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BUSINESSLIFE

CITY EDITION 2018 funds • private wealth brexit • capital markets insurance • money flows private equity • reputation

CITY EDITION 2018

A meeting of minds the enduring relationship between the channel islands and the city


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building on strong foundations IT’S INCREDIBLY EXCITING for us to be publishing this, our very first City Edition of Businesslife. It feels like we’ve come a very long way from the 64-page magazine that started in Jersey in 2009, focusing primarily on the finance industry in the island. At the time, we questioned the sanity of launching a new title right in the middle of a financial crisis – and plenty of naysayers thought we were mad. But fortune clearly does favour the brave, and our ‘local’ magazine moved into new territories – broadening its scope to include Guernsey in 2011. During this time, not only were we distributing in both of the Channel Islands, but we also had a presence across a network of UK airports. It became increasingly obvious, however, that because of the amount of business the Channel Islands does with the City of London, that we should distribute directly into the financial heart of the capital. So, 2015 saw us placing the magazine in a number of select City locations. And this City Edition, focusing on the relationship that London has with Guernsey and Jersey, seems a natural evolution of a publishing journey that started over nine years ago. Indeed, it’s something that many have urged us to do for quite a while now. The timing probably couldn’t be more apposite. In recent years, the Channel Islands have had to face up to tightening regulation on a European and global scale. More recently, the whole offshore industry has come under scrutiny (and attack) following the leaks of the Panama and Paradise Papers. The impact of these leaks on the Channel Islands’ reputation is an issue we address in this edition. And then there’s the thorny, complicated and as yet unresolved issue of Brexit. As the UK moves towards the EU exit door, there’s been much speculation with regard to the City’s future financial services relationship with Europe – not least that the UK will become a third country in much the same way as the Channel Islands. Quite whether this means the City and the islands will become competitors in certain areas is very much up for debate. Yet despite the numerous challenges they’ve faced, the Channel Islands and the City have

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continued to work closely and build on what many have described as a ‘special relationship’. And it’s in certain sectors that this is most evident. In private wealth, practitioners in the islands regularly work with firms in the City, most notably in trusts. A traditional area of business, the islands have a modern approach to trusts, strong local expertise, a knowledgeable judiciary and robust regulation in case something goes wrong – all things that are expected by clients in a time of transparency. Likewise, the Channel Islands have a strong and growing reputation in capital markets. Guernsey and Jersey are leading the way when it comes to listing on the London Stock Exchange. And The International Stock Exchange (TISE), which is headquartered in Guernsey, is offering firms from around the globe, including those in London, a robust and innovative venue to list a whole range of structures, including real estate investment trusts. Indeed, the Channel Islands are a major player when it comes to global capital flows. According to the most recent figures, the jurisdictions are a conduit for around £800bn of foreign investment into the UK from investors seeking strong returns in the era of globalisation. It’s an impressive statistic. All of the above is borne out by key figures in both the islands and the City. Our interviews with Amy Bryant, Deputy CEO, Jersey Finance; Dominic Wheatley, CEO, Guernsey Finance; and Miles Celic, CEO, TheCityUK, show exactly how important the islands are to the City and vice versa – and how the relationship looks set only to get stronger in the years ahead, no matter what challenges come down the pipeline. It’s a packed magazine with plenty of other features – including an in-depth look at the burgeoning tech industries in the islands and an examination of how private equity firms are investing heavily in Channel Islands fiduciary businesses. We hope you enjoy this first City Edition! n

the relationship between the city and the channel islands looks set only to get stronger in the years ahead, no matter what challenges come down the pipeline

Nick Kirby, Editor-in-Chief, Businesslife

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Contents

INSIDE

44 68

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

7 News

34 private wealth

56 private equity

A round-up of the latest Channel Island business news

For more than 50 years, the islands have been providing a host of private wealth services

Why PE investors are putting their money into Channel Island fiduciary businesses

Amy Bryant from Jersey Finance and Dominic Wheatley from Guernsey Finance talk shop

40 insurance

59 opinion

Why Guernsey is one of the leading global captive jurisdictions

18 capital markets

44 brexit

Wyvern Partners’ Jonathan Smith on how IPOs for finance firms are on the rise

How the Channel Islands are active in market listings both at home and abroad

A look at how the UK leaving the EU might affect both the City, Jersey and Guernsey

22 funds

49 opinion

The strengths of both islands in the funds space and why they’re attractive to the City

Zedra’s Bridget Barker gives us her view on how Brexit will impact the Channel Islands

30 miles celic

50 money flows

The CEO of TheCityUK on the relationship between the Channel Islands and London

How the islands help with billions of pounds in money flows, both in and out of the City

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

60 reputation Offshore centres may have suffered reputational damage, but they’re fighting back

68 relocation There are all sorts of reasons why businesses and people are moving to the Channel Islands

72 technology Guernsey and Jersey are making their marks in the tech space

79 The Agenda Our lifestyle section looks at all the must-haves for the working man or woman in the City

contributors The BL Global Discussion Forum

TOM HUELIN

Follow us @blglobalnews Office: Meadowlands, La Rue a la Dame, St Saviour, Jersey JE2 7NQ © Chameleon Group Limited, all rights reserved. Reproduction in whole or in part without written permission is prohibited. Views expressed by our contributors are their own and do not necessarily represent the views or policies of Chameleon Group. While every effort is made to achieve total accuracy, Chameleon Group cannot be held responsible for any errors or omissions.

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Freelance writer Tom gets to grips with the work that the Channel Islands do in the capital markets space, both locally and globally, and the role played by The International Stock Exchange

KIRSTEN MOREL

Newly elected Jersey Deputy Kirsten speaks to two leading figures from Guernsey and Jersey’s finance bodies and addresses how the islands are fighting to maintain their reputations

DAVE WALLER

Business writer Dave gets the London perspective from Miles Celic, CEO of TheCityUK, and then examines how private equity firms are investing in Channel Island fiduciary businesses

RICHARD WILLSHER It’s a double header for finance writer Richard as he unravels the substantial funds industries in Jersey and Guernsey, before casting his eye over what’s happening in the insurance sector

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Outlook positive for funds industries

GUERNSEY’S FUNDS INDUSTRY is seeing new inquiries this year and expects the value of the sector to rise before the end of 2018, following a decline in the first quarter’s statistics. Latest figures from the Guernsey Financial Services Commission (GFSC) showed that the net asset value of funds business in the island declined by 2.9 per cent (£8bn) during Q1, with total assets under management and administration amounting to £262.5bn. However, the underlying trend is positive, with £40bn growth over the past three years. The decline was led by the winding up of non-Guernsey schemes – funds not domiciled in the island but with some aspect of management, administration or custody carried out locally – which fell by £7.6bn, with a number of funds reaching a planned winding up. Meanwhile, the NAV of Guernsey-based schemes has increased by £1.4bn to £209.7bn over the previous 12 months. The GFSC is also seeing an increase in applications for new funds, with a year-on-year rise to more than 110 made over the six months to March. The Commission approved 16 new investment funds during Q1 – 10

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closed-ended, two open-ended and four non-Guernsey schemes. Meanwhile, in Jersey, the value of regulated funds administered rose to a record level of £291.1bn at the end of 2017, driven primarily by a rise in private equity business. According to the latest figures collated by the Jersey Financial Services Commission, and published by Jersey Finance, in the final quarter of 2017, the total net asset value of regulated funds serviced through Jersey rose by 10 per cent over the quarter and by 12 per cent year-on-year. The growth was driven by the alternative asset classes, which increased annually by 13 per cent to represent more than three quarters (77 per cent) of Jersey’s total funds activity. Within the alternative asset classes, private equity fund values performed particularly strongly, rising by 30 per cent to stand at £82.7bn – the second consecutive year private equity has risen by that level. Hedge fund values increased by six per cent to £50.7bn, real estate rose two per cent to £37.5bn, and the combined total of infrastructure, credit and debt funds rose by seven per cent to stand at £50.6bn. n

Jersey rises in global rankings JERSEY HAS RISEN one place in the rankings of the latest Global Financial Centres Index (GFCI 23) – taking it to number 39 and maintaining its position as a Western European Top 15 centre. Guernsey, meanwhile, has dropped 12 places to 53. The index, compiled by Londonbased think-tank Z/Yen and the China Development Institute, is updated every March and September. The key points from the new index are as follows: ● London and New York remain at the top of the rankings, with Hong Kong retaining third place. ● Western European financial centres remain volatile – Hamburg, Munich, Monaco and Madrid rose strongly, with improvements for Paris, Jersey, Edinburgh and Lisbon. ● In the Asia/Pacific region, there were significant rises in the ranks for Qingdao, Bangkok, Kuala Lumpur and Busan, while Tianjin and New Delhi are new entrants to the GFCI. ● In Eastern Europe and Central Asia, Cyprus, Istanbul and Moscow rose in the ranks. ● In the Middle East and Africa, Mauritius, Riyadh and Casablanca improved their rankings. ● In Latin America and the Caribbean, six centres rose in the ranks, with the Bahamas rising 22 places. The Cayman Islands are now the leading centre in the region. n

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News

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guernsey Strategy focuses on green investment GUERNSEY HAS UNVEILED a development strategy for the island’s financial services sector, with a focus on green investment. Dr Andy Sloan, Acting Director of Strategy at Guernsey Finance, said the aim was to develop the broadest range of products with a green focus among international finance centres, incorporating investment, securities and insurance markets and services. “The potential for green and sustainable finance is enormous and streams into major global initiatives,” he said. “Action in this area builds on Guernsey’s strengths in private equity and infrastructure, supports other initiatives in areas such as impact investing, and supports a general repositioning of the island’s financial services offer.” The Guernsey Financial Services Commission (GFSC) is poised to launch a new regulatory initiative, known as the Guernsey Green Fund. Compliance with green criteria will be required and it will be open to all types of funds. The Commission was expected to issue a consultation paper in May and to launch the Green Fund by the middle of the year. The GFSC also has plans to work with the global insurance industry to enable long-term green investments to be taken on as assets to meet long-term life insurance liabilities. The initiative seeks to make it easier for insurance companies to access long-term investments – making it simpler for them to offer sustainable long-term returns to policyholders – and to widen the pool of purchasers for green investments. Interest from industry is being sought as the GFSC develops its new approach to regulatory life insurance solvency requirements. n

Finance job figures remain strong THE LATEST REPORT on the Jersey labour market, published by the States of Jersey, demonstrates sustained growth in finance sector jobs. According to the report, employment in the sector increased by 230 jobs on an annual basis, with total employment at the highest level for nine years. A total of 13.330 people are currently employed in financial services in the island, accounting for 22 per cent of total employment. While there were 50 fewer people working in the banking sector compared with the same time last year, the number of jobs in trust and company administration reached its highest level to date – 5,380 in total. Geoff Cook, CEO at Jersey Finance, commented: “The industry accounts for more than a fifth of total employment in Jersey, and for every 10 jobs created in the finance industry, an equal amount are created elsewhere in the community. “These figures chime with the feedback we’ve had from industry – a recent survey of firms forecast that 800 jobs will be created in the industry over the next five years, 83 per cent of which will be filled by local people.” The latest Jersey Labour Market report can be found at www.gov.je n

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Pictured: Sam Woods (left) and William Mason

GFSC signs M o U with Bank of England THE GUERNSEY FINANCIAL Services Commission has signed a Memorandum of Understanding (MoU) with the Bank of England. The new agreement is a reaffirmation of a longheld relationship between the Guernsey regulator and the Bank’s Prudential Regulation Authority (PRA), which dates back to the PRA’s predecessor, the Financial Services Authority. Through the MoU, both parties will be able to share confidential information about regulated entities and formally co-operate on other supervision activities. The PRA, which is part of the Bank of England, is responsible for the prudential regulation and supervision of banks, insurers and major investment firms, and regulates around 1,700 financial firms. The agreement was signed by William Mason, Director-General at the GFSC, and Sam Woods, Deputy Governor at the Bank of England for Prudential Regulation and Chief Executive Officer of the PRA. “There is a very productive and good relationship between the GFSC and the PRA, and we see this confirmation as good news for the bailiwick, demonstrating that we are regarded as credible operators by our main counterparties,” said Mason. n

