able to have discussions and to network. Much of that has been borne out of the fact that we’ve had some really good male leaders on the island who have been keen to promote and support that type of initiative. Certainly, all businesses benefit from having a diverse board in my opinion. That’s certainly a strength of Guernsey – but what are the other strengths of the island that mean it is likely to remain a strong jurisdiction for funds activity going forward? Our legislative and regulatory landscape obviously plays a big role in our appeal and will continue to do so. The International

FACT FILE Name: Marie McNeela Role: Managing Director, Intertrust Guernsey Born: UK Family: Married; with two children Home: Guernsey Hobbies: “Partly I’m a taxi driver to my kids. I enjoy travelling to new places and I also love skiing; I’ve definitely missed that in the Covid-19 world. As a working mum, I spend a lot of time either at work or with my family.”

Stock Exchange (TISE) is also based here – that’s really useful and we have a strong relationship with TISE. There are around 800 funds set up in Guernsey alone and Jersey’s even bigger. While there are always threats to our standing, such as the murmurings around global tax rates and the like, I think the Channel Islands are bigger than that. If you look back over the past 10 or 15 years, we have seen constant change, including political and regulatory change, but we have retained our strength and our standing. We see that strength in our everyday work at Intertrust Group – in the fact that we have so many outstanding professionals in the offices in both islands, which enables us to understand the factors that we face and look at ways to enhance our client offering. I think that’s a big part of the reason people choose Intertrust Group in the islands. n

August - October 2021 23

Advertising feature

Why are LGBTQ+ investors different? Marc Nightingale, Senior Client Advisor at UBS Wealth Management in Jersey, discusses how LGBTQ+ people can build investment strategies to help meet their financial goals

full legal and social equality does not exist anywhere in the world

24 August - October 2021

THE OBVIOUS QUESTION when writing about LGBTQ+ investment is why the LGBTQ+ community – which includes lesbian, gay, bisexual and transgender people – would need to invest differently from the cis-gendered heterosexual community. The answer is that full legal and social equality does not exist anywhere in the world. Sexuality prejudice is still widespread, with more than a third of countries making it a crime to be LGBTQ+. When different groups face different social or legal environments, they need to invest differently to deal with the challenges that they face. While the main concerns of investors are the same, regardless of gender or sexual orientation, LGBTQ+ investors are likely to have different needs and challenges. The prejudice that the LGBTQ+ community

faces also means that investment decisions by the community and allies are potentially more powerful in their impact.

INVESTING WITH VALUES IN MIND Investors want to have investments that fit with the values they hold. The rise of sustainable and impact investing is a key part of this. The LGBTQ+ community may choose to align their financial decision-making with their values around equality for LGBTQ+ people. Different investors may choose to reflect their values in different ways. Some LGBTQ+ investors may decide to exclude investments in companies that have a poor track record on LGBTQ+ rights and equality. Such a signalling effect, however, is unlikely to drive major corporate change as individual investors will not have the

Advertising feature

Linking LGBTQ+ investors to businesses through networks can help connect people for a better world Investing is about more than personal financial goals. LGBTQ+ individuals may invest their human capital and time into supporting LGBTQ+ causes – whether that might be through volunteering or mentoring, or bringing relevant skills to LGBTQ+ businesses. Linking LGBTQ+ investors to businesses through networks can help connect people for a better world, in terms of greater equality of opportunity, potential access to pools of private capital and to learn best practices for starting and running a successful business.


size (as a share of total share or bond capital) or influence needed. Other sustainable and impact investment approaches might deliver both superior financial and social returns compared with an exclusion approach. Aligning investments with values can also extend to building a financial legacy. LGBTQ+ investors may want financial resources surplus to their lifetime needs to be used in support of LGBTQ+ causes. Some may choose philanthropic causes that support environmental and social causes, including LGBTQ+ rights. Others may elect to build a financial portfolio that invests sustainably or impactfully to maximise financial and social returns.


Some approaches signal an investor’s approval or disapproval of a particular way of doing business. Exclusion approaches could eschew the stocks and bonds of firms whose environmental and social policies do not match an investor’s affinities. Inclusion strategies seek to invest in companies whose environmental, social and corporate governance (ESG) characteristics align with an investor’s values. There is limited evidence that exclusion leads to higher financial returns, though such an approach may help investors with risk mitigation. Inclusion strategies can help to increase financial performance. One such example is that businesses that have a superior track record around diversity, equality and inclusion may enjoy commercial benefits over their peers. LGBTQ+ investors might consider longer-term thematic investments that align with their values. Themes may match with general affinities towards environmental factors – such as clean energy and greentech – or social factors such as education services. Themes could be chosen because they match LGBTQ+ challenges, such as investing in retirement living that is inclusive for the LGBTQ+ community. Other investment approaches that have the potential to deliver commercial and environmental or social returns

include impact investing. These kinds of investments seek to deliver demonstrable and material improvements in social or environmental outcomes in ways that also improve financial performance, such as higher revenues, reduced costs or increased efficiencies. In a UBS Wealth Way approach, sustainable and impact investing may be particularly interesting for your legacy strategy1. These funds are earmarked for use beyond your lifetime. The long investment time horizon and your potential desire to leave the world a better place may mean that this strategy can be filled with longer-term, less liquid, but potentially higher return potential investments, such as private markets. The UBS Chief Investment Office has already concluded that excluding people based on their sexual or gender orientation is bad for economic prosperity. Economics is not the main argument against prejudice, but it is one of many, and it is likely to become more powerful over the next 10 years. n


To find out more about how we can support your investment strategies, please contact Marc Nightingale for more information: Marc Nightingale, Senior Client Advisor, UBS AG, Jersey Branch 1, IFC St Helier, Jersey JE2 3BX Tel: 01534 701173 Email:

Strategies are subject to individual client goals, objectives and suitability.

UBS AG, Jersey Branch is authorised and regulated by the Jersey Financial Services Commission for the conduct of banking, funds and investment business. © UBS 2021. All rights reserved.

August - October 2021 25

Funds landscape

Positive outlook

Despite a challenging 18 months for the global economy, the Channel Islands’ funds sector is performing better than ever Words: Len Williams

PUT YOURSELF IN the shoes of a fund manager deciding where to domicile a new fund. The choices you make today could certainly have major implications for the fund’s long-term performance. How will your destination’s political environment, tax regime, regulations or geographic location affect its success? For many investors, the Channel Islands continue to be an attractive option, especially for those based in the UK and Europe. But how will factors such as the pandemic, shifting regulations and Brexit play into decision-making?

A GOOD YEAR FOR FUNDS It has been a rocky 18 months for the global economy. However, looking at the funds industry’s performance in isolation, you’d be forgiven for failing to register altogether that there had been a global pandemic, fallout from Brexit or an international recession. Figures from Hedge Fund Research, for example, show that 2021 has so far seen the strongest first-half performance in a calendar year since 1999. Total hedge fund capital surpassed an estimated $3.96trn at quarter-end, an increase of $360bn from the start of the year. More broadly, since the beginning of 2021, all kinds of funds have continued to perform remarkably well in most domiciles. According to data from Morningstar, US funds returned an average 7.9% in the first seven months of the year, while European,

Asian and African funds returned 6.8%. And zooming in on the Channel Islands, funds have performed even better than in other key regions, returning 10.2% on average, according to Morningstar. What’s more, after the UK, Guernsey and Jersey remain the second and third largest domiciles for private equity and venture capital funds in Europe (setting aside unclassified funds), according to analyst Preqin (see figure 1 overleaf). Elliot Refson, Head of Funds at Jersey Finance, agrees the bailiwick has continued to perform well. “The value of regulated funds business serviced in the jurisdiction reached a new record high of £410bn. This reflects 13.6% year-on-year growth and 79.5% over the past five years.” There has been similar growth in Guernsey. A June report from the Guernsey Financial Services Commission notes that the net asset value of Guernsey funds

26 August - October 2021

Funds landscape

and investors are seeking security and stability in their fund domicile. “They are continuing to gravitate towards jurisdictions with a good reputation and track record, as well as a supportive regulator that is robust but flexible and encouraging of innovation.” The islands have also seen continued success with specific kinds of products. In Jersey, for instance, Refson says the main driver of growth in the alternatives space is the private equity and venture capital sector – “something we have been seeing for some time now”. By playing to their strengths, the islands have managed to weather the storm of the pandemic. Similarly, Alex Smyth, Director at fund administration firm Oakbridge, explains: “Jersey has forged a formidable reputation in private equity and real estate in particular.

increased by £30.4bn over the previous 12 months (13%). Channel Islands funds have managed not only to survive but to thrive in what has been an otherwise challenging year. In many ways, their success has been about sticking to the basics and the things the islands do best. Mark Symons, Senior Manager at Apex Fund Services in Guernsey, notes: “Funds are reassured by domiciles with a mature funds industry, a choice of highly experienced administrators, a sophisticated legal system with top-tier legal firms, Big Four and other leading audit firms on hand.” Both Guernsey and Jersey tick all these boxes. Refson adds: “We offer regulatory stability in addition to political stability and fiscal stability, as well as a minimal change outlook from a regulatory, legal or economic perspective.” Meanwhile, Antoinette Kyriacou, Head of Private Equity at Apex Group’s Jersey office, notes: “In uncertain times, managers

August - October 2021 27

Funds landscape


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Funds landscape

After the UK, Guernsey and Jersey are the second and third largest domiciles for private equity and venture capital funds in Europe that since the vote to leave the EU, the UK has lost out to Luxembourg when it comes to the creation of new PE/VC funds. Cameron Joyce, VP of Research Insights at Preqin, explains: “While UK-domiciled funds have been the most popular based on their aggregate size, the top spot has been taken by Luxembourg for vintages after the Brexit vote in 2016.” However, this political shift hasn’t significantly affected the Channel Islands, which have continued to perform well despite the Brexit fall-out. As Refson explains: “Our position post-Brexit is the same as our position pre-Brexit.” Since the Channels Islands are independent of the UK and hold thirdparty status with the EU, the islands have not been significantly affected by the political turmoil. Speaking from a Guernsey perspective, Smith sums up the island as “decidedly politically stable”, which is a key benefit. The islands’ authorities are also proactive when it comes to regulation, and have continually worked to stay in line


No. funds

Total fund size ($m)

Proportion (%)



























Cayman Islands


















































“This puts Jersey in a great place for the future, especially considering that it is anticipated that private markets assets under management (AUM) will increase by $4.9trn, reaching $14.4trn by 2025 – around 10% of overall AUM worldwide.” In uncertain times, destinations such as Jersey and Guernsey offer fund managers greater confidence when choosing where to domicile. But the islands are not sitting on their laurels. When the pandemic struck, businesses and the authorities in the Channel Islands were quick to address potential customers’ concerns. Ian Smith, Client Director at the Guernsey office of fund administrator Ocorian, says: “Guernsey was well marketed during the pandemic.” The authorities made it clear that “despite border restrictions being in place, the island was operating as usual”, he adds. By taking active steps to promote the islands’ funds industry, customers could be confident that the pandemic would not affect operations. That said, there is a general feeling that the pandemic itself hasn’t, so far, had a significant impact on fund domiciliation. “Our experiences over the past year have shown that Covid-19 has not affected fund domiciliation patterns,” Kyriacou notes. “But should travel restrictions continue beyond this year, we may see it beginning to affect domiciliation, with geographical proximity becoming more important.” Then there’s the issue of Brexit. Data from Preqin (see figure 2 overleaf) shows

Figure 1: European-focused PE/VC funds by domicile, all vintages. Source: Preqin

August - October 2021 29

Funds landscape


No. funds

Total fund size ($m)

Proportion (%)
































Cayman Islands













































Figure 2: Europe-focused PE/VC funds by domicile, post-Brexit vintages (2017-21). Source: Preqin

Guernsey is forward-thinking in its approach to global regulatory issues and is often ahead of the regulatory curve

with new rules that could have an impact on fund domiciliation. For instance, Smith says: “Guernsey is forward-thinking in its approach to global regulatory issues and is often ahead of the regulatory curve thanks to the proactive relationship between its regulators and financial community.” The close relationship between funds and the regulatory authorities on the islands means they can continually adapt to any external pressures. So, funds domiciled on the Channel Islands are well placed to manage BEPS requirements and evergrowing substance demands, for instance.

NEW AVENUES The Channel Islands’ continued success can also be put down to a proactive strategy to drum up new business. While Jersey’s largest market remains the UK, Jersey Finance is attempting to diversify its funds footprint by geography and asset class. “Following the opening of our New York office in 2019, the US has become our fastest growing market, with AUM rising by 17.2% and the number of new funds rising by 37%,” explains Refson. The Channel Islands were also early movers on ESG (environmental, social and corporate governance) funds, with Deutsche Bank expecting ESG assets to surpass $100trn by 2028.

30 August - October 2021

In March, Jersey Finance launched a sustainable finance strategy, which shows how funds and the wider financial services industry can support the transition to a more sustainable future. Fund managers and investors are increasingly keen on these sorts of funds and, says Kyriacou, Jersey is well positioned to take advantage of this emergent trend. A recent survey by IFI Global revealed that 69% of investors and fund managers believe ESG considerations will influence fund domiciliation, particularly in Europe. With the Channel Islands preparing themselves for the growth of these markets, they could become a destination of choice for ESG funds. There are also a number of attractive innovations, such as Jersey’s Private Fund regime, established in 2017. The structure offers attractive speed to market, with a 48-hour regulatory approval timeframe, and is a cost-efficient option compared with EU-style AIFM structures. In 2020 alone, a total of 100 funds were launched under this structure, according to Jersey Finance. For a fund manager deciding where to domicile a new fund, the Channel Islands make a strong case. With their established strengths, adaptability and proactive approach to emerging trends, they offer an attractive package – which goes a long way to explaining their continued success. n

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A guide to Jersey’s new cannabis investment rules Many local financial services businesses will have experienced increased enquiries from clients wishing to move away from traditional investments and investment strategies, and looking instead to invest directly and indirectly in the lucrative recreational and medicinal cannabis sectors. Ogier’s Katie Baxter explores the rules THE GOVERNMENT OF Jersey recently legalised the on-island growing of cannabis for medicinal purposes, and the island is positioning itself as a central player in this field, which was valued at £5.64bn in 2020. However, growing and supplying cannabis for recreational use remains very much illegal as a matter of Jersey law. The cannabis sector is a ‘growing’ market – so far, 36 US states and the district of Colombia have approved the medicinal use of marijuana and 15 of those have also approved its recreational use. The start-ups looking to produce new cannabis technologies are readily available investments, including cultivation management and distribution – home delivery apps for cannabis orders proved to be particularly lucrative and in demand during the pandemic. There is even a stock exchange dedicated to monitoring the value of medicinal and legal marijuana. The Global Cannabis Stock Index, which was established in 2013, tracks the overall publicly traded market value for these sectors. CBD cannabis is being utilised in numerous industries. One example is healthcare and wellbeing, ranging from healing products to face creams. For financial services businesses in Jersey, the difficulty had always been that Jersey applied a ‘single criminality test’ – if the conduct undertaken in another jurisdiction was unlawful in Jersey, it was deemed to be criminal conduct, even if it was perfectly lawful in the original jurisdiction.