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News

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Jersey ranked third easiest for compliance ONLY THE BRITISH Virgin Islands and the Cayman Islands are less complex than Jersey when it comes to accounting and tax compliance, according to TMF Group’s Financial Complexity Index (FCI) for 2018. The index ranked Jersey 92nd out of 94 jurisdictions across Europe, the Middle East, Africa, Asia Pacific and the Americas, with 1 being most complex through to 94 the least complex. TMF didn’t include Guernsey in the survey. Jersey’s ranking puts it ahead of Hong Kong, and two places better than its inaugural FCI ranking of 90th last year. China is ranked the most complex jurisdiction in the world, followed by Brazil, Turkey, Italy and Argentina. The 10 least complex jurisdictions are: 94 Cayman Islands 93 BVI 92 Jersey 91 Hong Kong 90 Curaçao 89 Afghanistan 88 Guyana 87 Norway 86 Bangladesh 85 Singapore To determine the rankings, TMF circulated a 74-question survey to specialists in each country, with weighted parameters for regulatory compliance, tax, statutory reporting and bookkeeping. Cengiz Somay, Managing Director of TMF Jersey, said: “Jersey has a long-standing reputation as an easy place to do business, and this is reflected in its FCI ranking. Local laws require that accounting records are maintained, and annual accounts prepared and approved by directors/ shareholders or trustees. However, the laws are relatively relaxed regarding the format and content of the accounts.” n

10 City Edition 2018

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Done Deals A Guernsey captive insurance subsidiary of the troubled Carillion group has been compulsorily wound up by the Royal Court. Babbé Dispute Resolution Partner Todd McGuffin, assisted by Associate Bryan Little, represented the Directors of Carillion Insurance Company. Its parent, British facilities management and construction services company Carillion Group, was placed into compulsory liquidation by the English High Court in January, with reported debts of £1.3bn and pension liabilities of £587 million. Nicholas Vermeulen and Christian van den Berg of PwC CI were appointed joint liquidators of the company. Bedell Cristin has advised the Abu Dhabi Investment Authority on all Jersey law matters in relation to the circa £300 million sale of Regent Quarter in London’s King’s Cross to Hong Kong-based Nan Fung Group. The property comprises 250,000 square feet across 30 buildings, including nearly 200,000 square feet of offices, historic warehouses and retail space. The Bedell Cristin team was led by Partner Tom Davies and Associate Charlotte Bascombe on the Jersey law aspects, with Associate Louise Hassell in respect of BVI law. Carey Olsen’s corporate team in Guernsey has advised Inflexion Private Equity Partners on the establishment of two new funds, Inflexion Buyout Fund V and Inflexion Partnership Capital Fund II, securing commitments of £1.25bn and £1bn respectively. Both funds were oversubscribed and reached their respective hard caps within four months of launch, attracting new investors from the US, Europe and Asia. Led by Partner Andrew Boyce and Senior Associate John Scanlan, Carey Olsen worked alongside onshore legal adviser Ashurst to advise longstanding client Inflexion on the formation of both Guernseydomiciled funds. Collas Crill has advised fund manager Phoenix Asset Management Partners in connection with the investment of up to £19.45 million by Phoenix UK Fund in stamp and collectibles business Stanley Gibbons Group. The transaction involved the restructuring of external debt and the acquisition of certain rights of the group in intercompany indebtedness of Stanley Gibbons (Guernsey), which went into administration towards the end of 2017. The Collas Crill team was led by Partners Sean Cheong and Michael Adkins in Guernsey, assisted by Fiona Wilson and Gareth Morgan, Senior Associates in Jersey and Guernsey, respectively.

Mourant Ozannes represented BGH Capital as to Guernsey law in the raising of its first private equity fund with a focus on investment in Australia and New Zealand. The fund, which held its final closing with commitments at around A$2.6bn (US$2bn), is said to be the largest first-time fund focused on investment in Australia and New Zealand. The Mourant team was led by Guernsey Partner Frances Watson and Hong Kong Managing Partner Paul Christopher. Ogier has assisted Safe Harbour Holdings with the admission and listing of its shares on AIM. Trading commenced on 15 March. Safe Harbour aims to acquire a platform trading business with an enterprise value of £250 million to £1.5bn via a buy-and-build strategy. Partner Niamh Lalor led the Ogier Jersey team, assisted by Associate Tara Kapur. Voisin has acted as legal counsel in the issuing of collateralised loan obligation (CLO) refinancing notes. Saranac CLO III and Saranac CLO III issued just over $363 million of refinancing notes. The notes, rated by Moody’s Investors Service, are collateralised primarily by a portfolio of senior secured syndicated corporate loans. Associate Howard O’Toole led the Voisin structured finance and capital markets team. Voisin acted alongside Seward & Kissel, Allen & Overy and Nixon Peabody. Jersey-based firms VG and Ward Yates acted in partnership with the Dubai office of Dentons to advise Virgin Mobile Middle East and Africa (VMMEA) on the issuance of a US$30 million pre-IPO exchangeable senior secured Sukuk, which was privately placed. The company plans to use the proceeds to fund expansion. Ward Yates advised as Jersey and BVI Counsel; VG acted as corporate services provider to the special purpose vehicle issuer. Arqaam Capital acted as the lead arranger and book runner, while BNY Mellon acted as the delegate and Minhaj Advisory acted as the Sharia adviser. Walkers has acted as Jersey Counsel to Westbrooke Alternative Asset Management UK on launching two Jersey Private Funds. The first, Westbrooke Yield Plus, invests in a diversified portfolio of private debt instruments with a focus on the UK, Europe and US, and plans to invest in other developed economies. The other, Westbrooke Rhythm, invests in a diversified global portfolio of early-stage companies with innovative business models. The Walkers team included Partner Jonathan Heaney and Senior Counsel Christopher Reed. n

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Interview

A tale of two islands The Channel Islands’ relationship with the City of London goes back decades, but just how important are the islands to the City and vice versa? We spoke to Amy Bryant, Deputy CEO of Jersey Finance, and Dominic Wheatley, CEO of Guernsey Finance, to find out more Words: Kirsten Morel Pictures: Jon Barlow

Amy Bryant: I agree wholeheartedly. The relationship is a long-standing and greatly valued one that’s viewed as a partnership. The UK is the largest trading partner for both islands and I think I can safely say that our aim is to continue working with the City for as long as possible. Looking at it the other way, are the islands important to the City? AB: It’s definitely a mutually beneficial relationship. Speaking specifically about Jersey, we act as a capital magnet and help sustain 250,000 jobs, bring in £5bn of tax revenues and provide £14bn in terms of net benefit to the UK. The relationship is about the sharing and blending of our expertise and getting the most out of the synergies between the two, including the global network that both Guernsey and Jersey give to the City. DW: I’d say it’s a symbiotic relationship in which London benefits from having the islands available as part of its suite of offerings – but it’s also dependent on us maintaining the standards of

12 City Edition 2018

quality that London is known for. Because of the volume of business it does, the City has a more generic style of regulation whereas, because of our size, the Channel Islands can be more focused on specialist areas. On that subject, in what sectors do the islands do most business with the City right now? DW: In Guernsey, we have a lively insurance sector and last year we saw growth in our private equity sector. We’re also seeing growth in risk financing, and insurance-linked securities had an interesting year. The islands also offer expertise in operating globally and working with other jurisdictions. This is an asset in the corporate wealth and pensions arenas, where we’re seeing a lot of clients with international requirements. AB: As far as Jersey is concerned, the main areas are banking, private wealth, capital markets and funds. Jersey is a jurisdiction of choice for listing funds on the FTSE and we’re also the principal partner for property investment in the UK. The deal involving Battersea Power Station, which was structured through Jersey, is an excellent example of this. Is this likely to remain the same, or do you expect more business to come from different sectors via the City? AB: We expect Jersey’s broad appeal to continue, but there’s likely to be an evolution, and I see two

So, the big question first – how important is the City of London to the Channel Islands? Dominic Wheatley: It’s demonstrably important, as it’s our nearest world-leading finance centre. London attracts finance from around the world and, as a result, it’s critical to the future of finance in the Channel Islands.

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Interview

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City Edition 2018 13


Interview

clear trends developing – in new markets and technology. First, the City has stated that it wants to work with growth markets and, for us, this means the UAE, China, Saudi Arabia, India, South Africa, Kenya and Nigeria, among others. The second trend is the pace of digitisation, which we see as vital to remaining focused and ahead of the pack.

Jersey is a jurisdiction of choice for listing funds on the FTSE and we’re also the principal partner for UK property investment

DW: For Guernsey, the funds sector is significant and we already have expertise in private equity and particularly in listed funds. Over the coming period, however, we expect to see growth, particularly in impact investment and green funds. Insurance-linked securities as a portfolio balancing asset are attractive to investors, so there’s certainly good scope for this area to develop. Also, changes to pension regulation mean that we now see good growth prospects in personal international pension arrangements.

AB: I’d echo Dominic’s sentiment here. Neither Jersey or Guernsey are members of the EU, nor are they part of the UK. Given the UK’s wider desire to achieve a good settlement with the EU, it’s unlikely they will want to become an offshore centre to compete with the Channel Islands. With regard to passporting, our private placement regime works effectively and is seen as a stable place in the funds sector. Jersey facilitates £0.5trn worth of foreign direct investment into the UK, which is about £1 in £20 of FDI into the country. While we might see a short-term dip following Brexit, in the long term there’s still a lot of potential.

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Have sensational headlines over the years – such as around the Panama Papers – affected the way the islands are perceived in the City? DW: Not in my experience. I think it’s important to remember that our partners in the City are very much professionals who look at the objective facts of the situation rather than the way they’re portrayed in the media. It’s also important to note that assessments from international standards organisations find us to be very compliant and we’re judged on that rather than the media portrayal. AB: We don’t want to side-step these issues, but the people who work with us know what we’re all about. Speaking specifically about Jersey, they know that we have an excellent, stable and consistent policy regime, but it’s the breadth and depth of expertise that attracts people here irrespective of the headlines. You mention international assessments – what are your City contacts saying about the Channel Islands’ adherence to everchanging regulatory standards? DW: The City’s view is that we’re a leader in international standards and our record is second to none. Every time we’re assessed, we’re found to be in the vanguard of

international jurisdictions. On the AML front, they’ve always found that we’re more compliant than anywhere else in the world. AB: I’d definitely second that. Our leading regulatory position is recognised by others who see that we’ve been at the forefront of transparency and cracking down on tax evasion. The EU Code Group has recognised both islands as meeting these standards and being world-leading in terms of regulatory compliance. We also received very positive assessments in terms of compliance by Moneyval. It’s critical we continue to deliver at the highest standards. Clients want this, and it’s part of our appeal as international finance centres. There’s been quite a lot of M&A/private equity activity in the Channel Islands over recent years – is that a sign of strength in the sector? AB: Worldwide M&A activity has exceeded $3trn and is set to increase, and this is definitely something we’ve seen actively reflected in Jersey’s finance industry. Locally, there’s been a continued consolidation in the fiduciary sector. We see this as a positive because it gives clients a whole range of providers to choose from – niche boutique providers to multi-jurisdictional groups.

While the end result of Brexit is unknown, does the fact that the City may become a third country pose a threat to the islands? DW: In short, no. We’re complementary to London’s offering. They’re partners with us in what we do as finance centres. Business moving to other finance centres isn’t a threat because our relationship with the EU is independent of London. We have a private placement regime for the distribution of funds – but having said that, we don’t have relationships with other EU jurisdictions, as we do with London. It’s also worth noting that financial centres in the EU don’t have the same capabilities as London – so if business moves, it won’t be to Frankfurt or Paris, but to Singapore or Hong Kong.

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Interview aren’t limiting in themselves. In fact, the island being in control of its own destiny is an important part of our stability. How are the islands doing in the fintech and regtech spaces – and is the City interested in this? DW: Yes, the City is definitely interested because it’s doing a lot of work in those areas. There are funds set up to promote and support new businesses, and the use of blockchain technology in finance has received considerable attention. For example, Northern Trust is using blockchain for fund technologies and is working with PwC to use it in the audit process.

DW: I’d definitely agree that investment into the finance sector is a sign of confidence, and our ability to attract investment from serious institutions is an endorsement of the islands. Many commentators have said tax is no longer a key driver for using the Channel Islands, but is this really the case? DW: From my experience, tax isn’t a driver. The driver is our ability to create a niche environment for businesses. Our regulatory environment is specifically designed for corporate risk transfer vehicles and not commercial insurance – so the regulatory approach is more appropriate here than the UK, and has, for instance, led to growth in insurance-linked securities business in Guernsey. AB: Clients choose Jersey for many reasons, including the depth of expertise, regulatory environment, connectivity and the range of products and services that we have available. Tax certainly isn’t a key driver any more, but tax neutrality is. However, it’s important to emphasise that this isn’t tax evasion – it ensures that tax isn’t paid twice.