Article 1(2A) of the Proceeds of Crime Law states: “A person benefits from any criminal conduct if that person obtains property as a result of or in connection with the conduct, and a person benefits from criminal conduct if the person receives any payment or other reward in connection with such conduct, whether carried out by that person or another.” Prior to this year, any involvement with the overseas cannabis sector – regardless of it being perfectly legal in that jurisdiction – that resulted in proceeds derived from such involvement were treated as proceeds of crime, such that Suspicious Activity Reporting requirements would be triggered and filed with the States of Jersey Police. This may have resulted in assets being frozen in Jersey, and fund services businesses finding themselves in the unenviable position of being unable to process those proceeds and divest themselves of the asset – which could cause significant operating issues for them.

JERSEY LAW CHANGE However, on 30 June this year, the Government of Jersey passed amendments to the Proceeds of Crime (Jersey) Law 1999 to amend the current definition of criminal conduct, facilitating investment and structuring in the cannabis sector. The new regulations clarify which investments should not be treated as proceeds of crime by FSBs. It also amended the definition of ‘criminal conduct’ under the law to provide that the production, supply, use, export or import of cannabis or any of its derivatives are no longer considered criminal conduct – provided that it is lawful where and when it occurs, and it occurs in a jurisdiction outside Jersey that the Minister for External Relations and Financial Services may specify by order. The order as to which jurisdiction will be an ‘approved jurisdiction’ will be those countries which apply equivalent money laundering controls to Jersey and reflect FATF (Financial Action Task Force) standards – the international standards concerning money laundering, terrorist

financing and financing of proliferation. In addition, it is anticipated that there will be guidance to sit alongside the law to deal with the position of directors and other officers involved with cannabisrelated companies. However, regulations do not provide blanket approval. As such, when considering whether their investment complies with the regulations, financial services businesses will be required to conduct a two-stage due diligence test. They will need to ensure that the cannabis-related activities that generated the proceeds were lawful in the place where and when they took place, the jurisdiction is on the approved list and there are no unspecified jurisdictions involved in the supply chain (production, distribution and so on). Once the financial services business has established that the tests are met, the cannabis proceeds will no longer be the proceeds of crime under Jersey law. This rule will apply even if the proceeds were generated prior to the regulations coming into force. Proceeds that are generated from conduct which is not lawful where and when it occurred do not benefit from the exemption of criminal conduct and remain proceeds of crime under the law. If the jurisdiction does not feature on the approved list, then even if the proceeds are legal in that particular jurisdiction, they would also remain proceeds of crime. So, investors, beware. n


Katie Baxter is a Senior Associate at Ogier who specialises in non-contentious trust and fiduciary law and assists a wide range of professional trustees, family offices and private clients. For more information on this topic, please contact Ogier’s Private Wealth or Investment Funds teams at

August - October 2021 31


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How the Channel Islands can help first-time fund managers Richard Le Liard and Dylan Latimer, Partners at Bedell Cristin in Jersey and Guernsey, provide a roadmap for success RAISING THAT FIRST fund is challenging at the best of times, let alone during a global pandemic, where the ‘flight to the familiar’ has been felt particularly hard by first-time fund managers. For the best chance of tackling those challenges successfully, fund managers must get certain key decisions right – and that includes the jurisdiction in which the fund should be domiciled.

the ground among practitioners, and can offer the flexibility when required. There is no doubt that both jurisdictions have established a global footprint. And their reputation as funds jurisdictions is appreciated by investors across the world, but especially the UK, mainland Europe, the Nordic countries, the Middle East, the Far East and the US.


The Channel Islands have ensured there are no barriers to marketing the funds product to the rest of the world. Agreements are in place that ensure easy and cost-effective access to the UK and the EU if required, or freedom from AIFMD regulation if not. The Brexit agreement between the UK and EU has not affected the jurisdictions’ capabilities in offering seamless access to the EU market, thanks to their ‘third country’ status and separate agreements with the EU that have long been in place.

When choosing a domicile, there are several considerations that have to be taken into account. In the first instance, the process will be smoother if a domicile is selected that is familiar to investors and has a track record in the funds space. A question to ask at the outset is: does this jurisdiction provide access to the markets required? As noted, regulation needs to meet the international requirements for high standards but also be simple to navigate, so that fund managers are not tied up in red tape. Managers are naturally concerned about costs when launching their first fund and a high-cost ratio will eat into a fund’s returns, which will not appeal to investors or managers, so cost-effectiveness will be a further important consideration. Finally, there is the collaboration required for a successful launch. Managers must surround themselves with the right advisers and service providers, preferably a close-knit team who have administrative and legal skills and can easily connect with each other so that the process remains as seamless as possible.

THE CHANNEL ISLANDS Where do the Channel Islands align in meeting these objectives and are both Jersey and Guernsey a suitable fit for the first-time fund manager? Whether Jersey or Guernsey is selected may depend on the relationship that the managers or their advisers may have with a particular jurisdiction. However, while existing relationships may influence such a decision, the most important factor when assessing a choice of jurisdiction is that both Jersey and Guernsey have the regulatory and legislative framework necessary, backed up by the expertise on


STREAMLINED Both jurisdictions have been astute in developing their regulatory regimes. They provide a regulatory model that has wide appeal and has been tailored to meet the needs of managers, especially those working in alternatives. The Channel Islands offer a range of fund products to suit all requirements and certain funds are subject to streamlined, light-touch regulation, which helps reduce costs and ensure speed to market. Another crucial factor is the turnaround time with the local regulator which, in certain cases, can be as quick as one business day. The regulatory landscape is an evolving one and managers have to take into account economic substance rules, disclosure and reporting requirements. But Jersey and Guernsey have ensured their regulatory platforms have evolved, too, so that the process remains straightforward. Tax neutrality has been a feature of both jurisdictions for decades and it provides managers with simplicity and certainty, without having to negotiate complicated tax arrangements.

of experienced practitioners accustomed to working together as a team and able to guide fund managers embarking on their first product launch on the best means of achieving their goal. Location helps too, and London-based fund managers are easily able to meet their service providers face to face, which provides added reassurance.

FLEXIBILITY Lawyers have a pivotal role to play in the process and the team at Bedell Cristin, working in both Jersey and Guernsey, often work with first-time and smaller scale fund managers, advising on the best legal structure and regulatory treatment for them. Although we advise on complex, multibillion-dollar vehicles, our advice also extends to joint venture arrangements and proprietary single asset holding structures. We advise on all types of investment vehicle, structured to meet cross-border investment strategies and, when required, we have extensive experience in Shariah-compliant structures. Our expertise also extends to BVI and Cayman law. Sometimes, the vehicle can be structured to fall outside the funds regimes in the Channel Islands altogether, providing further opportunities to reduce costs and increase simplicity. The firm can also help a client navigate along that route if that is the preferred option. In meeting the requirements of fund managers, flexibility remains the key in both jurisdictions. And given their long track record of success in servicing the needs of the funds marketplace – their combined assets under management currently total more than £650bn – the islands remain the ideal jurisdictions of choice for managers who are about to launch a fund for the first time. n

LOCATION Another strength has been the nucleus of first-rate advisers and service providers that operate in both jurisdictions, a deep pool


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August - October 2021 33

Fund management

As the funds landscape becomes increasingly complex, fund managers are outsourcing large chunks of their operations to bespoke and specialist fund administrators. But what are the pros and cons of outsourcing? and how do you manage the process to protect your clients and your reputation?

Sharing the burden Words: David Craik

THE PANDEMIC HAS piled the pressure on all global businesses, prompting many to review their operations – from costs to talent, supply chain and technology. Some, particularly in the retail, manufacturing and IT sectors, have taken the decision to ‘in-house’ some or all of these operational elements to save money and improve resilience in an uncertain economic climate. The fund management sector has done its own fair share of soul-searching, but continues to hang its hat steadfastly on outsourcing rather than insourcing its operations. According to a recent survey of 100 alternative investment fund managers, carried out by fund administrator Ocorian, 70% of managers expect to increase the amount of functions they outsource in the next three years, with 72% expecting outsourcing to “play a more central role”. This is primarily down to the need for more oversight in a time of increased regulation and cost efficiencies, as margins and fees come under more pressure. Typical outsourced tasks include investor onboarding, financial reporting, company secretarial services, preparations and review of constitutional documents, trade execution, dividend payments and fund accounting, bookkeeping and valuations. For Anita Weaver, Director of Corporate Services at Stonehage Fleming, the benefits

34 August - October 2021

are clear. “What fund managers receive from administrators is independent accounting, particularly for fund net asset value (NAV), calculation of performance and carried interest fees,” she says. “They also get experienced staff across the spectrum. It can be quite challenging for smaller fund managers to attract top talent and keep them busy all the year round as some of the activities are cyclical. “It can also be more cost-effective from an office space perspective. Administrators just have more economies of scale.” She adds that administrators also provide key relationships with other service providers, such as banks and regulators. “The sharing of best practice is crucial,” she adds. “The administrators can offer this as they often sit on industry committees.” Aside from these benefits, there are several key structural drivers behind the demand for outsourcing. One sounds simple – letting fund managers get on with their day jobs. “It allows them to do what they do best, which is maximising returns for investors,” says Simon Burgess, Head of Alternative Investments at Ocorian. “If they focus too much on the back office, they may take their eye off the ball from the front-office work.” Jody Newark, Managing Director of Guernsey fund administrator Obsidian, believes that the culture of fund management is well aligned with outsourcing some activities. “A fund manager thinks about your investment portfolio, your clients and the transactions they are going to place,” she says. “Fund managers will outsource

because they don’t want to get bogged down in a high level of technical detail. A portfolio manager has no specific interest in how the financial statements are prepared. In-house administration is just not in a fund manager’s mindset.” Newark adds that most, if not all, fund managers had already outsourced at least part of their operations prior to the pandemic. “Outsourcing meets with a lot of fund managers’ risk appetite. Institutional investors also want to see a certain level of control around the administration process,” she says. “We’ve had the financial crisis and the subsequent need for more regulation and transparency, and we’ve also had scandals such as the Bernie Madoff case, which may not have happened if there had been a third-party administrator involved in the process.”

CAPITAL GAINS Burgess says the rise in investor capital is another driver. “In key markets such as the Channel Islands, the number of funds being launched is not increasing but the assets under management is,” he says. “The levels of sophistication among investors in terms of information, data and reporting are now higher when fund managers look to raise capital from them. Using administrators can make this process easier and if you have happy investors, they are more likely to re-invest.” Newark says she has seen an increase in funds as a result of the pandemic. “There have been a lot of positive investment opportunities arising out of Covid-19

Fund management

An administrator has specialist expertise – they have knowledge of how your fund works and how others work as well ▼

and, as a result, we are seeing more fund managers entering the market,” she says. “More international fund managers are coming to Guernsey given some of the issues around economic substance in other jurisdictions such as the Caymans. They are looking to outsource here to save costs.” Another fundamental driver has been the increase in regulations and the subsequent need for compliance and transparency in recent years – Know Your Customer, AIFMD, BEPS and FACTA. “The needs of stakeholders have expanded, for investors, regulators, auditors and tax authorities,” says Weaver. “This can be prohibitive to smaller managers, who require the same technology

August - October 2021 35

Fund management

We may even see new services being outsourced, such as ‘routine trades’ and ESG reporting

as their larger counterparts in order to appeal to investors and comply with their regulatory requirements.” Access to technical and technological expertise is therefore crucial, which explains Ocorian’s recent acquisition of two specialists, Newgate Compliance in the UK and Platinum Compliance in Guernsey. Ocorian’s technology solutions include eFront, a software allowing fund managers access to investment reports and data, and dedicated client portals. “It’s about building out a tech platform to provide information to fund managers to suit individual investors,” explains Burgess. “It’s about having that granularity of information at a fund manager’s fingertips and slicing data to help investors make good decisions. “Such a platform is expensive to run in-house for just two or three funds. An administrator might have 100 funds spread across the platform and thus the cost base per fund is lower.” He adds that with technology and staffing, an administrator can also scale up and down more easily in response to market changes. “It might be too challenging for a fund manager to get a team in place to take advantage of the next wave or current pricing,” he says. “An administrator has specialist expertise in place such as technical accountants. They have knowledge of how your fund works and how others work as well, which proves helpful.

36 August - October 2021

Despite the strengths of fund administrators, Burgess is quick to emphasise that fund managers need to manage their outsourcing strategy. “You can’t just hand it over and say: ‘Ok, get on with it’,” he says. “It’s like working with your accountant on your tax return. You have to manage the process with them.” That means putting in place a system where people know whose role it is to do what and by when. “What are the handoffs?” he says.

FACILITATING RELATIONSHIPS Weaver suggests a specific role, head of operations, should be put in place in a fund manager to facilitate these relationships. “They can be the bridge between the administrator and the portfolio manager,” she says. “There should be regular updates and calls every two weeks. It’s a strategic partnership.” To ensure the relationship works, she advises fund managers to take their time and do ample research before choosing an administrator. “Do you go for a full turnkey solution, where the one administrator provides the full service, or look for specific partners for areas such as Know Your Customer?” she says. “You need to identify the ‘musthaves’ on your list.” There’s always the option to keep administration in-house. “You get more oversight and more control,” Weaver says.

“You live and breathe the funds as it is what you do every day. “But on the other side, you need cost efficiencies and scalability and the technology in the transparency and reporting requirements. “There are areas that fund managers will keep in-house, such as portfolio management and deal origination, but overall the outsourcing trend will continue. We may even see new services being outsourced, such as ‘routine trades’ and ESG reporting.” Burgess agrees. “There will be administration services that develop off the back of ESG reporting requirements, with the EU sustainable finance regulation coming this year. “Generally, we will see more capital moving into renewable infrastructure funds such as wind and solar, which will need administering as well.” He also expects to see an increase in bespoke administration rather than providing a standard product offering. Meanwhile, Newark wants to see more bespoke administrators such as Obsidian entering the Channel Islands, given that company’s success since it was launched in March this year. “[Bespoke administrators] can be an extension of a fund manager’s own team. We have great knowledge of their investment portfolio, but we are also there as a general sounding board,” she explains. “We take fund managers’ headaches away.” n

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Refresh your future outlook Let us help you provide a clear view for your investors KPMG in the Crown Dependencies is a leading provider of audit, tax and advisory services. We combine business acumen and deep sector knowledge with technical know-how and superior analytical tools. Within our suite of services, we provide bespoke assurance reports, tax advisory and compliance work, valuation reviews and reporting accountant services. Rachid Frihmat Audit Director KPMG in the Crown Dependencies Natalie Finlayson Advisory Senior Manager KPMG in the Crown Dependencies © 2021 KPMG in the Crown Dependencies is the business name of a group of Jersey and Isle of Man limited liability entities each of which are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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Flurry of activity in UK capital markets Rachid Frihmat, Audit Director, KPMG in the Crown Dependencies, explores the current – and future – listed funds landscape LISTED CLOSED-ENDED investment funds (listed funds) continue to play an important role in the Guernsey funds sector. The island is home to more non-UK listed entities on the London Stock Exchange (LSE) markets than any other jurisdiction globally. Based on LSE data (December 2020), there were 102 Guernsey-incorporated entities listed across its various markets. Since the start of the Covid-19 outbreak, the boards and sponsors of listed funds have focused on dealing with many challenges and opportunities – significant fluctuations in share prices, the widening or narrowing of discounts and premiums, valuation issues, changes to dividend policies, pressures on ongoing charges and changes to the regulatory environment. As management teams learn to operate within this Covid-19 environment, stakeholder confidence in capital markets is returning – and new investment opportunities are emerging. From our discussions with clients, fundraising projects and investment transactions that were postponed or cancelled during 2019/20 are now being reinvigorated and executed. We are also seeing new opportunities driven by renewed demand for real assets, private and digital capital and sustainability focused investments.

FUNDRAISING – H1 2021 The first half of 2021 has seen a significant increase in the level of investment activity in the UK capital markets when compared with the same period last year. A significant proportion of the capital raised on the LSE during this period has been through existing listed fund structures,

which have utilised either secondary or C-share issuances. Against this backdrop, Guernsey listed funds have performed strongly, with five such funds (based on capital raised that was greater than £100m) raising in total more than £1.364bn via secondary or C-share issuances. The underlying asset classes driving these Guernsey capital raises were: ● Private equity (£820m raised) – private firms are now staying private for longer, so investors are allocating a greater proportion of capital to private or unlisted companies ● Renewables (£246m raised) – as governments around the world set their net-zero targets, demand for renewables continues to rise ● Covid-19 has accelerated the investment in digital assets (£185m raised) and infrastructure-related projects (£113m raised). In addition to these allocations, nonGuernsey funds have seen significant investment activity in sectors related to healthcare and life sciences. Consistent with the prior year, H1 2021 continued to be a difficult environment to raise capital through the IPO process. Of only a handful of the IPOs that managed to raise new capital, £549m was raised by two Guernsey funds – Cordiant Digital (investing in digital assets) and Taylor Maritime (investing in shipping assets).

FUNDRAISING – OUTLOOK For the second half of 2021, the expectation is that the trends noted above will continue, while acknowledging that much will depend on how the UK economy (and beyond) reacts to the relaxation

of lockdown measures. Alternatives, including private equity, infrastructure, renewables and digital-related assets, are expected to continue to provide opportunities to the capital markets. Several Guernsey listed funds have already set out their intention publicly to raise further capital in H2 2021; the outlook for secondary or C-share issuances for the remainder of 2021 remains positive. It is expected that opportunities for new IPO issuances could be limited and will be restricted to listed funds launching on either a niche investment strategy and/ or capitalising on an excellent investment manager/sponsor track record. With the Financial Conduct Authority’s policy statement on SPACs having been revised, this will be a key topic to review in the upcoming months. Guernsey is well placed to capitalise on these opportunities. It can demonstrate its depth and breadth of experience in the alternatives listed funds space. n


Rachid Frihmat is an Audit Director at KPMG in the Crown Dependencies, based in the Guernsey office. He specialises in delivering audit and assurance services to financial services clients predominantly in the investment management industry, including funds listed on the LSE, the AIM of the LSE and alternative investment funds, comprising private equity, renewable energy and hedge fund structures. For more information, contact:

August - October 2021 39



MEASURE 40 August - October 2021


ESG is becoming a must-have for investors, and fund managers are under growing pressure to demonstrate their ESG credentials through accurate reporting based on high-quality, real-time data. So what reporting tools are available to them? And how are firms responding to client calls for consistent measurement?

Words: Alexa Robertson

social and corporate governance (ESG)linked products has been gathering momentum for a decade now, but the pandemic, along with growing social unrest and a series of natural disasters, has pushed it to the top of the investor agenda. Yet while investors are in agreement about its importance, reporting and regulation in the ESG space remain a complex challenge. One of the issues, according to Victoria Gillespie, Head of ESG Services at JTC, is the absence of common standards. “There is a real lack of universally adopted ESG reporting standards upon which companies and funds can measure and report their sustainability or their ESG metrics,” she says. “From a company perspective, this lack of standards adds to the confusion about what to actually report. Many don’t know where to start, which leads to lots of companies adopting a hybrid solution, where they look at combining tools such as the [ESG reporting tool] MSCI along with other frameworks.”

TIME PRESSURE The challenge of ESG reporting is, according to Gillespie, further exacerbated by a lack of timely information. “There’s no blame here, but what we’re seeing is that a lot of information is reported so far after the event that we’re always backward-looking rather than forecasting,” she says. “Once a company has identified what it wants to report

on, often it can’t find the information to feed the metrics. “There’s also a lack of information available in the public domain, which can’t easily be identified by either datarating agencies or directly by potential investors themselves. We don’t see many private equity houses communicating directly with the data-rating agencies. In an ideal world, that would happen a lot more to ensure a store of information that everyone could use.” She adds: “There’s also the lack of data-provider consistency. All these data providers are going out and sourcing data and using their own methodologies, but there is no overarching guidance and therefore a lack of comparability.” When it comes to ESG-linked products, the information required by investors from a reporting and regulatory perspective is wide-ranging. Gillespie says SASB (Sustainability Accounting Standards Board) reporting and Principles for Responsible Investment (PRI) are becoming more widely used in the space. “We’re also seeing investors ask more questions along the lines of: ‘Is the company carbon-neutral?’,’’ she adds. “If you’re dealing with a private equity house, you want to know that they’re doing what their portfolio is looking to achieve. Are they aligned from a cultural perspective to the service offerings they bring to market? “From an investor perspective, the story you sell needs to be believable and embedded within the products you sell.

A lot of information is reported so far after the event that we’re always backward-looking rather than forecasting


August - October 2021 41

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WE ARE NAVIGATORS Sometimes it’s important to see the world from a fresh perspective. The legal landscape can be complex and it’s often hard to understand what it all means for you and your situation. At Collas Crill, we aim to make the complex feel simple. We cut through the jargon to explain what matters, offering clear, practical solutions to help get the best outcome for you. For a fresh perspective, visit



RAISING STANDARDS For Mark Cleary, Interim MD Guernsey Funds and Director in Jersey at Zedra, today ESG is raised and prioritised by clients in a way that it wasn’t just five years ago. “I do have some clients who are completely ESG-focused, so each of their portfolio companies will have an ESG plan and will be expected to live up to certain standards,” he explains. “Depending on the type of company, it could be to reduce carbon emissions or it could be to make sure that there’s a 50/50 split between men and women on the board. “Every single company will also be given a target to achieve net zero by a certain date – so they’re really incentivised to make a positive impact on the planet while earning a return for their shareholders.”

Cleary believes the governance of ESG-linked funds is becoming even more essential as ESG issues further drive investment decisions. “From the investors’ perspective, they don’t really see or hear anything about fund governance unless – and until – something goes very wrong in the fund, at which point fingers immediately point towards the boards of directors,” he says. “They then might ask what the directors were doing or weren’t doing, or what aspect didn’t get covered. It’s not only investors but also regulators who will start asking questions when things go wrong. “The other angle is that directors have got a really important role in terms of the counterparties that their funds appoint. Whether it’s an administrator or a custodian or a bank – wherever there’s a touchpoint – ultimately, it’s the board of directors of the fund that are responsible for those decisions. “If they don’t pay due regard to those decisions, investors do have a right to question the appointment if and when something goes wrong.” The challenges around reporting, particularly with regards to ESG, are multifaceted. In fact, Victoria Gillespie believes the lack of common standards means some companies may be questioning the value of

From an investor perspective, the story you sell needs to be believable and embedded in the products you sell

The two need to be aligned. This means companies need to provide substance behind any form of reporting. They need to be able to prove that they’re doing what they say they do. “The best way to do that is through party assurance engagements. These allow for credible sources and reviews, which ultimately feed back to the management company and also the investors. Companies can then tweak what they’re doing.”

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Governance trends The recent IFI Global Investor Survey – The Future of International Fund Domiciliation 2021 – revealed some compelling statistics on fund governance:


of respondents said they would like publicly available analysis on the composition of fund boards.


of respondents believe that ESG considerations will have an impact on fund governance, compared with 18% who answered ‘no’ to this question.


of those questioned also agreed there should be term limits for fund directors – only 4% answered ‘no’.

the data sourced by third-party providers compared with the cost. “The regulators and the market need to keep pace with the requirements of investors, and make sure that what’s been asked is relevant,” she says. “We’ve seen with some regulatory requirements that they’re just not practical in their application. “So, while the theory is great, the practical application doesn’t bring any value – and actually delivers a cost. “Whatever reporting guidance and frameworks we bring to market, they need to give ultimate value – financial value and ESG-aligned value as well.”

Whatever reporting guidance and frameworks we bring to market, they need to give ultimate value

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TAILOR-MADE REPORTING With all these challenges in mind, what tools are companies using to report on their ESG-linked products? And how are they negotiating the minefield of inconsistent and often delayed data? “At the end of last year, we aligned our financial statements to the SASB framework and in the near future we’ll have to align our reporting to the TCFD [Task Force on Climate-Related Financial Disclosures],” says Gillespie. “For our clients, we do deliver some ESG-transparency reporting tools, tailored for various focal points and factors. “We listen to what the client is looking to achieve, who the audience is and the

required timeframe, and then we offer solutions that support that strategy and meet the purpose. As part of this, we look at what data provider coverage is available.” Gillespie continues: “If we’re working with a private equity house, for example, and they’ve got a number of private equity investments, we look at the coverage available and then we consider how to address any data gaps. “It could be talking with the underlying investor or investment company, or it could be applying ESG-specific scenario analysis, which would give us an output score. That might also be led by carbon reporting, for example.” While she believes there are valuable reporting tools out there, she feels that often they either need to be tweaked or companies have to pull out what’s applicable to them, which can be difficult to assess. She is confident, however, that the new frameworks being developed will in the near future fill the investor requirement and market need. “The IFRS [International Financial Reporting Standards] Foundation is working on a new International Sustainability Standards Board, which we’ll be following closely,” she says. “We think that will give the markets a line in the sand in terms of where to start and what reporting to adhere to.” n


Keeping your investments on track

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Investors should be aware that the price of investments and the income from them can go down as well as up and that neither is guaranteed. Past performance is not a reliable indicator of future results. Investors may not get back the amount invested. Brooks Macdonald Asset Management (International) Limited is licensed and regulated by the Guernsey Financial Services Commission. Its Jersey Branch is licensed and regulated by the Jersey Financial Services Commission. Registered in Guernsey No 47575. Registered office: First Floor, Royal Chambers, St. Julian’s Avenue, St. Peter Port, Guernsey, GY1 2HH. Principal place of business in Jersey: 5 Anley Street, St. Helier, Jersey, JE2 3QE. Brooks Macdonald Retirement Services (International) Limited is licensed and regulated by the Jersey Financial Services Commission. Registered in Jersey No 106423. Registered Office: 5 Anley Street, St. Helier, Jersey, JE2 3QE. Brooks Macdonald is a trading name of Brooks Macdonald Asset Management (International) Limited and used by various companies in the Brooks Macdonald group of companies. More information about the Brooks Macdonald Group can be found at

Private equity

Rise of the mega-deal With many major companies’ share prices eroded by a turbulent few years, the mega-funds are circling and recent deals suggest activity is increasing. But big isn’t always bad – and the rise in mega-deals may produce opportunities for other, smaller, players too

Words: Gill Wadsworth SO MANY OF the UK’s businesses are currently vulnerable to takeover that one former City minister has likened market conditions to a car boot sale. A look at the number of listed companies on the brink of being taken private, and with so many of them big names available at bargain prices, it’s hard to argue with the comparison. In the past few months, retail giants Asda and Morrisons have joined the growing list of UK PLCs that have become targets for private equity buyouts. Morrisons found itself at the centre of an aggressive bidding war between rival private equity companies intent on snapping up a supermarket stalwart that was carrying a depressed share price following years of Brexit negotiations and the pandemic. The UK is hot right now for private equity mega-funds intent on snapping up

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other household names similarly affected by Brexit and Covid. Further evidence can be found in the fact that the number of listed companies in the UK has fallen by around 40% compared with 2008, according to a review of listings by Lord Jonathan Hill, the former EU financial services commissioner. The UK government is now consulting on a series of recommendations put forward by Lord Hill’s UK Listing Review, which could further fuel PE activity. These include lowering the free float limit to 10%; reducing regulation around prospectus requirements; allowing dual-class share structures; and changing reverse takeover rules to encourage more SPAC listings. All of these measures are likely to encourage more PE-backed companies to tap the public markets.