16 City Edition 2018

The biggest part of Brexit is that by moving the EU border into the North Sea, we’ll see opportunities for us to strengthen relationships with the UK

Do the islands’ population controls limit growth and opportunities for the islands? AB: I don’t think that it’s really a limiting factor. While I understand why some people might think that way, it’s important to look at the figures. Employment in finance increased by 230 jobs last year and is the highest it’s been in nine years. More than 3,000 young people have found their first jobs in the finance industry in the past 10 years. Finance is a major contributor to the island, providing more than £420 million in taxes. DW: Access to talent is important, and to continue to have access to it is key, particularly when you have a new and developing market. And I think Guernsey’s new housing policies are useful in that regard. It’s up to Guernsey how much it wants to limit the population. I’m not sure we’re full, and the current arrangements

AB: I’d agree that there’s definite interest. In Jersey, we’re driving a practical agenda and have developed a good track record, including setting up the first bitcoin investment fund. The island’s first ICO also happened recently. We’ve got a great partner in Digital Jersey and we have a strong enabling environment. Are there any new products in the pipeline that might be of interest to the City? AB: I think the Channel Islands must always remain focused on the future. In 2017, both islands brought new products to the market – in our case, the Jersey Private Fund regime. The updated charities law and a charitable register will be set up in 2018, highlighting Jersey’s push into philanthropy. We’re certain that by focusing on new projects, Jersey will become a digital centre of excellence and move ahead of the competition. DW: Green finance is an area of growing investor interest and I’m aware of projects in Guernsey looking at the use of insurance technologies to meet the disaster response requirements of the third sector. In private wealth, like Jersey, we’re looking at how to develop and enhance the trend for institutionalising the philanthropic efforts of families. Finally, what’s your view on the relationship between the City and the Channel Islands in the next 24 months? DW: Ironically, to steal a phrase from the EU – ‘ever closer union’. We see Guernsey’s relationship with London as being part of our success and a key part of where we’re positioning the island. The biggest part of Brexit is that by moving the EU border into the North Sea, we’ll see opportunities for us to strengthen relationships with the UK. AB: There’s no doubt in my mind that Jersey will continue to support the City’s growth ambitions, and by working together we can both continue to be successful. n KIRSTEN MOREL is a freelance writer

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Capital markets

Heading off to market The Channel Islands are developing a reputation as go-to jurisdictions when it comes to listings on local and global stock markets – an area that’s enjoying a purple patch Words: Tom Huelin IT’S HARD TO hear the phrase ‘special relationship’ and not instantly picture Donald Trump walking hand in hand with Emmanuel Macron through the immaculate gardens of the White House. Putting that unpleasant image to one side, however, the phrase is actually quite a neat way of describing the Channel Islands’ capital markets relationship with the City. When we talk about capital markets in the islands, we’re essentially talking about two things – first, there’s The International Stock Exchange (TISE), where companies from around the world can list their businesses in a cost-effective, well-regulated environment. Second, the islands provide domiciliary services for inbound investment into the City – and other trading venues such as Hong Kong and Toronto – for international investors. When it comes to accessing London in particular, however, the Channel Islands are among the leading jurisdictions in the world. Jersey is home to the largest number of companies listed on the FTSE 100 registered outside the UK. In Guernsey, 119 domiciled companies have their shares trading on the London Stock Exchange’s AIM and Main Market – the highest of any jurisdiction outside England and Wales. “The City of London is one of the leading international transaction centres in the world,” explains Dan Richards, Partner at Ogier. “The role of the Channel Islands is to align themselves with and act as trusted long-term partners to those international transaction centres. Partly for

18 City Edition 2018

historic reasons, and also for current reasons, the Channel Islands are particularly closely aligned to the City.” We hear plenty on the islands’ tax neutrality – is that the key factor in making Jersey and Guernsey so attractive? Simon Heggs, Senior Associate at Collas Crill, thinks not. “For a number of years, the Channel Islands have been competing on an international stage with the likes of the UK, Europe and the US – the latter two via Luxembourg and Delaware respectively. Each offer their own tax-neutral structures and, as a result, the tax environment is becoming an insignificant factor in the choice of the Channel Islands.” Instead, the strength of the islands’ propositions lies in the quality of service clients receive. “The development of the Channel Islands’ financial services industries has created business hubs perfectly suited for international companies to operate from efficiently and effectively,” Heggs continues. “We’ve found that this is now the key driver in attracting new clients to the islands.”

AIDING GROWTH Even reclusive types living in the outer reaches of Brecqhou will be aware that Brexit is presenting some unique challenges to the UK, the EU and associated others. The UK government is looking for new ways to stimulate the economy ahead of the March 2019 exit and sees the growth of small and medium-sized enterprises (SMEs) as one way of launching it on an

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Capital markets

TISE’S TRACK RECORD

The development of the Channel Islands’ financial services industries has created business hubs perfectly suited to international companies

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Formed 20 years ago and formally known as the Channel Islands Stock Exchange, TISE is based in Guernsey, with additional offices in Jersey and the Isle of Man. TISE is an affiliate member of the International Organisation of Securities Commissions (IOSC) and the World Federation of Exchanges, and is also now recognised by the German Regulator, BaFin, as well as HMRC – credible stamps of approval which are recognised globally. TISE specialises in listing investment funds – open- and closed-ended funds as well as real estate investment trusts (REITs) and specialist debt. There are more than 2,600 listings on TISE today, worth over £300bn – companies listed more than 700 securities in 2017 alone, a 40 per cent increase on the previous year. These listings are facilitated by local fund administrators, lawyers, accountants and other local financial services firms. “We’ve seen a lot of growth over the past few years, which has been really positive,” says Fiona Le Poidevin, CEO at TISE. “It reflects the expertise that the Channel Islands is known for in terms of existing business, and most of that typically originates from London. “Something that’s not so well known about TISE is that we list a lot of household names. Last year, we listed a high-yield bond for Netflix worth €1.3bn. We have convertible debt listed for Balfour Beatty, Yorkshire Building Society and Sainsbury’s. Even companies listed on other exchanges – their debt will come to us.” Another area that’s experienced exponential growth in recent years is that of international investors looking to acquire UK real estate through Channel Islands vehicles. UK property has been particularly attractive since Brexit, with sterling essentially trading at a discount against other currencies. International investors are taking advantage of this and buying up property, particularly in the City, to the extent that investment in London real estate rose by 35 per cent in 2017. And Jersey was at the heart of that increase, with Ogier acting as Jersey

MARKET LISTINGS

119 Guernsey-incorporated entities listed on LSE markets

89 Jersey companies listed on global stock exchanges

THE INTERNATIONAL STOCK EXCHANGE

2,606 total listed securities

£300bn+ total listed market value All figures are latest available

Counsel on the acquisition of City buildings the ‘Walkie Talkie’ and the ‘Cheesegrater’ by international investors. “From those two examples, you’ve got £2.45bn of direct investment into London, from international investors, via Jersey,” Ogier’s Richards explains. “These investors set up a Jersey investment vehicle – a Jersey company or a Jersey limited partnership perhaps – that provides a neutral, stable, very well-regarded platform for international investment into the UK.” While property may be a more traditional asset class, this doesn’t mean the Channel Islands aren’t at the bleeding edge of innovation. By their very nature, many of the aforementioned SMEs are innovative companies. Which means new and exciting business opportunities are either being listed on TISE or domiciling in the islands to access further investment opportunities in the City. In late 2016, TISE listed GABI, which at the time was the world’s first regulated

City Edition 2018 19

upward trajectory. SMEs, however, are suffering from a lack of investment, which is where the Channel Islands come in. A press release from TISE recently stated: ‘A particular focus for us during the year will be showcasing how companies such as UK small and medium-sized enterprises, can potentially benefit from listing on TISE. We will be demonstrating how TISE is a more convenient exchange for listing SMEs compared with larger exchanges, but also that being based in the Crown Dependencies means we can offer stability at a time of significant uncertainty in the UK given the ongoing Brexit process.’


Capital markets

bitcoin fund listed on an exchange globally. “It was fantastic for us to be able to have that world first in such an innovative area,” Le Poidevin recalls. “I’m probably getting two or three queries a week through from blockchain-related businesses, or other fintech-type businesses. We’ve seen quite a lot on the tech side in the last couple of years, and we’re probably seeking it out as well, because it’s a trend that’s clearly there, with opportunity to follow.” In fact, tech and fintech companies are listing their debt on TISE, allowing investors to contribute to these businesses indirectly. Green finance is another area on which both Guernsey Finance and Jersey Finance are keeping a close eye, as it gathers interest. “At TISE, our strategy is to look at what the islands are doing and try to align ourselves as best we can in terms of our strategy, in terms of the jurisdictions in which Jersey and Guernsey are marketing, and the types of products that are right for the islands,” says Le Poidevin. That’s all well and good, but what about the Panama Papers, the Paradise Papers, or the next alliteratively themed Paper that will no doubt be conjured up before too long – do these stories negatively affect this special relationship? “There’s no doubt that the recent negative developments in the offshore world, and the present political sentiment when talking about offshore jurisdictions, are having an impact on the use of Channel Islands companies for listing on the LSE,” Heggs suggests. “We only see this as a temporary trend though, as the significant advantages of using the Channel Islands remain the same and the sentiment of secretive offshore tax centres is entirely unfounded.” Negative press aside then, the Channel Islands and the City’s ‘special relationship’ seems to be all hunky-dory, doesn’t it? “Post-Brexit, I would expect the UK to become even more international in outlook in terms of inbound, and outbound, investments,” concludes Alasdair Hunter, Partner at Bedell Cristin. “The Channel Islands are well placed to support these capital flows. Also, lower interest rates in Europe compared with the US may tempt US borrowers to raise debt finance in European bond markets – a positive for both the City and the Channel Islands.” n TOM HUELIN is a freelance finance writer

the reit stuff A quarter of all UK REITs are now listed on The International Stock Exchange. And with sovereign wealth funds, pension funds and insurance companies from all over the world looking to invest in UK property, that figure looks set to grow further. “REITs are extremely popular in the Channel Islands,” Alasdair Hunter, Partner at Bedell Cristin, explains. “Listing on TISE is relatively straightforward, inexpensive and quick, yet it still gives the comfort and protection of being well-regulated. “One of our large Asian fund clients was recently drawn to listing through us on TISE because of its strong regulation. We believe that we could see even bigger increases in REIT structuring if proposed changes to capital gains tax in the UK are implemented.” REITs provide investors with a more accessible entry and exit into real estate than investing in physical property provides. There are also a number of tax advantages to investing in a REIT, while recent suspensions on open-ended property funds have increased demand for closed-ended equivalents like REITs.

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THE PROFESSIONAL VIEW Ben Morgan, Partner at Carey Olsen and Head of the Corporate and Finance Group in Guernsey “Guernsey has developed a strong reputation for successfully handling complex and pioneering capital market transactions. It benefits from being in the European time zone and being located in close proximity and with good links to the UK; making Guernsey an ideal gateway to global capital markets. Not only that, it can also boast its own HMRC-recognised stock exchange, The International Stock Exchange (TISE), which facilitates the dual listing of investment vehicles with other global exchanges and is a leader in the area of listed debt. This is a differentiator for the island. It offers a convenient and pragmatic environment for listing specialist debt and is renowned for a highly responsive, streamlined and cost-effective listing process.”

Stephanie Coxon, Director, PwC CI Guernsey “Notwithstanding the Channel Islands’ flexible companies law and pragmatic regulators, the real reason I’m seeing new London listed funds setting up in the islands is the expertise of the service providers and NED community. I was recently speaking to a US asset manager who’s looking at setting up a London-listed vehicle domiciled in the Channel Islands. They decided on the islands as their jurisdiction of choice due to the level of service they had received here, as opposed to onshore jurisdictions such as the UK or Luxembourg. We should never underestimate the power of having all advisers in close proximity and working together to give a premium client experience.”