BIG ISN’T NECESSARILY BAD While the prospect of more mega-funds, and their mega-deals, might sound hostile, such behemoths need not necessarily be considered as a wholly bad development.

There are straightforward reasons why mega-funds exist, not least their ability to give more access to a larger number of investors otherwise precluded from the private equity space. David Crosland, Guernsey Investment Funds Partner at law firm Carey Olsen, points out: “Private equity and other alternative investments have been the preserve of institutional investors, but there is a push among private investors to get into the class.” Add to this a desire from UK government to make it easier for the UK’s billions of pounds in defined contribution assets to be put into private equity and other illiquids, and there is a huge amount of dry powder waiting to be put to work – much of which looks set to find its way onto the books of the mega-funds. Crosland says: “Private banks are putting together vehicles to allow investors to invest in private equity. They can’t sell [retail customers] a fund they’ve never heard of. Instead, they go to the big names – Blackstone, Apax – which attracts even more money for the mega-funds.”

Private equity

Mega-funds are good news for limited partners (LPs), too. Robin de GruchyWilson, Managing Director at Oakbridge Fund Services, says one of the most important benefits of investing in these enormous funds is the reduced number of general partner (GP) relationships needed by LPs. “For LPs particularly, the main attraction is the reduced number of GP relationships that they have,” he says. “If you are an investor into a number of funds across lots of assets, then it is time-consuming and costly to track everything.” And for firms able to secure a contract to provide mega-funds with legal services or administration, they are effectively on a golden ticket. Crosland adds: “If you are a service provider or administrator and you have one of these big guys as your clients, it’s fantastic. Some of the law firms are rising or falling depending on the fortunes of the clients they secured 30 years ago. “If they were the lead lawyers for Blackstone, for example, they will have built almost their entire business around

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Private equity

The good thing about mega-funds is they are often full of ambitious people who want to run funds themselves

that single client because they have been so successful.” And success is indisputable, with megafunds able to put their performance where their clout is. According to private equity data provider Pitchbook, mega-fund internal rates of return (IRR) bounced back more quickly than smaller fund IRRs after Q2 2020. Importantly, the larger portfolio assets of mega-funds may have been more resilient to the effects of the pandemic and are more likely to be marked-to-market against public company comps, which means these funds shared in the stock markets’ rapid recovery. Crosland says: “The guys raising lots of money are those with a long track record of producing good returns to investors. The bottom line is that no one will give you their money unless you have been shown to be successful.”

SUCCESS FEEDS SUCCESS This, of course, creates a virtuous circle where the mega-funds attract more investors because of strong performance. This in turn allows them to access deals outside the reach of those funds with less capital. And so the mega-fund gravy train continues. All this dominance smacks of a world in which competition is stifled. Indeed, Crosland says, there is always room for more players that can generate

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opportunities among service providers that have not been lucky enough to get a contract with a mega-fund. But this multibillion-dollar world is not for everyone. Clearly there are investors looking for smaller deals that the likes of KKR or Blackstone wouldn’t get out of bed for. Fortunately, says Crosland, there is evidence to suggest that the bright young things employed by the mega-funds harbour enough ambition to spin out their own smaller venture capital and private equity offerings catering to the smaller end of the market. “The good thing about the mega-funds is they are often full of entrepreneurial and ambitious people, so they are constantly spinning out individuals who want to [run funds] for themselves,” he says. “So, the big firms have teams starting their own thing and launching their own funds, which is good for the wider market.” Mega-funds are not a new feature of the private equity world, but they are getting bigger all the time and their market dominance is growing, too. So far, the opportunities outweigh the negatives – but regulators need to keep a close eye on developments to ensure no-one is operating in the shadows cast by colossal fund juggernauts. n

Mega-funds defined A mega-fund is a private equity fund worth more than $5bn. It is not uncommon to see deals reach $20bn – and they are increasing all the time. A venture capital mega-fund is one worth more than $1bn. A handful of relatively wellknown firms dominate the megafund space, including Blackstone, Goldman Sachs, Apollo Global Management, Apax Partners, CVC Capital Partners and KKR. Mega-funds invest across the entire business spectrum, but certain firms may specialise in particular sectors. For example, CVC favours the technology, financial services, manufacturing, services, distribution, media, retail, industrial and service sectors.

Advertising feature

Vaiie strengthens team with new recruits The specialist Channel Islands provider of digital regulatory technology, and part of the Jersey Post Group, has strengthened its team with four appointments

Pictured l-r: Richard Gaudin, Louise Flynn, Luke Hopton and Adam Brown


Programme Manager, Operations Manager and Solutions Architect have all recently joined specialist regtech business Vaiie, bringing a credible and diverse wealth of experience that will help excel Vaiie’s digital products and services for its customers. Lee Bosio, Managing Director of Vaiie, says: “I am very excited to welcome the new team members on board. We pride ourselves on building highperforming teams and look forward to our new appointments helping us to expand our vision and deliver the very best customer experience.” Richard Gaudin, Commercial Director Richard Gaudin has been appointed as Commercial Director. In his role, he will be responsible for all the firm’s commercial elements, such as business development, marketing and a particular focus on growth with responsibility for the mergers and acquisitions (M&A) activity. Vaiie is at a key stage of development and Richard hopes to use his 20 years’ experience in senior commercial roles to drive step-change growth within the company. Richard will be taking Vaiie’s new regulatory technology to market. The portfolio is a sophisticated technology that is designed to solve challenges around regulatory compliance, risk management and client onboarding/ lifecycle management. Louise Flynn, Operations Manager Vaiie has recruited Louise Flynn as Operations Manager to help lead on the outputs of its digital studio, and oversee the team responsible for providing support to ensure customer success. With previous

experience in operational roles in the legal and finance industry, as well as running her own family business, Louise will work closely with the product and development teams to scope, plan and budget projects, ensuring they are delivered to the highest possible standard. Luke Hopton, Solutions Architect Luke Hopton has recently joined the team as Solutions Architect, with responsibility for overseeing the development teams in Jersey, Italy and Malta for all existing client services and future technology solutions. Luke has more than 10 years’ experience in software development. He has specialised in web and cloud technology, bringing expertise from his career in a variety of organisations in Jersey, the UK and New Zealand. While bringing a creative and logical problem-solving approach to the role, Luke’s appointment will be central to the liaison between the technical team and senior team. His technical skills will also ensure Vaiie builds leading regtech products that deliver value to customers. Adam Brown, Programme Manager Vaiie has also appointed Adam Brown as Programme Manager to oversee its full programme of software development projects, from initial concept to bringing the products to market. With more than 15 years’ experience in the digital industry, Adam brings to the firm a wealth of knowledge across regulation, fintech, change management, payments, banking, strategy and digital transformation. He will play a key role in stakeholder management at Vaiie, along with being responsible for providing fact-based insights on new and

emerging trends, threats, legislation and regulatory developments to identify fresh opportunities and strategic solutions.

NEW PRODUCTS The new recruits join the Vaiie team as it drives innovation in the regtech space by launching three exciting products: ● Vaiie Onboard is a rapid, frictionless and fully compliant digital onboarding solution that empowers teams to shorten the onboarding process. It is packed with an intuitive workflow that meets the needs of businesses, customers and regulatory bodies, for an exceptional client engagement experience. ● Vaiie Locate aims to leave no address unverified through its comprehensive global address assurance service that serves to deter fraud. The cutting-edge authentication technology works to provide greater assurance that a person is based where they claim to live and verifies addresses anywhere in the world. Using Jersey Post’s knowledge, infrastructure and network of trusted postal operators, Vaiie Locate is uniquely positioned to deliver the highest level of assurance with its trusted verification techniques. ● Finally, Vaiie Identify sets a new global standard in trusted real-time remote identity verification, allowing companies to verify customers’ identity in seconds with fast, secure and easy-to-use ID authentication, facial recognition and liveness checking. The verification tool offers a robust and frictionless client experience that meets all KYC and AML obligations and is accessible on any web enabled device. The new product range and appointments highlight how Vaiie is committed to leading the way in achieving technology efficiency and innovation. The growing team will also help more organisations move away from traditional practices and processes and stride towards a digital first future. n


To find out more about Vaiie, visit

August - October 2021 49

HOME BUYERS PUTTING FRESH AIR AND FAMILY AHEAD OF PROXIMITY TO THE OFFICE After more than 12 months spent living under the constraints of the pandemic, a reassessment of work/life balance is seeing a number of people choose Jersey as their relocation destination of choice, says Geri O’Brien of Savills Jersey. According to a recent survey of 1,100 Savills buyers and sellers, proximity to family and to a park or open space now sit firmly at the top of home movers’ wish lists. By contrast, proximity to a station or place of work has slipped right down the list of top priorities among our buyers and sellers. This is certainly something we are seeing in Jersey. As well as the benefits of being in a central time zone that reaches the US, Europe and Asia within the same business day, our outstanding coastal environment provides the open space and quality of life that so many are seeking. At a local level, this is something

that is the number one priority among buyers and sellers registered with our office in Jersey. Over the last two years we have seen a number of hedge fund managers and financial services firms establishing a physical presence on the island, many of whom are relocating from London. While there are income tax benefits for residing in Jersey, possible tax changes in the UK – which is the largest European base for the hedge fund sector are contributing to the growing interest among hedge fund managers to domicile outside the

UK. Jersey’s tax model allows investors to work together more efficiently with no double or triple taxation of funds and investments. Another potential attraction behind the numbers relocating to Jersey is the ‘no change’ solution for access to UK investors. The UK Government has been clear that the special relationship between Jersey and Britain will not be impacted by Brexit. As Jersey has never been part of the EU, we have long-standing bilateral relationships with EU member states and established market access arrangements, which will not be affected either. To this end, Jersey is uniquely placed and this

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

Debbie Le Brun Associate Savills Jersey 01534 870 074

Sophie A’Court Associate Savills Jersey 01534 870 140

sets us us apart from other sets apart from other international finance centres. international finance centres. The pandemic has also altered The pandemic has also altered ourour behaviours and attitudes in in behaviours and attitudes respect of of thethe working week. respect working week. With so so many people around thethe With many people around world working from home, world working from home, people areare now reimagining how people now reimagining how they can split time between work they can split time between work at at home and thethe offioffi cece in the home and in the future. Given thethe shorter future. Given shorter commutes onon offoff er er in Jersey commutes in Jersey compared to to London, as as anan compared London, example, buyers areare realising thethe example, buyers realising benefi ts this presents in in benefi ts this presents spending time with family and spending time with family and also forfor their own mental and also their own mental and physical wellbeing. physical wellbeing.


Martin, JE3 6HQ St St Martin, JE3 6HQ Guide £4.95 million Guide £4.95 million


Grouville, JE3 9BB Grouville, JE3 9BB Guide £5.95 million Guide £5.95 million

Speaking to to a client who recently Speaking a client who recently chose to to relocate to to Jersey, they chose relocate Jersey, they commented onon how moving to to commented how moving thethe island has provided them island has provided them with thethe ability to to take their with ability take their children to to school and then children school and then seeing them again in the evening, seeing them again in the evening, which is something they which is something they struggled to to dodo when living and struggled when living and working in London. working in London. The shift in attitude among The shift in attitude among buyers in the property market buyers in the property market and thethe desire forfor space is is and desire space certainly benefi tting relocation certainly benefi tting relocation destinations such as as Jersey and, destinations such Jersey and, with London less than anan hour with London less than hour away byby plane, it isit no surprise away plane, is no surprise that there areare so so many interested that there many interested in making thethe move. However, in making move. However, keeping buyer and seller keeping buyer and seller expectations onon pricing aligned expectations pricing aligned willwill bebe key to to maintaining thethe key maintaining momentum we’ve seen over thethe momentum we’ve seen over last year, through thethe summer last year, through summer and beyond – especially whilst and beyond – especially whilst demand forfor properties farfar demand properties outweighs thethe available stock. outweighs available stock. If you’d likelike to to discuss thethe If you’d discuss property market in Jersey in in property market in Jersey more detail we’d bebe delighted more detail we’d delighted to to hear from you. hear from you.


Brelade, JE3 8DD St St Brelade, JE3 8DD

Guide £4.95 million Guide £4.95 million


Brelade, JE3 8BX St St Brelade, JE3 8BX

Guide £12.5 million Guide £12.5 million

Climate change

Transition vamp With the clock steadily ticking towards 2030, when the bulk of the reduction in carbon emissions must be achieved if the world is to reach its objective of net-zero status by 2050, the focus is turning to how the carbon transition will be financed

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Climate change

Words: Steve Falla

THE WORLD’S OBJECTIVE of reaching net-zero status by 2050 may seem a long way off, but many believe – especially in the wake of the IPCC’s recent report on the climate crisis – that the bulk of the actions required will need to be taken by 2030. Dubbed ‘the decade of action’, the reality is that the vast majority of steps that need to be taken are not 30 years away but just over eight. That tees up some huge challenges for the investment world – as it seeks to play its part in supporting government initiatives and financing the changes required to decarbonise the planet. Both the public and private sectors have a part to play in providing transition finance. And the COP26 meeting of the world’s climate leaders in Glasgow in November is expected to be a huge catalyst for placing a greater focus on the financing process – from the public, private and third sectors. The role of governments will be to encourage and incentivise investment by promoting the right landscape, while business will turn its expertise to garnering capital through innovative new investment opportunities, in part driven by climateconscious investors. Bill Prew, CEO of INDOS Financial, a JTC Group company, says: “Our view is that net zero will ultimately be financed by consumers and the capital markets, as it is simply too big a thing to be financed by governments alone. “However, the role of governments and supranational bodies in creating the right environment will be crucial, and that will include regulation and legislation.” The UK is a world leader in committing to net-zero targets and will play a significant part in the transition, according to Mark Cleary, Interim MD Guernsey Funds and Director in Jersey at Zedra. He points to the June launch of the UK Infrastructure Bank in Leeds, tasked with accelerating investment into ambitious infrastructure projects in support of regional economic growth and net-zero ambitions. It will issue £10bn of government guarantees to help unlock more than £40bn of overall investment. “What the bank may do is take the first tranche of risk and this will ‘crowd’ private capital into new projects,” says

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We make it our business to know your business We understand the opportunities and challenges for Jersey businesses in today’s fast-moving world. Our corporate team are locally focussed, commercially aware and provide clear, pragmatic and top quality legal advice in a friendly and cost-effective manner. If you have any questions on how we can support your business, please get in touch.