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Capital markets

The International Stock Exchange provides a responsive and innovative listing and trading facility for companies to raise capital from investors based around the world. From its offices in Guernsey, Jersey and the Isle of Man, TISE offers access to a regulated marketplace with globally recognisable clients and a growing product range. Products

Key Credentials

Why TISE?

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T: +44 (0) 1481 753000

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E: info@tisegroup.com www.tisegroup.com

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TISE is a registered trademark of The International Stock Exchange Group Limited (Guernsey registered company number 57524). It wholly owns The International Stock Exchange Authority Limited (Guernsey registered company number 57527), which is licensed by the Guernsey Financial Services Commission to operate an investment exchange under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. The registered office of The International Stock Exchange Group Limited and The International Stock Exchange Authority Limited is at Helvetia Court, Block B, Third Floor, Les Echelons, St Peter Port, Guernsey, GY1 1AR.

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City Edition 2018 21


Funds

The range and quantity of new investment funds being established in Guernsey and Jersey demonstrates their attractiveness in this highly competitive sector

LAST MAY, JAPANESE multinational conglomerate Softbank established the world’s largest investment fund in Jersey. The Softbank Vision Fund raised more than $90bn in committed capital to invest in the global tech sector. It was the latest in a long line of specialist, wholesale funds that have chosen to domicile in the Channel Islands. Jersey and Guernsey have been in the funds business for more than half a century. Figures from the Guernsey Financial Services Commission record that at the end of March 2017, the overall value of institutional and retail funds under management and administration in Guernsey stood at £262.5bn. These included a large variety of funds, many invested in alternative asset classes such as private equity, venture capital, real estate, infrastructure, debt, hedge funds and funds of funds. Similarly, the latest data from the Jersey Financial Services Commission at the time of writing, show that Jersey-serviced funds had a total net asset value of £291.1bn as at 31 December 2017. Alternatives, including hedge, real estate and private equity funds, accounted for around 77 per cent of the island’s overall funds business. Historically, Guernsey has had a higher proportion of private equity funds, while Jersey was a larger centre for real estate funds. These differences, however, have been largely eroded and both jurisdictions have large businesses in both fund sectors. But how have the islands developed this presence in the alternatives market? And

22 City Edition 2018

what makes them attractive places to do funds business? Mike Byrne, PwC’s asset management industry leader for the Channel Islands and Chair of the Jersey Funds Association, explains that flexibility in product choice and regulation is a key concept. “The limited partnerships that we use for many of the funds in Jersey and Guernsey offer a lot of flexibility. For example, in the choice of accounting framework, you can use IFRS, UK GAAP and US GAAP. So, depending on your investor base, you can structure to their needs. “You can produce accounts that are fit for purpose and friendly to the investors rather than following overly stringent disclosure requirements where sometimes you can’t see the wood for the trees.”

REGULATORY FLEXIBILITY In terms of regulatory flexibility, the islands have chosen to comply with the European Union’s Alternative Investment Fund Managers Directive (AIFMD). But they also achieved third-country EU passporting approval for their National Private Placement Regimes (NPPRs). As, for the most part, Channel Islands fund investors are from institutions or are other sophisticated investors who don’t require the same level of investor protection as retail investors, NPPRs are proving a valuable option. This cuts a fund manager’s regulatory burden because they don’t need to obtain approval in 27 EU markets when, as Mike

Byrne points out, only a handful of countries, including France, Germany, the Netherlands and some of the Nordic countries, buy material amounts of alternatives. In addition, the islands have passed muster with the world’s regulators in the fields of taxation, disclosure and money laundering, as well as investor protection and reporting. This means that as other offshore jurisdictions attract adverse publicity, the standing of Guernsey and Jersey as top-rated jurisdictions attracts more fund managers and investors. The highly specialised skills that the islands’ workforce has developed in the alternatives field also continually proves to be a draw. “There’s a lot of intellectual capital here,” says James Mulholland, a Partner at Carey Olsen, a legal adviser to the islands’ funds industry. “For a long time, we’ve had the people and the capability in the islands’ law firms, the administrators, the banks and accountants, to operate and be a centre of excellence.” Mulholland notes that both jurisdictions have moved with the times, adapting their funds regimes, including legal structures and regulation, to meet client demand from fund managers and investors. Simon Page, Global Head of Funds Services at fund administrator Hawksford, agrees. “There have been a lot changes – with the Jersey Private Fund [JPF] regime, for example,” he says. “That’s one of the biggest changes we’ve seen over a number of years and it’s about working closely with

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Words: Richard Willsher


Funds

Strength in depth

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City Edition 2018 23


Funds

GUERNSEY

JERSEY

£262.5BN

£291.1BN

funds under management and administration

net asset value of regulated funds under administration

1,104

funds domiciled in Guernsey

regulated funds

42%

149

increase in net asset value of property funds in 2017

alternative investment fund managers

Figures for 31 March 2018

Figures for 31 December 2017

The Jersey Private Fund consolidated previous regimes and enabled a lighttouch regulatory regime to be applied to sophisticated investors

24 City Edition 2018

the regulator, which has been open and transparent with us. That has enabled us to have a regulatory regime that’s given us an effective route to market for investors and managers.” The JPF consolidated previous fund regimes and enabled a light-touch regulatory regime to be applied to sophisticated investors. Vehicles established under the JPF should have fewer than 50 investors, can be open- or closed-ended funds and can be established and approved within a 48-hour window. Earlier this year, the JPF celebrated the creation of its 100th fund. The Private Investment Fund (PIF) is Guernsey’s equivalent and has, since its launch in November 2016, also attracted multiple funds. So, both products have proved to be a wise development. The ease of establishment and administration of JPFs and PIFs has

maintained the islands’ key role in working with London fund managers. While Jersey and Guernsey service funds from all over the world and attract global capital, the City-Channel Islands axis remains vital. “Private equity and venture capital is a global industry now,” explains Gurpreet Manku, Deputy Director General and Director of Policy at the British Private Equity & Venture Capital Association (BVCA). “You raise your money internationally, you invest your money internationally and you sell those assets on internationally. We as a trade body, and the professional services businesses as a whole, are there to ensure money flows as efficiently as possible and that we meet investor needs as part of that process. For particular investors, Jersey or Guernsey vehicles work well for them.” PwC’s Mike Byrne adds that for international investors there can be tax

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983

funds in figures


Xxxxx

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City Edition 2018 25


Funds

The pension perspective A report by Europe Economics commissioned by Jersey Finance concluded that 58 million people – roughly the size of the UK’s population – benefit from Jersey’s administration of pension fund investment in the real estate sector. This may be the tip of the iceberg for future pension fund investment in alternative asset classes, however. Willis Towers Watson’s Global Alternatives Survey 2017 defines alternatives as including hedge funds, private equity, real estate, infrastructure, commodities, natural resources, illiquid credit and insurance-linked investments. It concludes that pension funds are the largest investors in alternative assets. And with good reason. In many cases – infrastructure and real estate funds among others – the cash flows to investors tend to be stable; that is, low risk and long term, spanning many years. In terms of matching the liabilities of pension funds, alternatives can therefore be an ideal asset allocation choice. Compared with yields on bonds and cash, which are currently wafer thin, yields from alternatives can often look attractive. The good news for the Channel Islands is that they are positioned in the sweet spot. They are specialist jurisdictions for institutional funds and for alternatives, and both are growing markets. PwC has predicted that by 2020, global pension fund assets will have reached $56.6trn and alternative assets will by then have increased to $15.5trn. The fund administration industry in Jersey and Guernsey looks set to be the stable jurisdiction of choice to serve both sectors and the crossover between them.

leakage to UK taxation that may double up on what tax investors already pay in the home jurisdiction. On the political risk side, there’s considerable uncertainty about the outcome of Brexit, but also over the risk of a Labour government, which might seek to impose controls or taxes on the finance industry, for example. “It’s very much a symbiotic relationship between onshore and offshore law firms for the benefit of their client,” explains Bryon Rees, a Partner in the Guernsey office of offshore law firm Ogier. “It works both ways. A strong onshore and offshore relationship is beneficial for the client. All of the other Guernsey service providers have good relationships with each other and their onshore counterparts.” Carey Olsen’s James Mulholland agrees, but acknowledges that this isn’t the whole story. “London is a core market for us. We work a lot with UK or London-based managers and the law firms in London. However, it’s certainly not our only market. We have very strong Scandinavian and North American practices, especially with the East Coast. A lot of the US-based private equity managers who are launching European focused funds or tapping into European investors will use Jersey as their gateway to Europe.” To endorse the point, Michael Johnson, Head of Fund Services for Intertrust in the Channel Islands, says that although the firm works closely with business partners in London, the Channel Islands are becoming more popular for the pooling of global private capital. “Most managers now enjoy a global outlook for both the distribution of their investors and the allocation of their investments,” he explains. Johnson adds that the UK will soon be a third-country from an EU passporting perspective. As such, it may start to look at the strength of the Channel Islands’ regulatory products and use of proven distribution methods such as the NPPR. Since the Brexit referendum, some major funds have been raised and domiciled in the

islands, including Softbank’s Vision Fund. “Brexit will probably bring changes,” admits Mulholland. “Though what those will be is difficult to predict. However, the islands already know our position with regard to the EU, so we’re seen as the sensible safe choice for setting up funds while there is uncertainty over the UK’s position. The traditional advantages of using the islands still hold true.” Gurpreet Manku endorses this, saying: “Investors care about familiarity. It takes time for a new funds structure to gain traction because the investors want something they’re familiar with, that they understand and that’s well known and has been in place for a number of years.”

BEYOND BREXIT Moreover, those relationships between firms and fund practitioners in the City and the islands are many, deep-seated and ongoing. Everyone we spoke to for this article agreed that the post-Brexit outlook is positive but also that there’s much more to the islands’ future than the UK’s exit from the EU, not least in the types of funds which are now being launched. Funds underpinning iconic buildings in the City or elsewhere are likely to continue. Properties such as the ‘Gherkin’, the ‘Cheesegrater’, the ‘Walkie Talkie’ and Liverpool’s Liver Building fly recognisable flags for Channel Islands property funds. What’s more, the use of Jersey or Guernsey Property Unit Trust structures has proved popular. They remain useful vehicles likely to add volume to the bread and butter of real estate funds in addition to more high-profile ones. And there are many new innovations. “Fintech offers enormous opportunities,” says Simon Page. “Technology has become almost an asset class in its own right. The challenge is around scalability. And investors want managers that can offer them exposure to technology portfolio assets. Jersey’s always been an early adopter from a jurisdictional perspective in terms of what managers are calling for.”

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THE CITY VIEW Lisa Cawley, Partner at Kirkland & Ellis in London, gives her perspective on why the City continues to use the Channel Islands in the funds space. Cryptocurrency funds and those investing in blockchain technologies play a role in this. Mulholland says Carey Olsen has seen a big increase in cryptocurrency funds and fund structures. Initial coin offerings (ICO) are also becoming more frequent. “We’ve worked with the government and the regulators in determining a pathway and a policy positioning for these,” he says. “They are putting the islands on the map for the next generation – the next asset class that we need to be tapping into as a market offering.” The islands’ fund management sectors will continue to adapt to these sorts of trends in response to investors and fund managers. What the islands have going for them in this market will continue to be relevant. They have physical proximity to the UK and EU. And they are tried and tested as jurisdictions, offering long-standing relationships with asset managers in the City and around the world. The islands have global reach and can service a range of domiciles in addition to their own and the UK. And, perhaps above all, they have regulatory and jurisdictional integrity. As competitor offshore jurisdictions come under fire from the world’s regulators and multilateral organisations, the islands look increasingly attractive, stable, well-regulated places to do business. That’s worth a great deal in a world of globalised news flows and an increasing focus on ethical as well as financial values. n RICHARD WILLSHER is a freelance finance writer

“The Channel Islands continue to be popular private investment fund jurisdictions, in particular in the private equity, credit and real estate funds space. “The islands have an excellent reputation for the quality and experience of service providers – administrators, auditors, non-executive directors and lawyers, for example. Language and time zone are also favourable attributes. The local regulators are seen as robust, while also being able to adapt relatively quickly to the ever-evolving developments in the asset management industry and global regulatory environment – as was seen with the islands’ response to AIFMD. “The islands have a reputation for adhering to internationally recognised standards in areas such as money laundering and anti-corruption, something that’s of increasing importance to the industry. Legislators are regarded as responsive to the industry, where required, and the regulator readily engages with industry participants to resolve issues.   “The islands have been popular fund jurisdictions for some time, so practitioners, investors and fund managers are familiar with operating there. This is critical, because practitioners are unlikely to choose a jurisdiction for a new fund if it, the regulatory framework and the process are unfamiliar.   “The islands also have a good global reach. Investors and fund managers in the US, Middle East and Asia are becoming increasingly familiar with doing business in the islands, which are also recognised as jurisdictions where it’s possible to be up and running within a reasonable time frame.  Of course, the headwinds the Channel Islands face in competing with EU member state jurisdictions aren’t of their own making and will be significantly influenced by EU and country-specific legislation.”