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Corporate Law

Cleary. “By being innovative enough to create this bank, the UK will encourage private companies to invest alongside it and to increase the amount of capital that’s going to be invested in the sustainable infrastructure that will be needed. “Banks will support this by providing loans at lower interest rates, perhaps linked to a decrease in carbon or some other sustainable outcome. Lower interest rates result in higher financial returns, too, so there’s a win-win here.” Indeed, there’s some justification for the financial services industry to be proactive about the transition process, beyond pure self-interest, adds Sally Rochester, Director, Risk and Regulation, at Deloitte Guernsey.

CULPABLE CITY Rochester cites a report released in May 2021 by Greenpeace UK and the World Wildlife Fund UK, which concluded that UK banks and asset managers were responsible for financing 805 million tonnes of CO2 in 2019 – 1.8 times the UK’s net annual emissions. This would make the City of London the ninth biggest emitter of CO2 in the world if it were a country. Aiming for net-zero targets does not have to be at the expense of profitability, however, and many businesses are adopting a strategic approach. Cleary says: “You’ve got to ask what incentivises private markets to invest in sustainable infrastructure or other netzero products? There’s been quite a lot of evidence that you don’t necessarily give up returns by pursuing any ESG-related investment thesis.” Ian Corder, Director of Standards and Operations at ESI Monitor, agrees – and sees no conflict for environmentally aligned businesses. “For businesses using renewables, net-zero targets and

profitability are absolutely on the same page. They will be able to corner the market, create new products and new markets – unlike those stuck on pathways that use polluting fossil fuels,” he says. Alongside governments and financial institutions, investors are having a huge influence on business, and it is incumbent on financial institutions to demonstrate that their strategies support decarbonisation. Disclosure is becoming increasingly important in this area.

HITTING THE TARGET Bradley Davison, ESG lead at RBS International, says: “Over the past few years, we have seen a massive increase in investor requirements regarding ESG policy – for investment funds to demonstrate a clear net-zero target and how they are delivering on that target has a direct financial impact. Prew supports this view. “It’s quickly becoming a virtuous circle of supply and demand, but our experience so far has been that investor demand is the initial driver, then financial institutions respond to meet that demand,” he says. “Crucially it is their behaviour that has a knock-on effect on the wider economy and the behaviour of companies that need access to global capital.” However, simply setting targets is not enough, as investors are also looking for evidence that those targets are achievable. “It’s investor-driven,” Davison says. “Investors are increasingly choosing entities that have robust ESG pathways. Over the next year, that will be a crucial difference. “At the moment, it might be okay to have a target; but over the next year we’ll need to outline the plan to get there too, as investors recognise the benefits of investing in Paris-aligned investments. Investment institutions are having to play catch-up.”

There are, however, some standout examples setting a benchmark, as Rochester points out. “Financial institutions in some cases have led the charge. Organisations such as Aviva and BlackRock have been agents for change and have been championing the cause for a number of years. “The UNPRI [United Nations Principles for Responsible Investment] and various other groups are encouraging and supporting transition through these principles. The Task Force on ClimateRelated Financial Disclosures [TCFD] is developing as the international standard so that investors can make an informed choice about which companies they invest in.” Bradley highlights the need for compliance and regulation. “One of the most important differences between today and the future is this idea of sustainability reporting. In a net-zero economy it will be part of how a business operates, it won’t just be a nice-to-have.

The City of London would be the ninth biggest emitter of CO 2 in the world if it were a country

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Climate change

Climate change

“Regulations are catching up with where business is going. We will see entities being held to carbon dependency in a more scrutinised way.” “I rarely go into meetings now where I don’t hear ESG mentioned at least five times,” adds Cleary. “A lot of that is propelled by the younger generation and the demand is also recognised by managers and general partners. They have to change their ways or they are not going to be a player. There’s a groundswell coming from different sources.” So, what will the net-zero economy of the future look like? Corder highlights some key differences. “We need a clear picture of what the net-zero economy could be and how to get there,” he says. “If we are heading for it by the year 2100, we are really missing the point. If we are saying it remains part of the 21st century, certainly there will need to be incredibly high levels of renewables and electrification. “If 90% of electricity is renewable by 2050, the view is that almost all of that will need to be provided by solar and wind – and requires a big change in how power is stored and distributed at larger scales than currently. “Storage is really important – making sure it’s available when people press the switch – and by 2040 most new vehicles on the road will need to be electric.”

GREENIFICATION While disinvesting is the answer for some, Davison argues that it might not be the best solution. “It’s a difficult conversation and over-nuanced, but if you are an investor and in a position where you are starting to tilt towards ESG, excluding brown entities

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Setting targets is not enough – investors are also looking for evidence that those targets are achievable is simply walking away from the problem. If an entity does not want to change, it’s a more difficult conversation.” Corder goes further, saying: “Greening existing companies is essential, probably more important than encouraging new start-ups. There’s a great incentive for existing companies still to be there in 20 to 40 years.” A challenge for the investment community is the mismatch between traditional fund lifecycles, particularly in the private equity space, and patient equity. Prew is pragmatic: “If, for example, investors expect returns after just a few years for equities, or five to seven years for private equity, then asking them to focus on patient equity can be hard. “However, there have always been long-term plays and, ultimately, if the best returns come from patient equity strategies, the market will move in that direction.” The challenge is not insurmountable for Davison. “Fund lifecycles are relatively short – five to 10 years,” he points out. “Usually, there’s a period of a one- to three-year financing cycle, which clearly does not align with the long-term goals we are looking for.

“That gap is definitely identified, but it’s not a reason not to do it. You may be operating for five to 10 years, but there’s lots you can do even if you are not reaching out to 2050 transition financing and innovative solutions. “There could be partnerships between governments and financial institutions to set out that the capital is going to the right place at the right time.” Rochester believes Jersey and Guernsey can punch well above their weight when it comes to transition finance and tackling climate change. “The islands have the opportunity to demonstrate action, both in relation to nature and climate change, and show the difference that can make to the environment and the wellbeing of our local population. What we do, or don’t do, will be looked at on the world stage. “If we are brave enough to take the lead on some well-thought-out projects, we can be a global role model for what’s the most defining issue of our time. “It takes risk and it takes bravery. There are people on the islands who can make this happen and I would hate us to miss the opportunity.” n

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 • Regulatory advice and compliance • IPO services • Sustainability services • Digital transformation • Cyber security • Data, analytics and cognitive solutions We combine our local knowledge and a collaborative approach working across the Channel Islands, Gibraltar and the Isle of Man for fund clients to deliver practical, effective and insightful advice that cuts through the complexity of the global funds industry. Our Debt Fund Services team — Winner — Best Audit Service — 2019 and 2020 Alt Credit European Awards. Jersey: 01534 824200 Guernsey: 01481 724011 Isle of Man: 01624 672 332 Gibraltar: +350 20041200

Corporate financing

Private power With corporate banks seemingly reluctant to lend to anyone but big blue-chip firms, and businesses seeking greater access to financial support post-Covid, direct private lending is ready to seize the opportunity for growth

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Corporate financing

Words: Alexander Garrett represent 53% of the funds in market and 56% of the capital being targeted in private debt, while the proportion of investors targeting private direct lending has risen from 38% in Q2 2020 to 68% a year later. A key contributing factor to the rise in direct lending, first in North America and now increasingly in Europe and elsewhere, is the general trend of banks de-risking their loan books, resulting in a perceived growing reticence of banks to lend to all but the most ‘blue-chip of companies’. Andrew Boyce, a Corporate Partner at Carey Olsen in Guernsey, believes the global financial crisis provided much of the current impetus. “The period immediately prior to the financial crisis was a ‘boom period’ of available credit, resulting in somewhat borrower-friendly lending terms,” he says. “Examples of this were cheaper pricing and ‘covenant-lite’ loans. So, competition to be able to lend was eroding the usual lender protections. “The financial crisis exposed the dangers of a surplus of available credit and, with the post-financial crisis contraction in available liquidity, the banks – simply put – didn’t need or want to be taking those risks anymore,” he explains. “The banks have, to an extent, all started chasing similar clients – larger, well-known, financially stable ‘blue chip’ companies. That has inevitably left a bit of a gap.” The rise of direct lending, adds Boyce, has seen private debt move from ‘the fringes’ – secondary areas such as

mezzanine and junior level credit or more esoteric types of credit lines – to providing senior frontline and mainstream debt. “Direct lenders have provided much needed competition in the credit space and stepped in to the banks’ accustomed positions in many situations,” he says.

TARGET AUDIENCES Direct lending is generally targeted at mid-sized companies the banks typically shy away from, but which still require significant lines of credit. The size of loans

The banks have all started chasing the same clients, the blue-chip companies they are willing to lend to, so it’s left a bit of a gap

THE PAST DECADE has undoubtedly been a golden era for private equity. And now, it seems, private direct lending is set to enjoy its own moment in the sun. Private direct lending is any kind of credit extended to companies by lenders other than banks, and includes debt classes such as mezzanine, real estate, distressed, infrastructure and special situations. Direct lending funds have already taken a significant slice of the lending pie in the wake of the global financial crisis. Now, they are poised to extend their reach further – particularly into sectors where companies are facing distress and corporate restructurings following the pandemic. However, with that will come a new set of challenges – as funds will need to establish effective ways to manage the increased risks posed. The growing popularity of private debt among investors is already well evidenced. Alternative assets data provider Preqin estimates that in Q2 of 2021, private debt funds worldwide were sitting on $364bn of dry powder – capital raised but not yet deployed. The number of private debt funds has more than doubled since 2017, says Preqin. And it’s direct lending that’s generally leading the charge. According to Preqin, direct lending funds

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Corporate financing

would typically be between £20m and £500m, says Alan Booth, Global Head of Capital Markets at Ocorian. “If we look at the global corporates that might have a bit of stress, they have their own credit facilities with the banks that they can draw down on, albeit they’ll pay a little bit more,” says Booth. “But it’s companies that wouldn’t have access to those kind of robust credit facilities with the banks that present an opportunity for direct lending funds.” From an investor’s perspective, the appeal of direct lending is the opportunity to achieve higher levels of return than can be obtained from cash or fixed-rate securities. “What we are seeing now is that cash is relatively freely available, it is cheap,” explains Booth.

Fund managers need to be unshackled from the day-to-day operations so they can focus on executing on the investment strategy

60 August - October 2021

“But in this low interest rate environment, the return on keeping cash on deposit is minimal. If you’re holding euros, you’re in negative territory. So it’s a case of deploying that cash in the most appropriate way and getting the returns that you want.”

CHANGE OF EMPHASIS Other asset classes, such as UK real estate, which were providing reliable returns of up to 30% each year, have also dampened considerably. So investors such as pension funds, insurance companies and sovereign wealth funds have turned their attention to direct lending. Ocorian’s recent global survey of capital markets investors found that 87% are pursuing direct lending opportunities either through an existing strategy (57%) or a new strategy that they are in the process of executing (30%). And direct lending proved to be the most popular strategy for private capital funds closing in 2020, accounting for 56% of all funds closed in Europe, according to Deloitte’s Alternative Lender Deal Tracker, Spring 2021. Booth says that while much of the economy has weathered the storm of Covid-19, certain sectors have been harder hit. Once government support such as the furlough scheme is withdrawn, companies in these sectors will provide a vein of opportunities for direct lending in the months ahead. “For example, aviation and maritime transportation sectors, as well as highstreet retail businesses, have all had sizeable impacts,” says Booth. Already indebted companies may seek options such as mergers and acquisitions, debt restructurings, securitisation of assets and even insolvency. Because of the distressed nature of these companies, the returns on offer will be especially attractive.

However, with that will come a note of caution. The investors surveyed by Ocorian acknowledged lack of confidence in their own ability to manage these situations. They expressed the least confidence in addressing loss recoveries (47%), risk assessment (53%), statement production (54%) and covenant monitoring (57%). What that means, says Booth, is that those who are stepping into this space for the first time may need extra support in running their operations. “Our view is that fund managers need to be unshackled from the day-to-day operations so they can focus on executing on the investment strategy,” he says. The advantages of establishing private debt funds in the Channel Islands are much the same as those for establishing any financial structure in Jersey or Guernsey, says Boyce. “It’s the international standard regulation, the flexibility of the vehicles, the tax-neutrality, and the experience and the knowledge of the service providers here – we’ve been doing this for 30-odd years.” He points out that bigger private credit funds – run by the likes of the large private equity sponsors – have extremely sophisticated operations and will be quite capable of dealing with a more challenging environment. “The risk is the same as when there is a bank lending, because at its heart it is about understanding who you are lending to and what the specific financial tolerances are. “Where there’s a crisis element, there’s always some risk of default,” he says. “But in some ways, direct lenders are in a better position to effect recoveries because they can be more flexible in how they approach a default scenario.”