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Interview

As CEO of TheCityUK, Miles Celic has a unique view of UK-based financial and related professional services. He spoke to Businesslife about the relationship between the UK and the Channel Islands and how that may change post-Brexit Words: Dave Waller Pictures: Jon Barlow

Do you think there’s a perception that the Channel Islands are one entity rather than two separate jurisdictions? There’s the lay audience, and then there’s the industry audience, which is more informed. Anyone familiar with our industry absolutely has the right perception of the Channel Islands. They recognise the distinct strengths each offers – Jersey in wealth and fund management, for example, and Guernsey in pensions and insurance – and can see how well they interact with London and other UK financial centres. But the lay audience often doesn’t fully grasp the scale of activity that takes place in these centres, and it’s our job

30 CITY EDITION 2018

to address that. If you showed someone the Z/Yen index of global financial centres, they may be surprised to see Jersey ranked higher than Madrid, or Guernsey ranked higher than Monaco. These are fantastic success stories that people don’t necessarily know about. But together we’re working on doing a better job of communicating and advocating for the UK’s family of financial centres. Have leaks such as the Panama Papers affected the view of the Channel Islands from a reputation standpoint? Whenever you look at regulatory issues, and the Panama Papers are part of that, you have to see the broader context. There’s undoubtedly a broader issue around reputation and trust in business in general. Financial services have a clear challenge in dealing with the legacy of the global financial crisis. But it’s equally important for us to make the case for the impact that this industry has on people’s everyday lives. As well as paying more than £72bn in tax – funding healthcare, services and infrastructure – the industry also makes

a lot of the work we’ve done looking at the future regulatory relationship between the UK and the EU27 has been informed by the Channel Islands

it possible for people to have success and prosperity in their lives. If you want a mortgage, to save for kids to go to university, want to retire, expand your business, or you’ve been taken on by someone else who’s done so, the ecosystem of financial services makes all that possible. The industry has made great cultural strides over the past decade or so, with drives for international tax transparency, for example. And this is one of those times when we need to convey how we’re upholding those standards. Where do you see the biggest opportunities and growth areas in the finance sector in the years ahead? Fintech is an enormous opportunity. We’re in the middle of huge transformative change. People often ask me when financial services is going to have its Uber or iTunes moment, a disruptive player coming in and changing everything, but I think that misses what’s already happening. We’re seeing a more fundamental evolution – the number of people accessing their banks through apps, for example, has doubled in the past year or so. Then there’s the rise of robo-advisers, such as Betterment and Nutmeg, which are creating phenomenal opportunity in terms of financial inclusion. These platforms can offer financial advice on a pot that’s a quarter of the size they used to, because the economics are different. That has a transformational, democratising effect on people’s ability to save. If you look at places like Africa, there are huge opportunities for companies in the UK and Channel Islands to really make a difference. The Channel Islands have been fast, nimble and able to move quickly and maintain high standards. That’s a fantastic foundation for future success. What do you see as the biggest challenges? We clearly face political risk. The potential rise of protectionism around the world could easily lead to markets fragmenting. And there’s the rise of alternative centres in other parts of the world. I’m a realist.

The Channel Islands often cite their proximity to London as a key selling point – what’s your view of the relationship between the islands and the City? The Channel Islands are a fundamental part of the British family of financial centres. There’s a really strong relationship between TheCityUK, Jersey Finance and Guernsey Finance, and across the industry overall. We’re also about to follow the Channel Islands’ lead and become a third country as regards the EU. And a lot of the work we’ve done looking at the future regulatory relationship between the UK and the EU27 has been informed by the experience of the Channel Islands. That’s proving to be very helpful as we work out our position. We’ve had ongoing discussions at both the working level and senior level. I was in the Channel Islands recently so that I could pick up on speaking to business leaders about their concerns and focuses, and tell them what’s going on in the UK. And Dominic Wheatley [CEO of Guernsey Finance], Lyndon Trott [Chair of Guernsey Finance] and Geoff Cook [CEO of Jersey Finance] are regularly over here at our events. In fact, Geoff and Lyndon are both members of our advisory council – our most senior gathering of industry figures. So it’s a deep partnership between centres that are competitive, compelling, attractive places to be.

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Interview

The

interview Miles Celic


Interview

FACT FILE Name: Miles Celic Age: 45 Position: Chief Executive Officer, TheCityUK Other roles: Member of HM Treasury’s Financial Services Trade and Investment Board (FSTIB). Member of the board of UK Finance. Background: Miles began his career in broadcasting, making and presenting radio and television programmes for the BBC and others. He moved on to work in the UK Parliament, where he focused on foreign affairs and defence issues. He While London, Guernsey and Jersey are massively successful financial centres today, Florence, Venice and Amsterdam used to be the leading centres of previous ages. We’re very conscious of that. I am, however, an optimist too. Just because someone else is doing well in this industry doesn’t mean you’re doing any worse. We have terrific partnership opportunities of working with Chinese companies, for example. But it’s important to think of Asia as more than just China. By 2030, there will be more than three billion people in Asia’s middle-class, up from half-a-billion today, all rising in prosperity. More and more people are gaining the ability to aspire to a better life for themselves and their children, to invest more, save more, and have better lives and retirements. We’re living through an incredible change in humanity, and our industry can play a fundamental part in that. What, if anything, is TheCityUK doing to raise awareness of the money flows that the Channel Islands funnel to London? Jersey Finance and Guernsey Finance have done some powerful reports on that, which we draw upon a huge amount in our own work. We work closely with them both, on how we can best highlight the value of our financial services ecosystem. The Channel Islands are a vitally important part of that picture, and that plays into everything – from the top level of our advisory council, to detailed policy interactions. With regard to Brexit, have you forecast the impact on financial services in the UK? We commissioned a consultancy to conduct some research right after the Brexit vote. They looked at a spectrum of potential outcomes – from a high-access Brexit on EEA terms (the Norway option), to a low-access Brexit under WTO terms (the so-called ‘no deal Brexit’). We found that up to 4,000 industry jobs may be lost to a

32 city edition 2018

high-access Brexit. That’s not insignificant, but should be seen in the context of the 2.3 million UK jobs in this industry. At the low-access end, 35,000 financial services jobs could be lost. But it’s worth noting that people have used Brexit as an accelerator for strategic decisions that they would have taken over the next 10 years anyway – the impact of the rise of Asian centres, of where customers want to do business, and the implications of the technological developments I’ve discussed. We’ve seen progress since the turn of the year – on the transitional period being agreed, which is important for the industry, and on the future of the regulatory relationship. We’ve been arguing for a system of mutual recognition, which would be more sophisticated and beneficial than the current third-party equivalence. All this on top of the plumbing issues – the need for contract continuity so that customer disruption remains minimal. We’re optimistic we’ll reach the point where economics and pragmatism will take precedence over politics and the process.

We’re living through an incredible change in humanity, and our industry can play a fundamental part in that

subsequently worked in a number of leading reputation management and public policy consultancies. In 2007, Miles joined HSBC’s policy function to lead political engagement. He was part of the team that led the bank’s response to the global banking crisis. Miles moved to Prudential in 2009 as Director of Group Public Affairs and Policy, and became Director of Group Strategic Communications in 2013. He was a member of Prudential’s Group Leadership Team. He joined TheCityUK in 2016.

There’s been speculation about the UK becoming its own ‘offshore sector’. What’s your take on this? It depends what you mean by offshore. Many people take it to mean a lowregulation centre. People in Brussels will sometimes ask whether we’re in danger of becoming Singapore-on-Thames. To which I say: ‘Singapore is one of the best regulated finance centres in the world’. I’ve dealt with Singapore a lot – that’s an absolutely top-notch regulator. London knows that it can only be successful over the long term if there are rigorous standards in place, balancing strong regulation with the habit of being competitive, so that nobody anywhere is talking about a bonfire of regulations, a race to the bottom. Look at [UK Brexit Secretary] David Davis’s speech a matter of months ago – he made it absolutely clear that there’s no appetite for that approach within the UK government. And I’ve seen no appetite for it in industry, or among UK regulators. Are there any areas in which the City could learn more from the Channel Islands? We will continue to look to the Channel Islands for experience of dealing with the EU as a third-party regime and not being part of the single market. The Channel Islands have been enormously successful by being nimble – they’re small and fast, and can seize opportunities. The EU tends to be slower moving, but instead it has the benefit of enormous scale. The UK will need to find a path that works between those two models. We have experience of that from our time in the EU, but we will look to the Channel Islands for learning about how to be a quick, nimble centre that can evolve to grab the opportunities of the future. n DAVE WALLER is a freelance financial writer

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The Royal Bank of Scotland International Limited (“RBS International”) is incorporated in Jersey and registered on the Jersey Financial Services Commission (“JFSC”) company registry as a private company with limited liability. It is authorised and regulated by the JFSC with registration number 2304. Registered and Head Office: Royal Bank House, 71 Bath Street, St. Helier, Jersey, JE4 8PJ. Tel. 01534 285200. RBS International London Branch is registered in the United Kingdom as a foreign company with registration number FC034191 and branch number BR019279. United Kingdom business address: 280 Bishopsgate, London, EC2M 4RB. RBS International London Branch is authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority (reference number 760675) and limited regulation by the Prudential Regulation Authority. Details about the extent of RBS International’s regulation by the Prudential Regulation Authority are available on request. Guernsey business address: Royal Bank Place, 1 Glategny Esplanade, St. Peter Port, Guernsey, GY1 4BQ. Tel. 01481 710051. Regulated by the Guernsey Financial Services Commission and licensed under the Banking Supervision (Bailiwick of Guernsey) Law, 1994, as amended, the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002 and the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. Isle of Man business address: 2 Athol Street, Douglas, Isle of Man, IM99 1AN. Tel. 01624 646464. Licensed by the Isle of Man Financial Services Authority in respect of Deposit Taking, Investment Business and registered as a General Insurance Intermediary. The Royal Bank of Scotland International Limited, Luxembourg Branch, (RBS International Luxembourg Branch). Business address: 46 Avenue J F Kennedy, L-1855, Luxembourg. Tel. + 352 270 330 355. Authorised and supervised by the Commission de Surveillance du Secteur Financier. NatWest International is the registered business name of The Royal Bank of Scotland International Limited under the Business Names Registration Act. Gibraltar business address: National Westminster House, 57 Line Wall Road, Gibraltar. Tel. 200 77737 or 200 73200. Regulated and authorised by the Financial Services Commission, Gibraltar to undertake Banking and Investment Business from 55 and 57 Line Wall Road and 1 Corral Road, Gibraltar. Calls may be recorded. Internet e-mails are not necessarily secure as information might be intercepted, lost or destroyed. Please do not e-mail any account or other confidential information. Our services are not offered to any person in any jurisdiction where their advertisement, offer or sale is restricted or prohibited by law or regulation or where we are not appropriately licensed.


Private Wealth

When

wealth matters

Words: Chris Menon

Private clients have been using Guernsey and Jersey for decades, but it’s only through constant evolution that the islands have extended their expertise and reputation 34 City Edition 2018

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Private Wealth

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and London. From all of those places, clients used the Channel Islands as part of their wealth planning.” In Calnan’s opinion, while both islands are equally well regulated, it’s the very strength of this regulation that sets them apart from other jurisdictions. “This used to be seen as a weakness by some clients,” she affirms. “But now, being a well-regulated jurisdiction is undoubtedly a strength.” Indeed, in a world of ongoing political and financial uncertainty, wealthier individuals from around the world are seeking to place their assets in stable, well-regulated jurisdictions. However, political stability and sound regulation are just one part of their requirements. As Julie Kleis, Director in RBC Wealth Management’s Fiduciary Services team, explains: “If assets are to be held in a corporate or fiduciary structure, one needs experienced administrators and fiduciaries, along with tax advisers, investment managers and legal advisers. Given the maturity of the Channel Islands as financial centres, the firms in these specialist areas have a substantial, rather than token, presence on the islands.” From the perspective of an experienced City practitioner specialising in trust litigation, Geoffrey Kertesz, Partner and Head of Wills & Trust Disputes at Bircham

Dyson Bell, explains: “The Channel Islands have local fiduciary companies with a long history of dealing professionally with trust matters. They have the infrastructure for it. They’ve got excellent local law firms. They have a judiciary that’s familiar with trusts, and they have robust regulation in case something goes wrong.” He’s quick to scotch any suggestion that the Channel Islands are opaque. “They’re certainly more transparent than they are opaque. Jersey, in particular, was ahead of the game in adopting a regime of transparency. I think they may have lost some work at the outset because of it, but now everyone else is playing catch-up. “This is the way the world is shifting, towards transparency. Yes, there will always be questionable islands where you can put money, but Jersey and Guernsey have very good regimes.” Kertesz cites the key factors often raised by those on the islands: they’re in the same time zone as the UK, they speak English and they’re an hour’s flight from London.

THE SAME, BUT DIFFERENT Naturally, there are slight differences between Jersey and Guernsey. Richard Prosser, Group Director at Estera, which has an office on both islands, says: “Jersey is more experienced and has more expertise in private wealth compared

City Edition 2018 35

THE CHANNEL ISLANDS have been global centres for private wealth work going back 50 years, with clients from all over the world seeking the expertise the islands have to offer. All of that hard work and history means that today, Guernsey and Jersey stand tall as key jurisdictions for private wealth work. Trusts, foundations, family office, finance and banking, estates and succession, and philanthropy are among the most prevalent areas of work undertaken in the islands. As an example of the sheer volume of work taking place, a 2016 study by Capital Economics for Jersey Finance entitled Jersey’s Value to Britain, found that, at the time, more than £400bn of private assets was held in Jersey trusts, of which 94 per cent has been settled there by individuals resident outside the British Isles or by ‘non-doms’. In Jersey, nearly 360 foundations have been formed since their creation in 2009, and it has 1,252 regulated members of the Society of Trust and Estate Practitioners (STEP). Guernsey has 666 STEP members and 88 live foundations, having been introduced in 2013. Angela Calnan, Group Partner, Trusts and Fiduciary at offshore lawyers Collas Crill, confirms the islands’ popularity, saying: “Before moving to Guernsey, I worked as a lawyer in Dubai, Singapore


Private wealth

836

£400BN

foundations formed since 2009

regulated trust company businesses

value of assets held in Jersey by private individuals or families

149

88

666

licenced fiduciaries

foundations registered since 2013

STEP members

Clients seeking investment management services are certainly more aware of the need for quality, active risk management

36 City Edition 2018

with Guernsey, which is more focused on insurance and funds.” Geoffrey Kertesz doesn’t see a huge difference, but says: “Jersey is bigger, so it naturally has more law firms and trust companies. It has more permanent judges, and details of judgments in Jersey are also easier to obtain, but the Guernsey court system is certainly robust.” Still, given the similarities between the islands, the decision as to which island to choose is essentially a matter of personal preference. “In general, the Channel Islands are very active in non-traditional markets when it comes to fiduciary structures. I’ve found that Guernsey is perhaps favoured more by advisers in Asia, while Jersey is seen more favourably by Middle Eastern advisers,” says Julie Kleis. “Although this may vary from adviser to adviser.” From anecdotal evidence, it appears that the Channel Islands have benefited from a flight to quality since the financial crisis, alongside a growing demand for greater transparency. That’s certainly the opinion of Angela Calnan, who comments with clear relish: “We do seem to be picking up business from the Caribbean and Panama.” For her part, Kleis stresses: “Clients seeking investment management services are certainly more aware of the need for quality, active risk management. This is both a legacy of the financial crisis, which led to a number of regulatory initiatives promoting transparency, but also a result of changes in client behaviour, with more clients looking to have greater oversight of their assets.”

Source: Guernsey Finance

GUERNSEY

357

One product that has benefited from this desire for control is the foundation. Introduced in Jersey in 2009, and then in Guernsey in 2013, these are now well established. A foundation is distinct from a trust, has its own separate legal personality and can own assets directly, enabling a founder to have more control over their family’s business and assets. Keith Dixon, a Partner in Carey Olsen’s Trusts and Private Wealth practice in Jersey, explains: “They’re ideally suited as vehicles for holding private wealth or for philanthropic/charitable purposes.” Andrew Laws, Managing Partner at Babbé, adds: “The Guernsey foundation is particularly useful for asset protection, estate and succession management, and private wealth planning for globally mobile individuals and families.”

LEGISLATIVE UPDATES Jersey has long prided itself on its reputation as a leading jurisdiction in the field of private client trusts. Not wishing the jurisdiction to rest on its laurels, in March 2018 the Jersey government made certain changes to some of the main articles of the Trusts (Jersey) Law 1984, which are likely to come into effect later this year. “The provisions regarding the disclosure of information to beneficiaries, indemnities afforded to trustees or retiring trustees and the accumulation of income have all been revised, refreshed and updated so that they’re in line with modern practice and case law,” says Dixon. What’s more, the overwhelming consensus among the experts contacted was

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JERSEY

Source: Jersey Finance

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Private wealth

that the private wealth industry in the Channel Islands is now far more based around traditional wealth planning and less around tax and fiscal advantages. As Estera’s Richard Prosser confirms: “Clients are using Jersey structures as part of their succession planning for future generations.” Certainly, the Channel Islands have a lot to offer private clients, intermediaries and advisers from the City. Aside from the “experience and professionalism of private wealth advisers” noted by Estera’s Prosser, they’re also great places to live, attracting professionals from across the globe. According to Andrew Laws, this gives them “a truly international understanding of business and clients’ needs”. In April, Guernsey also appointed a permanent Londonbased representative, Adrian Norman, to help build closer connections with the City.

HIGH-NET-WORTH DEVELOPMENTS Some interesting trends have also developed in recent years. Richard Prosser notes that his firm is seeing a concentration of business at the ultra-high-net-worth end of the market, which he believes is largely driven by the cost of doing business in the Channel Islands. “Foundations have been a helpful addition to the stable of products offered, as they are attractive to wealthy families who prefer the flexibility offered by these structures compared with the more traditional trusts,” he says. In addition, Julie Kleis reveals that private trust companies (PTCs) are being used increasingly in the Channel Islands by high-net-worth private clients, who prefer to establish their own PTC to act as the trustee of their family trusts, rather than transferring assets to an offshore service provider’s professional trustee company. “In my experience, clients using PTCs are becoming bigger and more sophisticated and we’re seeing increased cross-referrals between the City of London and the Channel Islands,” she explains. Prosser has also seen more entrepreneurs moving to the islands who are interested in family offices and philanthropy. It’s a trend confirmed by Kleis, who explains that she’s seen an increase in the number of family offices being set up in the Channel Islands, both in the form of independent units with their own physical presence and those accommodated within existing licensed fiduciaries. “We’re also seeing an increase in the number of philanthropic requests from clients in recent years,” she explains. “This might be partly due to the introduction of the Charities (Jersey) Law 2014, with the appointment of a Charities Commissioner in 2017. Our younger clients believe more and more that philanthropy should be an obligation rather than a ‘good to have’.” Guernsey is introducing new anti-money laundering (AML) regulations this year to bring its AML framework into line with international Financial Action Task Force standards. This will also address recommendations made by Moneyval, a body entrusted by the Council of Europe with ensuring that member states can prevent money laundering and terrorist financing. The Channel Islands are still at the top of their game when it comes to providing private wealth services to a global clientele, and by constantly evolving their offerings, they look set to remains so. As City practitioner Geoffrey Kertesz concludes: “When we’re asked to recommend a jurisdiction, the Channel Islands are at or near the top of the list, depending on the client’s specific needs.” n CHRIS MENON is a freelance finance writer

38 City Edition 2018

THE PROFESSIONAL VIEW Richard Tribe, Head of Business Development for Europe and Head of Private Office, Equiom “Since the financial crisis, I feel there’s been a real flight to quality for clients seeking advice and assistance from professional services providers. Private clients want the reassurance that they’re dealing with an experienced and trustworthy individual who operates from a well-regulated and co-operative jurisdiction, and with whom they can look to develop a long-standing relationship and work towards that ‘trusted adviser’ status. For trusts nowadays, there are more limited tax advantages, but the fundamental purposes of asset protection, succession planning and confidentiality are still extremely important and are now seen as the main driver for such wealth planning.”

James Campbell, Partner, Ogier “One of the reasons for London’s success in being able to attract ultra-high-net families and foreign investment is the attractiveness of the UK’s resident but non-domiciled regime and the availability of the remittance-basis of taxation. Most of these families are international in the sense that family members and assets are situated in different parts of the world. To assist with the structuring of family assets, many of these non-doms have established structures in Jersey and Guernsey and require English law advice both on establishment and, once the structures are up and running, in the form of regular reviews. To this end, instructions will flow back from the Channel Islands to London. Jersey and Guernsey are established financial centres with political stability and close connections to the UK and London. Both islands have respected courts and trusts legislation. Fundamentally, both of the islands have access to strong professional services in the form of fiduciary, legal, accounting and investment.”

Ian Rumens, Global Head of Private Wealth, Intertrust “The Channel Islands have a long and distinguished heritage in the private wealth space which underpins the modern industry in the islands. Their political independence, which goes back more than 800 years, has resulted in an historic economic and political stability that extends to the present. The Channel Islands were one of the first places in the world to regulate trust providers and they have a rigorous regulatory environment that upholds the highest standards. The islands’ mature infrastructure and convenient time zone also contribute to their success. But all of this would be for nothing if the islands didn’t possess excellent practitioners with a huge amount of experience, knowledge and expertise; traits that make exceptional client service the norm in the islands and allow their businesses to approach client work with foresight and understanding.”

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Insurance

Captivating insurance

The Channel Islands – most notably Guernsey – have planted a firm flag in the global insurance sector, and no one looks set to remove it any time soon

40 City Edition 2018

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Words: Richard Willsher

BOTH GUERNSEY AND JERSEY offer

insurance products and structures with global appeal. Though the two islands use very similar models and both offer captive insurance as their lead structure, Guernsey is the more active. Indeed, it’s one of the world’s top captive jurisdictions and by far the leading centre for captive insurance in the European time zones. Captives are insurance companies that are typically owned by corporates. In fact, most of the companies in the FTSE 100 index own a captive of some sort, and 40 per cent of these are domiciled in Guernsey. What they offer is self-insurance. Peter Miller, an Associate Partner at EY in Guernsey, succinctly describes the concept: “If you pay out £1 million in premium a year but only have claims of £100,000, then you’re losing £900,000. If you pay the £1 million to the captive and pay out the £100,000 of claims, you retain £900,000 and can invest the premium for a return.”

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Captives have several other advantages. First and foremost, they’re established as properly constituted insurance companies for regulatory purposes. If they’re located in the Channel Islands they can be quickly and cheaply established and fall outside the scope of the European Union’s (EU) Solvency II regulatory regime. This means they can hold capital in proportion to the risks they actually write rather than in accordance with the overall industry template, which requires high levels of capital and solvency. In addition, the reporting and compliance requirements are considerably less. One other advantage that captives offer is that they enable corporates to access the reinsurance market where premium rates are lower than they would be in the open market. All in all, they’re a keenly priced and flexible risk management tool, and it’s captive business that accounts for the lion’s share of insurance business in the islands.