POSITIVE OUTLOOK Booth says the outlook for direct lending is extremely positive, not least because it will be an attractive option for investors, given the likelihood of continued low interest rates. “What we can see in the next three to five years are great opportunities for direct lending,” he says. “For those assets that are more distressed, direct lending will increase because we’re in a low interest rate environment. “And it’s going to be a focus of all the central banks to maintain that low interest rate environment, because there’s been a lot of government borrowing.” Banks will eventually lend more, says Booth, but the market has gained confidence around the agility that private direct lending can offer. Booth concludes: “I see direct lending certainly being the dominant player in terms of any form of lending for corporates going forward.” n

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Tackling the changing landscape of modern-day working The past year has seen many changes in how we work, all of which have introduced new challenges for businesses and employees alike. Jamie McDonald, Director at SystemLabs, a local provider of IT services and solutions, spoke to Alex Blackwell, MD of Redcoin, a local IT security distributor, about the challenges businesses faced when tackling the new normal Alex Blackwell: In March 2020, the landscape of work changed pretty much overnight. What sort of challenges did businesses encounter? Jamie McDonald: One of the biggest challenges was the increase in demand for those working on the service desk. When large numbers of users had to switch to working from home, they faced numerous issues because they were suddenly operating outside their normal network, which meant service desks saw a huge surge in requests for help. Many of our customers needed a tool to help manage this effectively and we introduced them to ServiceDeskPlus. AB: How did that help? JM: Well, as a tool it provides an increased visibility of all requests coming through the service desk. Some smaller businesses previously didn’t have a ticketing system to track IT requests and needed a way to effectively manage these. Larger sized teams also saw a huge increase in demand for urgent requests and, because it is fully customisable, we found that ServiceDeskPlus helped address these issues. In both cases, this ManageEngine solution provided them with an increased level of visibility on all active tickets, which meant they were able to monitor the number of requests and progress of tickets, assign tasks and prioritise them too. Some tickets logged by users had a high level of impact on their ability to do their job, which would have a knock-on

effect to business function, so these had to be dealt with urgently. We found that giving service teams a centralised view of these requests also meant that they had a means to overcome the barrier of working in different places as opposed to their normal close-knit environment. AB: I take it the teams weren’t the only ones under pressure? The infrastructure of networks must have been tested, too? JM: Absolutely. Before this happened, most workstations were connected to centralised secure networks. Many businesses had to shift to connecting into the office via Virtual Private Networks (VPNs) or use more cloud-based solutions. Business continuity was obviously key and so our customers needed a tool to help with that. We rolled out OpManager to a number of clients due to its capacity to identify and prevent critical errors, monitor storage availability, analyse bandwidth usage so there were no outages, and its ability to give users a clear view and prevent any unauthorised changes to network configurations. We also worked to set up secure and centralised password storage solutions using PasswordManagerPro, which provided users with the ability to remotely reset passwords and gave administrative staff a way to share updated passwords in a safe way. Helpdesk teams also used this to create secure connections when remotely logging in to users’ machines, to resolve issues that could not be handled over the phone.

AB: It sounds like security was a big concern for everyone? JM: The biggest. Unfortunately, we saw a large increase in phishing and ransomware attacks because the people behind these scams knew that a lot of businesses were operating outside of their normally secure network and tried to take advantage of that. Businesses had the additional challenge of a global shortage of laptops and mobile devices due to increased demand, meaning a number of people were forced to use personal devices. This meant that when rolling out security solutions, we had to switch our approach from securing networks to securing machines. As part of this, we needed to minimise the impact on the end user while ensuring companies were 100% compliant in terms of securing client data by providing encryption for documents, secure storage, file sharing and antivirus protection, to name just a few. AB: What should businesses be considering to make sure they’re not at risk from the kind of attacks you mentioned? JM: Each business has its own unique set of needs so it really is about tailoring the right solutions to the requirements on a case-by-case basis. We’re always happy to chat to anyone who is unsure of how to approach this, with our on-site security reviews providing a great baseline for both SystemLabs and our clients to identify the gaps and develop a plan to address them. n

Alex Blackwell (left) and Jamie McDonald


If you are interested in discussing ManageEngine’s solutions or our Security Reviews further, please get in touch by emailing

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Alternative finance

The recent collapse of alternative lender Greensill has thrust the spotlight firmly on non-traditional, less regulated financial services firms. But is shadow banking a dangerous dark art or a valuable cog in the financial services system? Words: James Tall

eventually be filed in history as a political story, there are plenty of financial and regulatory questions to be addressed before the involvement of a former prime minister and the lobbying of government are fully investigated. In early 2021, it became clear that Greensill Capital, a sizeable shadow bank that enabled businesses to borrow money to pay their suppliers, was struggling and on the verge of bankruptcy. The crisis deepened in March when BaFin, the German financial watchdog, banned Greensill Bank, the German subsidiary of Greensill Capital, from doing business – and reportedly filed a criminal complaint against its management. This followed a forensic audit in which BaFin raised concerns around bookkeeping, in particular for transactions linked to GFG Alliance Group, the famous steel empire headed by Sanjeev Gupta. In a statement, BaFin said: “Greensill Bank was unable to provide evidence of the existence of receivables in its balance sheet that it had purchased from the GFG Alliance Group. For this reason, BaFin has already taken extensive measures to secure the bank’s liquidity and to limit risks for Greensill Bank.” This was a critical blow to Greensill Capital, which counted former Prime Minister David Cameron as an adviser, and

it filed for insolvency on 8 March 2021. It was a crisis that has thrust the issue of shadow banking – or alternative lending – back into the spotlight, not least because the fallout has damaged traditional financial institutions, including Credit Suisse, which were doing business with the collapsed lender. According to the Financial Times, the Swiss bank, which had several ties with Greensill Capital, including $10bn worth of funds, reported a 78% fall in profits for the second quarter of 2021. As the shocks from the implosion continue to spread, many are questioning whether regulators will seek to get more control of a mode of lending that sits outside the main regulatory regime. Furthermore, the plight of Greensill Capital has raised concerns about the evolution of the global financial system in which alternative lending is a growing presence, and the ability of the regulatory authorities to keep up.

A PRESSING NEED FOR ALTERNATIVES There is no doubt that alternative lending has a crucial role to play in the financial services ecosystem. To give one example, it’s a necessary financial mechanism for SMEs that are struggling to cope in a tough economic climate. Alternative lenders played an increasingly vital role in delivering state-


Out of the 62 August - October 2021

Alternative finance


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Alternative finance backed loans to UK SMEs, including the Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS). As the banks were hit by unprecedented demand, which put a huge strain on legacy technology that was already creaking, research highlighted that of the 115 accredited CBILS lenders, 60% could be classed as an alternative lender. “Traditionally, it’s never been made particularly easy for SMEs to gain access to finance,” says Jo Gibson, Head of SME Non Bank Channel at fintech platform Incomeing. “The answer to some of the problems faced during the pandemic were the government-provided CBILS and BBLS programmes, which mobilised the alternative lenders alongside mainstream banks.” As Gibson points out, even before the pandemic, SMEs faced well-documented problems when it came to accessing credit. In recent years, banks and other mainstream financial institutions have cut back on business lending because of the comparatively high costs involved in acquisition, delivery and servicing, as well as the limitations of legacy technology and processes. These pressures have been increased by more stringent regulations, such as Basel III and Capital Requirements Directive, which have resulted in banks further reducing loans to small businesses and sole traders as they seek to strengthen their capital requirements and decrease leverage. These conditions have prompted huge growth in the shadow banking system, as alternative lenders, brokers and other credit intermediaries that fall outside the realm of traditional regulated banking step in to address the shortfall. A recent report by Cambridge University’s Judge Business School revealed that global alternative finance volumes grew by 24% in 2020 – a remarkable figure when you consider the economic disruption that characterised last year. It’s also fair to point out that much of the alternative finance sector enjoys a good relationship with regulators, especially in the UK, with the Financial Conduct Authority (FCA) seen as a progressive entity keen to work with the new generation of lenders. The Peer-to-Peer Finance Association (P2PFA) was set up by alternative finance companies, including Zopa and Funding Circle, in 2011 to actively lobby the FCA to regulate the burgeoning sector.

FLAMBOYANT OUTLIER OR WARNING? So should Greensill Capital be considered a bad apple or representative of a wider problem in the sector? The Financial Times, among other publications, believes Greensill bore many of the classic signs of a financial accident

64 August - October 2021

waiting to happen. Its charismatic founder, Alexander David ‘Lex’ Greensill, is considered by many to be a stereotypically flamboyant entrepreneur. The company’s website talks up his trajectory “from humble beginnings to revolutionary thinking”, drawing on anecdotes from his childhood at his parents’ sugar cane and melon farm in Australia. There were also concerns about the speed of Greensill Capital’s growth, which can often be a red flag for excessive risktaking and a poor-quality loan book. The shadow bank was created in 2011, when Lex Greensill left his banking career – which included stints doing global supply chain financing at Morgan Stanley and Citibank – to follow his entrepreneurial desires. By 2019, Greensill Capital had extended $143bn of financing to more than 10 million customers and suppliers in 175 countries. Its heavily concentrated portfolio was another warning sign. The Scope rating agency estimated that in 2019, two-thirds of Greensill Bank’s loans originated from a single group of linked private companies – almost certainly part of Sanjeev Gupta’s business empire. BaFin called out this concentrated exposure when it ordered the German operation to be closed.

REGULATORY LENS SET TO INTENSIFY As with any sector, there are good and bad players in the alternative lending space. While there is a clear need for shadow banking in our post-pandemic economy, its capacity to spring dangerous systemic shocks shouldn’t be underestimated. There is currently a lack of transparency in certain areas of the financial markets, and the risks that some alternative lenders take on aren’t just borne by themselves – they are shared by the banks and the other market participants they partner. In the Greensill case, insurers and outside investors have also been caught up in the ongoing losses.

During the pandemic, the government’s CBILS and BBLS programmes mobilised the alternative lenders alongside mainstream banks

There are likely to be more losses associated with new non-bank entrants moving into the traditional markets to cater for increased demand. Alternative lenders typically seek to operate in a more high-risk manner than the banks have done, but without being required to disclose much of their activities. Because these entities rely on outside investment from other institutional investors, any failures can easily create a ripple effect across the markets. This is why many commentators expect further legal fallout from the Greensill losses. Lawsuits have already been raised against Credit Suisse on behalf of the investors in its Greensill-related funds. The banks themselves will be looking at exactly how these losses occurred and whether anyone else can be held accountable for them. And the regulators will be taking a closer interest in the actions of all those involved. The challenge for the regulators, as always, will be how to appropriately regulate a burgeoning sector without stifling the innovation behind it. In the shape of the FCA, the UK at least has a regulator that is used to working with ambitious new entrants. n


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Passion investing

wine remains attractive to investors because of the steadiness of the market and the growing scarcity of some of its most sought-after bottles. But investing in wine is not straightforward – challenges range from avoiding scammers to identifying which grapes are likely to reap returns in future

WITH THE VALUE of fine wine increasing by 13% during 2020 and 127% over the past decade, according to a report by Knight Frank, investors around the world are raising a glass to this luxurious but accessible asset class. “With a couple of quite noticeable caveats – such as the Asian wine boom and the crash after the 2008 financial crisis – wine is an incredibly steady asset,” explains Tom Harrow from online wine trader Honest Grapes. “It’s not correlated to the financial markets, so even when there have been massive dips or rises, wine remains pretty constant. “We would call it a defensive hedge investment. If you’ve got a client, for example, who has a fairly sizeable crypto portfolio, the moment that portfolio is up, cashing out and putting some of that into wine offers a hedge in a very stable market.” Harrow also points out that, unlike art, cars or watches, wine is a depreciating asset in the sense that if you use it, it is gone. Taking your classic car for a drive or wearing your Rolex Daytona doesn’t materially affect their value. But opening a bottle from your collection removes it as an asset. For the wider market, however, that increases the scarcity of fine and vintage wines. “That scarcity means the few bottles that are left gain in value. The longer you keep your wine – as long as you’re

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TAX MATTERS Another key attraction of wine compared with other alternative asset classes is that it’s not subject to the same tax requirements. So long as you buy the wines in bond, you don’t have to pay duty or VAT. But what exactly does ‘in bond’ mean? “The government gives licences to particular logistics and storage companies, and part of those businesses will have bonded warehouses within their framework,” explains Ben Dawes, Managing Director of Richard Dawes Fine Wines. “If you’re importing alcohol, the product can enter the UK into a warehouse that’s regulated by HMRC, meaning it can arrive duty and tax free.” “When you’re trading wine, you should sell it in bond, meaning any future liability is passed on to the buyer,” adds Harrow. “All in all, wine is a very taxefficient asset.” He adds: “Crucially for investors, wine isn’t subject to capital gains tax (CGT) either. That has come under review several times in the last five years, but the Revenue and the Exchequer are showing no interest in applying CGT to wine because it’s considered a chattel, or a wasting asset.” On the flip side of these benefits, wine is not a registered or regulated industry. This means that investors are not protected by the Financial Services Compensation Scheme should something go wrong. As a result, it’s important that anyone considering investing in wine does their own due diligence to safeguard themselves.

Words: Sophie McCarthy

making sure you’re keeping it within its drinking window – the more it’s going to go up in value. It’s as simple as that,” Harrow says.

Passion investing

A vine romance

August - October 2021 67

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Passion investing “Research, research, research,” says Dawes “Do your due diligence on any business you might be working with. Check their balance sheet and only work with those that have a good track record. “Anybody offering you guaranteed returns is probably somebody you’d want to do more research on or steer clear of altogether.” Harrow agrees. “It’s imperative that you work with a trusted, recognised merchant, broker or portfolio manager,” he says. This is especially important, he adds, because so much wine investment is about buying pre-release, or en primeur. “This means you’re buying before the wine is bottled. We’ve just completed the Bordeaux 2020 en primeur campaign and we’ve been selling through that vintage extremely well, but those wines will not be physically available or shipped until 2023. So, there’s a lot of trust there,” he explains. “There have been some scammers who’ve taken people’s pension cash and not spent it on the wine. Then, two years later, they’ve disappeared. That’s why you very much have to work with professionals who have a good track record and industry credibility and recognition.” Although finding a reputable partner can help you navigate the pitfalls of investing in wine, there are some who successfully go it alone. “We’ve got a customer who buys straight from us and 10 or 15 other merchants in the UK,” says Dawes. “He spends a lot of time researching the market, as well as the brands and wines one would want to follow and purchase in an investment arena, and goes about it himself. “He speaks to us regularly in terms of trying to garner more information, just to make sure he’s buying and selling the right wines.” For those opting to go down this route, Dawes recommends Cellar Watch, which used to be owned by Liv-ex, the global marketplace for the wine trade. “You plug information into the database – the cost price of your purchase, how many bottles you bought and so on – and from it you get a valuation every month, so you can watch your cellar moving up or down in value.”