RISK COVERAGE Often within the structure of protected cells or incorporated cells (see jargon buster overleaf), a captive can cover pretty much any risk its owners want it to cover, provided that it’s properly constituted, resourced and run. While lines of business have traditionally been dominated by property and liability classes, there’s now more variation. As Aon Guernsey Managing Director Paul Sykes explains: “In more recent years, we’ve seen increasing use of captives to

write non-damage business interruption, cyber, employee benefits, trade credit and supply chain covers.” An Insurance Sector Strategic Review commissioned by the States of Guernsey and carried out by PwC in December 2016, highlighted seven key areas in which the successful Guernsey industry could continue to develop. Captives was one of these – and while it’s been the bread-and-butter business of the industry for some time, it’s continuing to expand. Cyber and technology risk of various sorts formed another category of risk. Life business, retail insurance, reinsurance and alternative reinsurance were further ones. Pensions longevity de-risking was the seventh. Each of these is a specialist business in its own right, but they each point to some key features that the islands offer that remain consistent from one to the other. So why are the islands so successful in insurance? And why does Guernsey have a leading position in the market? First and foremost is the proximity of the islands to the EU and particularly to London’s leading global insurance industry. The vast bulk of insurance business transacted in Guernsey and Jersey either derives from the requirements of businesses with a presence in London, or is placed with the insurance industry there. Second, as Derek Maddison, Chairman of the Guernsey International Insurance Association, explains: “We have a very approachable regulator here. The speed of getting things done is good.” Third is the industry expertise, especially in captives. To quote from the PwC Guernsey Strategic Review: ‘The sector is staffed by 775 skilled professionals including chartered insurers, actuaries, accountants and risk modellers, and is complimented by an extensive network of legal, accountancy, investment, compliance and advisory firms. An experienced group of non-executive directors adds a final layer

Insurance


Insurance of substance to the presence of the island’s international insurers.’ This matters, because a key competitive advantage is that the islands are experts in the relatively small but vital offshore insurance segment of the vast worldwide insurance business. It makes sense for those interested, and in a position to gain from the advantages, that the islands offer to speak to the experts rather than study what’s a pretty esoteric, specialist subject. “We have local knowledge of the islands regulators’ codes of practice,” says John Lowery, Head of Corporate and Professional Risks at Rossborough, a Channel Island broker and part of US insurance brokerage group Arthur J Gallagher & Co. “We have wordings that insurers approve, so we help with claim servicing. These give comfort to those in London who are placing the business.” Lowery highlights the importance of the close relations the islands have with the City – it’s very much a two-way street. For example, he notes that a City investment manager may use a Channel Islands administrator for his or her funds.

the islands are experts in the small but vital offshore insurance segment of the vast worldwide insurance business

42 City Edition 2018

This will necessarily involve the use of island-based directors, non-execs and officers. They, in turn, will require directors’ and officers’ professional indemnity cover. Rossborough will arrange this and probably place the business with either Lloyds of London or directly with insurers in the City.

ILS CONNECTION In another example of the City connection, the GIIA’s Derek Maddison refers to the relatively new and rapidly developing insurance-linked securities (ILS) market. Institutional investors – some, though not necessarily all, of whom may be based in London – may wish to invest in structures that give them exposure to such risks as natural disasters. The institutions invest a premium against the risk that a particular catastrophe may occur, with claims being triggered by certain measurable events, such as a Richter scale measurement for an earthquake or a force level for a storm or hurricane. Should the risk come to pass, the premium will be used to meet claims. If it doesn’t, the premium and an investment return on it will be returned to the investor. “The driver is that the number of natural catastrophes for which people are seeking cover is growing,” Maddison explains. “Some of these risks can be difficult to place in conventional insurance markets. There may not be enough capacity or those insured may want a particular trigger to be used instead of proving an event in the conventional insurance sense. “There’s also a growing appetite among the institutional investors to diversify into such risks.” The importance of the relationship between the City institution, say, and a Channel Island structured and managed risk vehicle is easy to see. Aon’s Paul Sykes underscores the point. “London is the insurance and reinsurance capital of the world, and also the headquarters of Aon plc. Our relationship with London is absolutely crucial, as we work on a daily basis with brokers and insurers [including Lloyds], many of whom are strong supporters of Guernsey, having transacted business here for many years.” While the Brexit question hovers over the head of the relationship between the City and the Channel Islands – because no one yet knows how this will affect the City’s financial services markets – the islands know where they stand. They’re neither part of the UK, nor are they part of the EU, so they will still be in a position to operate as offshore insurance centres both with clients in the UK and in the single market. In the meantime, new business trends such as the ILS market development, the attraction of niche reinsurance business and the ever-growing menace of cyber-risk, look

likely to burgeon in the islands, according to market practitioners. The islands, and Guernsey in particular, are constantly examining and tweaking the regulatory environment to give themselves competitive advantages against both onshore and offshore rivals in the European and global insurance arena. At the same time, the specialist expertise in the islands is practised, honed and enhanced with each new transaction carried out. There’s every reason to expect, therefore, that the islands’ insurance sectors will continue to develop and prosper for the foreseeable future. n RICHARD WILLSHER is a freelance insurance writer

Jargon buster Captive insurance An insurance company owned and used by its own corporate to cover certain risks. PCC – protected cell company An overarching incorporated company with its own board of directors that houses individual segregated cell companies which are typically owned by corporates. These cells can write whatever insurance its owner needs it to write, within the regulatory limits, and its assets and liabilities are segregated from those of the other cells. ICC – incorporated cell company A company that’s authorised to establish individually incorporated cell companies, with their own board of directors. Because of their individual incorporation, the cells are regarded as having a more legally solid segregation of assets and liabilities than the cells of a PCC. ILS – insurance-linked securities An investment instrument that enables institutional investors to gain exposure to particular risks for a defined period of time. Risks could include those of natural disasters, such as those linked, among other things, to weather or earthquakes. For those selling the risk, ILS represents the opportunity to gain risk coverage outside of traditional insurance. Reinsurance Wholesale insurance that provides insurance to insurance companies.

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Insurance

Appleby’s Channel Islands team of legal specialists advise global public and private companies, financial institutions, and high net worth individuals, working with them and their advisers to achieve practical solutions, whether in a single location or across multiple jurisdictions. Appleby Guernsey +44 (0)1481 755600 guernsey@applebyglobal.com

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City Edition 2018 43


Brexit

As the Channel Islands prepare for the UK’s split from Europe, will they find themselves going up against the City when it comes to financial business?

Is a Brexit storm brewing? 44 City Edition 2018

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Brexit

JUST LIKE IN the rest of the British Isles, many Words: Orlando Crowcroft

in the Channel Islands have been watching the UK government’s Brexit negotiations with trepidation. The decision on 23 June 2016 to leave the European Union, took half of Britain by surprise – arguably more, if you include those who voted to leave but never expected it to really happen. Step forward Boris Johnson. And now, two years later, it’s far from clear what kind of deal the UK will be able to strike with Europe. Indeed, the picture has been made all the more opaque recently, after the government suffered a number of blows at the hands of the House of Lords – not least their efforts to force Prime Minister Theresa May to give Parliament a final vote on the deal. As May barters with Brussels over everything from fishing rights to how many billions of pounds the UK will hand over in divorce payments, the only thing that’s clear is that the UK will be required to leave the European Union at 11pm on 29 March 2019. But politicians in the Channel Islands are keen to stress that they aren’t passive partners in the Brexit process. Guernsey’s cross-committee Brexit Group meets fortnightly and, alongside Jersey and the Isle of Man, has a direct line into the UK’s Department for Exiting the EU. “We’re not worried about being left behind,” says Deputy Lyndon Trott, Vice-President of the Policy and Resources Committee in Guernsey and Chairman of Guernsey Finance. “The draft withdrawal agreement contains a territorial extent clause which includes explicit reference to the Crown Dependencies. We saw this as a significant and positive step and the first sign of the EU’s intention to include the islands in the exit agreement.” So far, much of the focus on the Channel Islands post-Brexit has been on industries other than financial services. In January, it was reported that Jersey farmers were struggling to recruit enough migrant workers to plant and harvest potatoes – a job that, since 2000, has largely been carried out by workers from Poland. As a result, farmers were considering bringing in workers from outside the EU, such as Kenya.

But while the UK is Jersey and Guernsey’s biggest trading partner, it’s also the source of the vast majority of its financial services business. Despite efforts to diversify the offshore finance industries away from reliance on links with the City of London, it is referrals from British banks that bring Guernsey and Jersey the bulk of their clients. In the UK, much has been made of Britain taking ‘the Jersey option’ when it comes to its post-Brexit relationship with the EU. This would involve the UK, like Jersey, retaining its customs union for goods (but not services) and becoming a ‘third country’ in trading with the EU. Under the Alternative Investment Fund Managers Directive (AIFMD), the City of London would have the same status as the Channel Islands. If that were to happen, Britain could go from the Channel Islands’ main referrer of business to its major rival. The City would be far larger and better resourced as a financial centre, catering to investors who want

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City Edition 2018 45

FROM ALLY TO RIVAL?


Brexit

A soft Brexit is generally seen as being better for the UK, and what’s good for the UK is, generally speaking, good for the Channel Islands

to invest in the EU and, perhaps, negating the need for investors to use Jersey or Guernsey at all. “The Channel Islands and the UK will be competing head-tohead for business,” says Bridget Barker, Executive Director at Zedra in London. Even in this scenario, Jersey and Guernsey still have an advantage, says Barker, in that the islands have no VAT and are quicker and, in some areas, less regulated than London. But equally it would be relatively easy for the City to introduce a fund structure that could compete with the islands. Meanwhile, if the last decade has shown the offshore finance world anything, it’s that lighter regulation is shaky ground on which to base business. “On both these points, the devil is very much in the detail. The Channel Islands will need to ensure that they keep ahead of the game,” Barker says. Much will depend on the kind of Brexit May is able to deliver before the 2019 deadline. Harassed by Brexiteers on the right, the embattled Prime Minister is being pushed towards a so-called ‘hard’ rather than ‘soft’ Brexit, meaning Britain would withdraw from the EU without a trade deal. The soft option, meanwhile, would involve it remaining in the common market and would be less disruptive to the economy – in the short term, at least.

WEATHERING THE STORM Whatever happens, the UK is expecting a decline in growth as Britain struggles to sign trade deals with other nations that will help it make up the shortfall. A muchvaunted trade deal with the US is expected

46 City Edition 2018

to boost gross domestic product (GDP) by just 0.2 per cent. Meanwhile, abandoning the UK’s favourable trade deal with Europe is expected to lower growth by 15 per cent in the years after Brexit. Opinion is divided on what the respective scenarios mean for the islands, but industry practitioners and local politicians have been keen emphasise that the islands could weather both. Bryan Little, an Associate at Babbé in Guernsey, explains that the island remains a third country with respect to the movement of capital in and out of Europe either way. But anything that reduces the economic impact of Brexit on the UK economy is a good thing for the Channel Islands. “A hard Brexit doesn’t change Guernsey’s access to European markets in a legal and regulatory sense, which will remain stable, particularly compared with the UK,” Little says. “But a soft Brexit is generally seen as being better for the UK, and what’s good for the UK is, generally speaking, good for Guernsey.” Like Guernsey, Jersey will also retain its third-country role after Brexit. Indeed, Geoff Cook, Chief Executive Officer of Jersey Finance, envisages opportunities for Jersey in supporting UK and other non-EU fund managers distributing their funds into the EU post-Brexit. Cook says Jersey has seen a 15 per cent growth in fund managers using its private placement regime to access EU markets, and that interest has continued into 2018. As for competing with the City, Cook believes Jersey can rise to it. “Jersey has a clear proposition, and it’s hard to see how the UK would create a comparable

environment. But ultimately, Jersey doesn’t want to be a competitor to the UK. It’s focused on supporting global investment into and out of the UK, and actually that will become more important post-Brexit. We see more of a collaborative role.” Over in Guernsey, Lyndon Trott agrees that it’s important for the islands to remain part of the British finance family after Brexit. “We know Brexit will bring many changes, but what will not change is the strong and mutually beneficial relationship that Guernsey has with the British Isles, the UK and the City. “We are looking to offer complementary services to London, particularly with global fund distribution,” he says. But it’s also true that for both islands, the finance industry isn’t solely about the UK. Ever since the transparency push began from the OECD and Washington in the mid-2000s, the proportion of business coming from markets in Asia, the Middle East and South America has increased exponentially. In that time, Jersey Finance alone has opened offices in Dubai and Hong Kong, as well as virtual offices in Shanghai and Mumbai. For Barker, those networks will be key to weathering the post-Brexit storm. “The best scenario is for the Channel Islands to develop additional business that’s not EU or UK dependent,” she says. “They have an excellent infrastructure and very experienced service providers, so they should seek to utilise those advantages and market themselves more widely.” n ORLANDO CROWCROFT is a freelance finance writer