WHAT’S HOT AND WHAT’S NOT? So, what about those making their first foray into this field? “We suggest a pretty diverse portfolio, probably more diverse than many would recommend. And we suggest you have an annual budget in mind – your discretionary spend for the year,” says Harrow. “Typically, a client would come to us with an annual budget of £8,000 to £12,000. We’d say that is a good jumping off point. “When people are starting out, we often suggest they prime the pump, as it were, meaning they might want to spend

Some superb 2018 and 2019 vintages are coming out from Tuscany that have remained under the radar

anywhere between 50% to 100% of that just to get immediately involved.” As for which wines experts recommend including in a portfolio in order to maximise future gains, Harrow strongly believes that Italy is on the march. “I’ve been banging the drum for Italy for a number of years,” he continues. “Global interest in wines from Piedmont is really picking up and they’ve got some absolutely fantastic vintages that will be available soon. “In September and October this year, there are going to be some superb 2018 and 2019 vintages coming out from Tuscany that are very well scored but have remained under the radar. I think they’re going to become increasingly significant in portfolios. “We’re also always advising clients to look out for the top champagnes,” he

continues. “Vintage Krug, Dom Perignon, Henri Giraud. People don’t identify champagne as being an asset wine, but it really is because it lasts for such a long time and it gets drunk so quickly.” Dawes agrees. “Champagne has been doing very well over the last few years. Big brands like Louis Roederer and Cristal are wines that people should definitely be keeping an eye on. “When it comes to Bordeaux, Château Canon, Château Rauzan-Ségla and Vieux Château Certan are some hot names that people are really following at the moment. Those are three wines that people are really chasing right now alongside the first growths in Pétrus and Le Pin,” he adds. “Down in Spain, follow Vega Sicilia’s Unico, and in Italy the likes of Sassicaia and Ornellaia and Masseto are doing particularly well. Out of those three, Sassicaia, is on a real run.” Sassicaia – a Bordeaux-style red – crops up again during conversations with these connoisseurs, in relation to keeping a weather eye on portfolios in case particular lines within it are peaking. “A classic example of this,” says Harrow, “was when Rihanna was ‘papped’ swigging a bottle of 2003 Sassicaia. If that was within your portfolio, it might have acted as a trigger point for you to cash out because it suddenly spiked.” Occasions such as this are rare, however. As such, Harrow suggests purchasing cases “that you’d be very happy to drink if the returns after, say, five, six or seven years aren’t as exciting as you’d hoped”. That, according to Harrow, is the ultimate joy of investing in wine. “The worst possible outcome is that you’re going to end up with a cellar of gorgeous, mature, high-scoring wines to enjoy yourself.” Cheers to that. n

August - October 2021 69


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.


Pierpaolo, Partner & Head of Wine Buying


Knowledge Brain food for the busy business professional

The Knowledge is compiled by Alexander Garrett Load of rubbish


points Stormy weather

Intense rainstorms of the kind that have battered Europe this summer are expected to become more frequent due to global warming, because warmer air can hold more moisture. A study published in the journal Geophysical Research Letters predicts that slowmoving storms could become as much as 14 times more common by the end of the century in a worst-case scenario. The slower a storm moves, the more rain it dumps on a small area and the greater the risk of serious flooding. Computer modelling forecasts storms moving more slowly and becoming more deadly.

Fly-tipping now costs the UK economy almost £1bn a year, according to the Environmental Services Association. Its report, Counting the cost of waste crime, says criminal activity relating to waste management is estimated to have cost England £924m in 2018/19, a significant increase from the previously estimated costs of waste crime of £604m in 2015. The reasons for the 53% increase include a larger number of incidents and landfill tax being extended to illegal disposals of waste. The total cost includes costs to the public sector, such as loss of tax revenue; to the private sector, including revenue; and to the wider environment. Other costs include clearing illegal waste sites and enforcement action.

Signal value

Some 70% of house-hunters say they would walk away from their dream home if mobile connectivity wasn’t up to par, following a shift in working patterns due to the pandemic, according to newly released data from Virgin Media O2. And around a fifth of house-hunters would be willing to pay more, some up to £10,000 more, for a property with strong indoor and outdoor phone signal. The research also highlighted that good broadband connectivity is crucial, with 35% of Brits prioritising good broadband over good transport links. And 60% of house-hunters said the strength of the mobile and broadband network would be a top consideration when looking at properties to buy or rent.

Four legs faster

Humans cannot run as fast as the speediest members of the animal kingdom because of a number of body design factors, a study by the University of Cologne has concluded. Animals perfectly adapted to sprinting, such as cheetahs or antelopes, are characterised by a slender body shape, long legs and a particularly mobile spine to achieve very high speeds when running, the scientists found. The physical balance of propulsive leg force and air resistance to be overcome, as well as the inertia of the propelling muscles, are the key factors that determine how fast an animal can run. Four-legged mammals can reach much higher running speeds than bipedal designs such as humans and birds because they can gallop, using their trunk muscles for propulsion. But above an optimum weight of around 50kg, more powerful muscles no longer help because larger muscles take more time to contract at top speed.

Poor kids

The coronavirus pandemic has made parents around the world pessimistic about their children’s future, according to a survey by Pew Research. In Japan and France, 77% of those surveyed think today’s children will be worse off than their parents, while Italy and Spain are not far behind. Some 68% of those in the US agreed – up from 60% in 2019. The most optimistic countries included Sweden and Singapore, where only a minority thought that children will fare less well than their parents’ generation. The countries where optimism about the economy has increased the most in the last year included Australia and the UK.

August - october 2021 71


New in… BOOKS

Business reset

Digging the dirt

Rebuild: How to Thrive in the New Kindness Economy by Mary Portas (Bantam Press, £14.99, paperback) Mary Queen of Shops turns her attention to the post-pandemic world and says it’s time to put people and planet before profit. Businesses in the Kindness Economy must understand the role they play in all our lives – the book is aimed, it says, at those who want to spend better, with social progress in mind. Portas promises tips and ideas for businesses that want to reset and embrace the new values. She came up with the idea of the Kindness Economy before the pandemic, in response to the decline of the high street and what she sees as the excessive emphasis on fast and cheap.

Kleptopia: How Dirty Money is Conquering the World by Tom Burgis (William Collins, £9.99, paperback) Written in the style of a fictional thriller, this is a real-life expose of the trail of corruption that circles the globe, written by FT investigative journalist Tom Burgis. The story starts with Nigel Wilkins, a compliance officer working at a Swiss bank, who suspects his bank is handling dirty money. He gathers evidence and uncovers a system of complex relationships including Asian oligarchs, African dictators and Manhattan realtors, but when he spills the beans to the regulators, they do nothing. Burgis uses the story to show how autocrats around the world are building political power on tainted money. Governments and even entire societies become corrupted by the process amid a conspiracy of silence.

The plot thickens

Sail of the century

Stonehouse: Cabinet Minister, Fraudster, Spy by Julian Hayes (Robinson, £25, hardback) This tells the story of a real-life Reggie Perrin, the MP John Stonehouse. In November 1974, the former Cabinet Minister walked into the sea from a beach in Miami and disappeared, apparently drowned. In fact, he had faked his own death after his businesses got into trouble and was en route to Australia with his secretary Sheila Buckley. Weeks later, he was arrested, deported to Britain, tried for offences including fraud, forgery and wasting police time, and sentenced to seven years in prison. As if that wasn’t enough, it later emerged that Stonehouse had been a spy for Czechoslovakia in the 1960s. As one reviewer notes: “Had Stonehouse’s life story occurred to John Le Carré as a plot for one of his novels, he would have dismissed it as too far-fetched.”

Merchants: The Community That Shaped England’s Trade and Empire, 1550-1650 by Edmond Smith (Yale University Press, £25, hardback) Smith charts how one group was responsible for shaping the trading nation that many now see as Britain’s postBrexit future. In the century following Elizabeth I’s rise to the throne, English trade blossomed as thousands of merchants launched ventures across the globe, turning the nation from a peripheral power on the fringes of Europe to the most powerful country in the world. Smith traces the lives of individual English merchants and their experiences from exporting wool to Russia, to importing exotic luxuries from India and building plantations in America.

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The Knowledge

In numbers: Space travel RESOURCES

574 Number of people who have travelled to space

Source: Fédération Aéronautique Internationale

The Authentic You This podcast from Canadian consultant Goran Yerkovich aims to counter post-pandemic burnout by “empowering employees with a better understanding of their rights and how they can start doing more of the little things that matter each day to bring more passion, purpose and joy into their lives”. Each episode includes steps to address workplace stress.


Price of a ticket aboard Virgin Galactic, increased on 5 August 2021 from $250,000 Source: Virgin Galactic


Talks with Tony AirAsia founder Tony Fernandes’ new podcast series discusses issues such as branding and reputation, entrepreneurship, health and lifestyle with friends including Black Eyed Peas’ and UFC President Dana White – “people from business, sport, music because it’s been a large part of my life, as well as other prominent figures and entrepreneurs”.

The distance to space in miles

Source: Live Science

The Cobra Club An online club dreamt up in lockdown by two Wiltshire businessmen is being rolled out across the UK. The Cobra Club (Confederation of Business Referral Associates) acts as a digital business hub via Zoom. It has attracted business owners and managers keen to grow their networks and find opportunities while deprived of face-to-face meetings. Clubs have already opened in Bristol, Birmingham, Somerset, Hertfordshire, East Anglia, Scotland and Wales.


Tonnes of CO2 emitted by a single SpaceX Falcon9 spaceship taking off Source: Science Focus

The Micro Business Tool Kit Web host GoDaddy has joined Olympic sailing champion Hannah Mills to help microbusinesses become more sustainable. Through its partnership with Team GB for the Tokyo Olympics, GoDaddy supports the Big Plastic Pledge initiative Mills launched in 2019, which aims to eradicate singleuse plastics in sport. The new toolkit offers tips to cut plastic waste, work with sustainable brands and operate a ‘clean’ supply chain.

24,600 Speed in mph at which Perseverance Rover departs Earth aboard a rocket en route to Mars Source: NASA

August - october 2021 73


How to…

...Get a pay rise Inflation is ticking upwards and the past 18 months have been a long, hard slog. As we emerge from the pandemic, the time is surely right for you to be rewarded for all those hours of Zoom calls? But how should you set about securing yourself a pay rise?

Do your research “Research the average salaries in your industry for the role you do,” advises recruitment agency Reed. “One of the quickest ways to do this is simply by finding job adverts for similar positions, or by using our average salary checker to compare salaries across your industry and region.” You could also look for data on pay rises in your sector – for example, in an industry-wide pay survey carried out by the relevant trade association or professional journal.

Make a business case

“Be assertive in a polite, balanced way and not apologetic for, or excessively grateful for, receiving something which you know you’ve earned”

“To achieve a raise, you can’t just want one; you need to deserve one,” says Geoff Fawcett, Director for the UK and Ireland at Hays. “Write down all the things you’ve achieved individually or contributed to significantly as part of a team. Build your whole case around two or three of these projects. Back up your claims with real and irrefutable evidence – money earned as a result of your success, improved relationships with clients, processes improved and savings made.”

Pick your moment Your annual or regular appraisal is the obvious time to ask for an increase, when you know your line manager will have dedicated time to

74 august - october 2021

considering your performance. If there’s no appraisal on the horizon, ask your boss when you can discuss your position confidentially. But don’t ask when the company has just lost a big client or your manager has a lot on, suggests recruitment agency Michael Page. “When it comes to negotiating a pay rise, you want the deck to be stacked in your favour,” says the company. That could be when you’ve just completed a valuable project or when the company has lost other people in your team.

How to present it Think about this as a selling pitch, or even a job interview. Prepare thoroughly, make your case coherently and above all be confident. Rocki Howard, Client Services Director at recruitment outsourcer Resource Solutions, says women are often less confident than men when asking for a pay increase. “Women especially must learn to use the right language in negotiations,” she says. “It’s important to be confident and direct. Be assertive in a polite, balanced way, and not apologetic for, or excessively grateful for, receiving something which you know you’ve earned.” But keep the conversation on a professional level, and never make it personal.

Be prepared The answer may not be a straightforward yes or no, but something more nuanced. What

The Knowledge

Business leaders on making it to the top

Getting ahead Nichole Culverwell Director and owner, Black Vanilla if you’re asked to take on more responsibility? Or your boss tells you they can’t afford to pay you more in your current role? What if they offer you a better company car instead of more money? It’s worth considering these possibilities in advance and having a backup plan that could help in the negotiation. You could, for example, offer to sort out an issue that you know is causing the company problems, or you could volunteer to mentor younger members of the team. Make it easier for them to give you what you want.

Take the next step It’s seldom a good idea to threaten to leave if you don’t get the pay increase you want, but it’s always worth letting your employer know you are alert to other opportunities. If you are turned down, ask the manager what you would need to do to secure the pay rise. You could ask if they will fund you to undertake further development and training, says Reed. “Not only will that enhance your skills and, ultimately, your market worth, but, with your new-found knowledge, you’ll become a more valuable asset to your employer.” And if you do get the pay rise, be discreet about it – they last thing your manager will want is everyone asking for an increase.

What kind of person should become a PR? First and foremost, they must be tuned into the news and understand communication is central to every interaction we make. A PR needs to be a problem solver who can look around corners, spotting risks and opportunities – tenacious and resilient, but confident and articulate. The best in PR combine strategic and creative thinking.

Who is your perfect client? One who takes an equal and collaborative approach – it’s about mutual respect. The more information a client shares, the better advice we can give.

What’s the secret to starting your own business? Running a business needs an ability to adapt and pivot around risks or move on opportunities quickly. And it’s about helping a team achieve their potential. Starting a business is a leap of faith – you need to go all in investing money, energy and a little sanity at times. Deciding to give it your all takes courage; sticking with it takes resilience.

Why is it so important to help young people get into this business? Public relations is a fantastic career because you can combine things you love with a role in business all the way to the top. If you’re keen on sport, aim your career towards a specialist agency or a fitness brand; if you’re interested in politics, public affairs or lobbying is a natural fit. PR is fast-moving. Harnessing technologies such as AI, we need a youthful outlook to help us keep pace. Businesses flourish with a mix of generations. As more activities become automated, junior roles are changing and senior professionals must think about how we develop the next generation so they can take on the strategic roles.

What issues are closest to your heart outside work? My family and friends are my priority, but I also care deeply about health and wellbeing, particularly for young people. I am also a member of the IoD committee in Guernsey because I am interested in local politics and the business landscape.

Finally, how does sea swimming improve your work/life balance? The sea is not our natural environment, so going for a long swim takes you out of your comfort zone – and the sense of achievement is a buzz. I’ve always felt at home in the sea, so it really is my happy place.

August - october 2021 75




Gina Miller


o some, she is a hero, standing up for constitutional and more transparent. For that, she was shunned by many in the City, civil rights; to others she is a nuisance, a traitor, even an earning her the sobriquet ‘black widow spider’. imposter. But for any institution or arm of state, knowing Miller’s back story is a key part of her appeal to her followers. Gina Miller is on your case is likely to cause a stomach-churning She was born and brought up in Guyana by Indian parents and apprehension few activists inspire. came to school in England at the age of 10. But when Guyana’s Miller is the campaigner who in 2016 mounted a legal challenge economy faltered, she became a chambermaid in Eastbourne at to the UK government’s authority to invoke Article 50 (by 14 so she could continue her studies. She studied law, then which the UK would leave the European Union) without marketing before going into business, first owning a putting the matter before Parliament. This infuriated photographic lab, then as a marketing manager for Brexiteers, but she won the case and forced the BMW, before moving into the investment world. “Miller’s Twitter government to give MPs the right to vote on Brexit. In the wake of her failure to prevent Brexit, profile states: Although this was the move that brought Miller Miller’s Twitter profile states: “Refuse to be bullied ‘Refuse to be to the public eye, it wasn’t the first time she’d spoken and silenced” and she has become a champion of bullied and out. In 2009, after co-founding investment firm whistleblowers, with UK regulator the FCA and silenced’” SCM Direct with her husband Alan Miller, she created disgraced fund manager Neil Woodford among her the True and Fair Foundation, a charity dedicated to latest adversaries. “increasing philanthropy and common good in an era of She’s been voted Britain’s most influential black woman; growing inequality, social fragmentation and small state funding”. and has published her memoirs, Rise: Life Lessons in Speaking The organisation aimed to get those who had been successful to Out, Standing Tall & Leading the Way. Where Miller’s convictions give back to their communities. That then led in 2012 to the True take her next is hard to say, but anyone expecting her to stop and Fair Campaign, which set out to make financial institutions far speaking up on the things she cares about will be disappointed.


Uneasy about going back to work after furlough? Or going back to the office after fitting your work around home teaching the kids? There’s a word for it: languishing. The New York Times coined it in an article that dubbed the condition “the neglected child of mental health”, or the absence of wellbeing. Writer Adam Grant said: “Languishing is a sense of stagnation and emptiness. It feels as if you’re muddling through, looking at your life through a foggy windshield. And it might be the dominant emotion of 2021.” This can dull your motivation, disrupt your focus and increase the odds that you’ll cut back on work. Upbeat self-help gurus were quick to respond. Melissa Fleming at UNHCR recommends meditating, breathing, fasting, journaling, cooking, running and podcasting to put yourself back into thrive mode. Yes, that’s fasting AND cooking. Others suggest ‘checking in with yourself’ and ‘taking a day at a time’. Languishing may not qualify you for sick leave, but it could be a good conversation starter, especially on days when you can’t quite be bothered.

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Undertoad Person occupying the lowest position in the office, one up from office plankton

Converstation Where you go to have those watercooler chats with your workmates




The Knowledge

Top tech WHAT’S



Elon Musk has been flipflopping on Bitcoin this year, leaving many confused about the cryptocurrency and what the founder of Tesla really thinks. In February, he announced the carmaker would accept Bitcoin as payment for new vehicles, and simultaneously invested $1.5bn of its reserves in the currency. Three months later he reversed that decision, stating: “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions.” Fast forward to July and at the B Word virtual conference, Musk said: “I wanted a little bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50%, and that there is a trend towards increasing that number, and if so Tesla would resume accepting bitcoin.” Ethical questions aside – Musk’s flipflops have caused Bitcoin’s price to bounce up and down – onlookers are left in the dark about the true impact of Bitcoin mining. So does it really have a damaging effect on the environment? Bitcoin mining is the process by which new currency is circulated, but it’s a lot more complicated than that. Miners earn new currency by verifying blockchain transactions, and they do that by being the first to come up with a 64-digit hexadecimal number that corresponds to a target number or hash. It takes an enormous amount of processing power to carry out this kind of prospecting, which is where the environmental issues come in. The Cambridge Bitcoin Electricity Consumption Index (CBECI) is an attempt to estimate the amount of electricity used to mine Bitcoin. It uses theoretical models and is updated daily. On 2 August, it estimated 9 Gigawatts of electricity was being used to mine Bitcoin, or 78.5 Terawatt-hours on an

annualised basis. That’s been compared to the electricity consumption of Finland. And the numbers have been growing steadily since they were first estimated in 2017, notwithstanding fluctuations caused by the changing price of Bitcoin, among other factors. The key question for many is: what are the sources of the electricity used? It is widely assumed that much of the mining activity takes place in China, and uses electricity produced by coal-fired power stations. CBECI says: “Our 2020 industry survey found that hydroelectric power, coal and natural gas were dominating, but miners were also using oil, nuclear power, and renewables (wind, solar, and geothermal) as part of their energy mix.” However, other surveys have found that renewables account for a growing proportion of the electricity used, in some cases as much as 70%. And CBECI acknowledges that obtaining an accurate breakdown would be incredibly challenging, not least because Bitcoin miners can move to where the energy is cheapest. In China, it says, miners have flocked from the coal-rich northern province of Xinjiang to the south-western province of Sichuan to benefit from cheap surplus hydro power during the monsoon season. Supporters defend Bitcoin, pointing out that all industries – including banks – use large amounts of energy. Cryptocurrency company Galaxy Digital carried out research that concluded the Bitcoin network consumes less than half the energy consumed by the banking or gold industries. Opponents might argue that banks, whether through ATMs or counters, serve billions of people around the world every day. To them, Bitcoin is a ‘dirty currency’ that promises to accelerate global warming. One thing’s for sure, the scrutiny is not going to go away.

PUMMEL POWER The Theragun is a “percussive therapy device” that thumps your muscles at high speeds to provide the same relaxing results as a soft-tissue massage. £549

STANDING SOLUTION The Flexispot E5 is an ergonomic standing desk with a number of pre-programmed settings that can be switched between using motor control. £359.99 www.flexispot.

August - october 2021 77

Directory To advertise in the directory in print or online contact Carl Methven on

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.

As a full service Jersey law firm, we are best placed to support our clients no matter their personal or business related legal needs. Led by industry recognised litigator, David Benest, our team of expert Jersey lawyers provide our clients with sound, practical and commercial advice you’d expect from larger Jersey law firms, with the personable and responsive agility of a smaller one. Since establishing in 2016, we have worked with a variety of clients ranging from private individuals, large and small local businesses, and government departments. We are known for being an authoritative voice that cuts through complexities to provide accessible advice without the jargon while maintaining our approachability and high standards of service. Our private client team offer expert advice in helping individuals make key decisions when it comes to preserving their wealth now and in the future. We offer a wide range of legal services which include: Dispute resolution Criminal l Business law l Commercial l Commercial property l Employment l Family law l Residential property l Wills and probate l

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: Website: Twitter: LinkedIn: agile-automations/ Facebook: AgileAutomations/

78 August - October 2021


For more information on how we can be of service to you, please visit our website or contact us on: Tel: 01534 760860 Email:

Deloitte is the largest global provider of audit and assurance, tax, consulting, financial advisory, risk advisory and related services, bringing world-class capabilities and highquality 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). Deloitte currently has approximately 330,000 people in more than 150 countries and territories, giving the firm the expertise to solve organisations’ most complex challenges and make an impact that matters. David Becker - Audit Partner, Guernsey D: +44 1481 703 335 Jo Huxtable - Tax Partner, Guernsey D: +44 1481 703 308 Adam Cichocki - Advisory Partner, Jersey D: +44 1534 824 393 Martin Rowley - Tax Partner, Jersey D: +44 20 7007 7665 Siobhan Durcan - Audit Partner, Jersey D: +44 1534 824 274 Theo Brennand - Audit Partner, Jersey D: +44 1534 824 396

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 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.

We are IQ-EQ, a leading investor services group that brings together a rare combination of global technical expertise and deep understanding of clients’ individual needs. We have the know-how and the ‘know you’ to provide a comprehensive range of compliance, administration, asset and advisory services to fund managers, multinational companies, family offices and private clients operating worldwide. We act as a trusted partner to our clients, helping them to invest and preserve their capital in a sustainable and compliant manner. IQ-EQ employs a global workforce of 3,400+ professionals located in 23 jurisdictions, giving us a genuine global reach. We have assets under administration (AUA) exceeding US$500 billion. In the Channel Islands, we have 380 people across our Jersey and Guernsey offices and our expert, director-led private wealth, corporate and fund administration teams work closely with a wide array of international clients as well as their advisers. To find out more and discuss your specific requirements, please contact: Mirek Gruna Chief Commercial Officer, Jersey E: T: +44 (0)1534 714 486 Jacques Vermeulen Chief Commercial Officer, Guernsey E: T: +44 (0)1481 231 941 For more information about IQ-EQ’s global service offering, please visit

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. Stephen Burt Branch Manager Jean-Luc Le Tocq Head of Private Banking Craig Allen Head of Investment Management Shaun Kelling Head of External Asset Management 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.

IQ EQ (Jersey) Limited and IQ EQ Fund Services (Jersey) Limited are regulated by the Jersey Financial Services Commission. IQ EQ (Guernsey) Limited is regulated by the Guernsey Financial Services Commission. IQ EQ Management (Guernsey) Limited is licensed by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law 1987. IQ EQ Depositary Company (UK) Limited is authorised and regulated by the Financial Conduct Authority of the United Kingdom under firm reference number 481843.

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KPMG in the Crown Dependencies is a leading professional firm that delivers audit, tax and advisory services. Operating across the islands of Guernsey, Jersey and the Isle of Man, it is a standalone, locally led partnership with over 450 members of staff. The combined practice forms a core part of the KPMG Islands Group, made up of International Financial Centres and Overseas Territories spanning a sub-region which extends from Malta to the Caribbean. This grouping works closely with other KPMG practices in major global financial centres such as London and New York, ensuring that clients can benefit from an optimal blend of local and global expertise from KPMG’s network. KPMG is a global organisation of independent professional services firms providing Audit, Tax and Advisory services. It operates in 146 countries and territories with over 220,000 people working in member firms around the world. Find out more at Contact details: Neale Jehan Senior Partner KPMG in the Crown Dependencies E: T: +44 (0) 1481 721000

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.

Building trust in society and solving important problems We focus on three things at PwC in the Channel Islands: assurance, tax and advisory services. But how we use our knowledge and experience depends on what you want to achieve. So whichever one of our 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: Are you looking to build trust? Give your shareholders more value? Or do you want to do something completely different with your strategy?

We also provide pan-Island legal services for local Channel Islands businesses and individuals.

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.

Guernsey Redwood House St Julian’s Avenue St Peter Port Guernsey GY1 1WA T +44 (0)1481 721672 E

For further information, please contact:

Jersey 44 Esplanade St Helier Jersey Channel Islands JE4 9WG T +44 (0)1534 514000 E

Follow us: @PwC_CI

John Roche, Partner, Guernsey Phone: +44 1481 752040 Email: Karl Hairon, Partner, Jersey Phone: +44 1534 838276 Email:


80 August - October 2021 To advertise in the directory in print or online contact Carl Methven on

Redcoin – Your Cyber Security is our Priority. 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. 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 – or email Follow us on Linkedin – Redcoin Limited

Digitalising Corporate Services, Trust and Fund Administrators with integrated software TrustQuay was formed from the merger of Microgen Financial Systems and Touchstone Wealth Management to become the global leader in technology for the corporate services, trust and fund administration markets. With 30 years’ experience, TrustQuay serves more than 450 clients and 17,500 users in over 30 jurisdictions, through 9 offices worldwide in key markets including Jersey, Guernsey, United Kingdom, Luxembourg, Singapore and Australia. The corporate services, trust and fund administration market is undergoing unprecedented change, and the need to help firms leverage technology and digitalise their business models to drive innovation has never been more important, not just from a back-office perspective but with regard to client engagement. TrustQuay offers corporate services, trust and fund administration clients in the Channel Islands and worldwide the strongest product range and widest global coverage to help clients maximise efficiencies, reduce costs, ensure compliance and drive new revenue opportunities. We continually invest in our technology and have the highest targeted R&D spend of any provider in our sector. To find out more about how TrustQuay can help you, please visit our website: Or contact us at

August - October 2021 81

Data focus

Thematic funds take centre stage Global thematic assets under management (AUM) Theme

AUM ($bn)

Energy transition


Multiple tech themes


Digital economy


Broad thematic


Resource management


Robotics and automation


Consumer 40 Life sciences


Artificial intelligence and big data


Security 21 Fintech 20 Future mobility


Next gen communications


Cyber security


Demographics 12 Cloud computing


Political 10 Connectivity 7 Battery technology


Logistics and transportation


Wellness 5 Cannabis 5 0

Thematic funds have been the big winners of the global pandemic, with many posting eye-catching returns during the lockdown. The global market for these funds, which attempt to harness secular growth themes ranging from artificial intelligence to cannabis, has expanded rapidly in size and breadth. Analysis produced by Morningstar Research shows that, with $74bn in assets tied to it, energy transition is the most popular theme globally. The grouping, which is









largely populated by alternative energy funds, was given a huge boost in late 2020, when new US President Joe Biden pledged billions of dollars of government support for green infrastructure, according to Morningstar. Technology themes, with $66bn in assets, represent the second most popular thematic grouping globally. Also popular are those funds with a digital economy theme – a cluster that includes e-commerce, social media, and internet subthemes.

Source: Morningstar Research. Data as of 31 March 2021

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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 Bermuda | BVI | Cayman Islands | Guernsey | Hong Kong | Ireland | Isle of Man | Jersey | Luxembourg | Mauritius | Netherlands | Singapore | UAE | UK | USA Information about our regulators is available online

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