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Brexit

Exceptional Performance Walkers provides practical and commercial legal advice to our international client base which includes global corporations, financial institutions, investment fund managers and high net worth individuals. Advising on the laws of Jersey, Guernsey, the Cayman Islands, Bermuda, the British Virgin Islands and Ireland, from our global network of offices, Walkers has the expertise to deliver every time. Walker House 28-34 Hill Street, St. Helier Jersey JE4 8PN, Channel Islands T +44 (0)1534 700 700 F +44 (0)1534 700 800 E jonathan.heaney@walkersglobal.com

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City Edition 2018 47


Delivering independent, offshore, bespoke solutions for 50 years Private Client Services • Family Investment Companies • Fund Services At Moore Stephens in the Channel Islands, we are proud of the long standing relationships that we have built with our clients. Over the years we have earned an enviable reputation for our high quality products and services. It is our independence and experience that enables us to provide complete solutions that are tailored specifically to our clients’ needs and requirements. Being a member of the Moore Stephens International network, we can provide an in-depth cultural and technical understanding of different markets around the world. We look forward to the future and to building further long term relationships. To find out more please email: angus.taylor@moorestephens-jersey.com or telephone: +44 (0)1534 880088

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Opinion

Brexit: a game changer zedra Executive Director Bridget Barker examines how the relationship between the Channel Islands and the UK may shift after Brexit IN A LONDON cab, only recently, the

taxi driver complained that things were too quiet. Although there was considerable traffic, his view was that there were fewer people around and less business was being done. So, either the old adage ‘sell in May and go away’ is proving correct this year, or perhaps it’s the beginning of the feared Brexit slowdown? UK wealth managers have been reporting decent returns and many City law firms are anticipating bumper profits. However, the increasing rows and uncertainty over where the Brexit process will end up is casting a long shadow – will it be hard or soft? The newspapers regularly report that businesses are leaving London, and there are fewer stories about new entrants. Traditionally, the view has been that what’s good for London is good for the Channel Islands, but it’s difficult to see what the position for the UK will be by the end of March 2019 and how that will impact on Jersey and Guernsey. The Channel Islands have developed their considerable skills in financial services over many years of servicing overseas clients. Although this developed from working for the UK banks and other asset managers, both islands now have a far wider international client base, particularly in Europe, the Middle East and Asia. The islands are insisting that, postBrexit, it will be business as usual, but in the eyes of the EU they have been very tied to the UK. At present, the Brexit draft withdrawal agreement includes explicit reference to the Crown Dependencies, and politicians in both islands say they have a direct line into

the UK’s Department for Exiting the EU. However, post-Brexit, the relationship between the two islands and other EU countries will inevitably change. Sir Phillip Bailhache, who recently stepped down as Jersey External Relations Minister, said earlier this year that convincing European politicians that Jersey is a well-regulated jurisdiction was an “uphill struggle”. Jersey has been considered offshore to the UK and possibly perceived as providing less stringent regulation. Bailhache said he wanted “to persuade the countries of the EU to allow us to continue to operate as an international financial centre in the way we have done in the past”.

GOING HEAD-TO-HEAD Following Brexit, the UK will be offshore as regards the EU, and a third country for the purposes of the Alternative Investment Fund Managers Directive (AIFMD) – so Jersey and Guernsey will be competing head-to-head for business with the UK. The Channel Islands’ key card is, of course, tax – particularly the lack of VAT. However, if the UK government can be persuaded to introduce a fund structure that’s as tax-efficient for investors as a Channel Islands fund, it will be easier for a promoter to establish a competitive fund structure in the UK, so cutting out the need to use an offshore centre. Both Jersey and Guernsey have benefited from offering structures that require relatively light regulation – although there are still fairly stringent regulatory requirements on the administrators of such funds. Private funds, which are aimed

at professional investors and can be set up in a few days, are popular. However, on both these points the devil is very much in the detail, so both Jersey and Guernsey will need to ensure that they keep ahead of the game. The best scenario is for the Channel Islands, post-Brexit, to develop additional business that isn’t EU or UK dependent. Both islands have strong infrastructures and experienced service providers, so should seek to utilise those advantages. Both islands are ready to take advantage of the AIFMD passport, once that becomes available, and in the interim will continue to utilise the national private placement regimes (NPPRs). UK managers, on the other hand, have to date been able to use the AIFMD passport but will have to learn about the various individual NPPRs. External marketing has already started. Both Jersey Finance and Guernsey Finance have active programmes of promotion to other financial centres. Jersey has recently enacted legislation to permit the establishment of limited liability companies (LLCs) based on the US model, providing something that’s familiar to US managers. Guernsey is considering the concept of a ‘Green Fund’, which places emphasis on impact investing, currently a popular theme with many international investors. Irrespective of what happens to the UK, thinking about an independent future after Brexit is important. Continuing to develop innovative products and marketing the Channel Islands to a wider audience will inevitably be more necessary. n

The best scenario is to develop additional business that isn’t EU or UK dependent

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City Edition 2018 49


Money flows

The Channel Islands are routing billions of pounds of foreign investment, both directly into the UK and outwards to the rest of the world – and this money flow only looks set to increase

Follow the Words: Andrew Strange ACCORDING TO THE most recent figures, the international financial centres of Jersey and Guernsey are a conduit for around £800bn of foreign investment into the UK from investors seeking strong returns in the era of globalisation. The flow of capital through the islands is having a huge impact, enabling the construction and development of everything from offices and residential property to roads, airports, hospitals and schools. The Channel Islands have emerged as the gateway to Europe for international capital, and their close ties to the City and tax-neutral status have seen investors – including sovereign wealth funds, pension funds, private equity firms and professional investors – routing money into the UK through the islands. A recent report found that Jersey was responsible for £500bn of foreign investment into the UK, which is around five per cent of the total stock of foreignowned assets in the country and supports the livelihoods of almost 200,000 people. While Guernsey hasn’t assessed its contribution in the same way, it estimates that the amount of foreign investment into the UK through the island is between £200bn and £300bn, assuming the same methodology were used Money is flowing into the country

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through investment in safe tangible assets such as property, which remains a favourite of foreign investors, but there are also consistently high levels of private equity and infrastructure funds activity. And the recent Jersey’s Value to the UK report found that Jersey banks alone upstream £89bn of deposits to UK banks each year, providing 1.5 per cent of the funding of the entire UK banking sector. Channel Islands-based law firm Ogier reports recent transactions including one through which a South Korean fund acquired a shopping centre in Bristol; another involving a joint venture between a UK real estate manager and a US fund that acquired properties to develop as student

accommodation; an Asian client that’s invested in UK student accommodation; and structures investing in industrial real estate such as factories. This is typical of a pattern seen by many practitioners in both Guernsey and Jersey. So what’s the attraction? Jersey Finance Head of Business Development Richard Nunn says: “Jersey’s proportionate regulatory regime, which offers the highest levels of governance whilst retaining flexibility, is a key factor in attracting business, as is the high-quality,

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Money flows

skilled labour force available in the island. “For cross-border investment, Jersey’s tax neutrality is vital too. It offers a simple and transparent environment that enables investors from all over the world to pool their capital in one place before it’s put to work. Tax is still paid where it’s due at the investor end and where capital is invested, but there’s no additional layer of taxation in Jersey itself.” Dr Andy Sloan, Acting Director of Strategy at Guernsey Finance, agrees that the Channel Islands offer secure and stable jurisdictions in uncertain times, which is attracting investors from across the globe.

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Around 70 per cent of Guernsey funds have investors from two or more regions of the world, whether it’s Europe, North America, Asia or South America.

ROUTE INTO THE CITY “What we do is provide an environment to route capital straight into the City,” Sloan explains. “How do we do it? By providing a well-regulated, tax-transparent environment that enables investors to service their requirements. “We provide a secure, stable, solid bedrock from which to organise their financial facilities. And we offer a tax-

transparent investment platform that enables the efficient arranging and structuring of investments that can then be routed straight into the UK or elsewhere.” The Channel Islands have been proactively building relationships with markets around the world for several years, which has left them in a strong position, particularly with Brexit likely to place even greater value on global connectivity. Jersey, for example, mediates £1.3trn of assets from institutional and private investors around the world through deposits, funds, trusts and corporate structures. Around 20 per cent of that is

City Edition 2018 51

money


Money flows

from the UK and 13 per cent from the rest of the EU. Jersey firms are also managing capital from North America, Asia Pacific, the Middle East and North Africa. Simon Schilder, Partner at Ogier, says discretion is another reason why the Channel Islands are popular with overseas investors with an eye on UK assets. Privacy rules mean that while regulators can gain access to records, it’s more difficult for the public to gain details of ownership. This is particularly important for wealthy people from parts of the world where they face a high kidnap risk, such as South America. They want to be reassured that criminals won’t be able to identify a home they’re planning to buy in the UK. Another important aspect of the islands is their proximity to London, which allows advisers to fly between the locations quickly for meetings, helping the investment process move more smoothly.

HEADING OUT But it’s not all about money flowing into the UK. The Channel Islands can also play a key role in helping UK investors seize opportunities around the world. Sloan explains that good relationships have been developed with Hong Kong and China, for example. And the top 20 countries for capital invested abroad through Jersey include Poland, Turkey and the Netherlands. Of total assets managed through the island, however, around a third is ultimately invested beyond the UK and

The Channel Islands have been proactively building relationships with markets around the world for several years, which has left them in a strong position

Europe. Some 20 per cent of Jersey’s total outbound ‘greenfield’ foreign direct investment – which is focused specifically on developing new factories and other commercial sites – was targeting projects in the Middle East, underlining the island’s strong and growing links with the region. And several African developing markets benefit from FDI originating in the Channel Islands, including Uganda, Mozambique, Mali, Guinea, Egypt and Senegal. Sloan adds that one of the key issues that funds face is the cost of global distribution and of trying to market and sell to investors. As a result, they need a consistent approach to reduce the regulatory and administrative burden of operating in multiple markets. Ideally, they need to use the same platform to move into as many different markets as possible. The Channel Islands have built a network of relationships over a long period and have many capabilities and routes into markets that have been quietly developed over the years. In a challenging post-Brexit environment, the islands can provide a common investment vehicle into Asia, North America, the EU, the Middle East and South Africa. “It gives investors flexibility, it gives them manageability and it reduces their costs,” says Sloan. Richard Nunn adds: “Post-Brexit, we see a really positive role for the Channel Islands in enabling investors to bridge the Brexit gap with certainty and maintain business as usual – both in terms of facilitating high-quality investment into the UK and in supporting the UK’s global investment ambitions, so that everyone benefits. “Our third country status in relation to the EU will remain unchanged and, as such, we will continue to be able to support non-EU, including UK, fund managers in marketing their funds to EU investors. “By the same token, EU investors will be able to structure their funds through Jersey to maintain access to the significant UK investor market.” Jersey and Guernsey are high-quality centres that focus on working with investors around the world to offer them certainty and to help them achieve better returns. In a globalised and often uncertain world, they are secure and stable locations for international business. n ANDREW STRANGE is a freelance finance writer

52 City Edition 2018

The Islamic perspective The Channel Islands have a long history of working with clients from across the Middle East and other Islamic countries, who want their money invested in a Shariacompliant way. Much of the money from these countries is invested in UK commercial real estate, such as offices, student accommodation, distribution centres and industrial sites. Jersey-based VG, an independent provider of fiduciary and administration solutions, has been working with clients from Saudi Arabia since 1981. It reports a steady flow of Islamic investment and says Middle East family offices and sovereign wealth funds are also taking significant stakes in UK companies, while wealthy families continue to acquire properties for private use. Trevor Norman, Director, Islamic Finance and Funds Group at VG, says: “A Jersey structure is commonly used because of the island’s reputation for such services and the certainty of law that Jersey offers. The long-standing links to the Middle East – VG has had clients from Saudi Arabia since 1981 – and the number of practitioners with knowledge of the region are also factors.” With Sharia investments, the target assets must, for example, not be undertaking haram (prohibited or harmful) transactions or activities, such as trading in alcohol or pork products. And any structure and documentation should normally be reviewed by an Islamic scholar or board of scholars, who will issue a fatwa, declaring them compliant. Links between the islands and the Islamic world are deep and VG works with Islamic scholars across the world. In one deal, scholars from the US, Malaysia, Bahrain and Saudi Arabia were used to ensure compliance with various schools of Islam – a powerful example of the islands’ networks and connections.

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54 City Edition 2018

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Ipes: advancing through technology Barry McClay, Chief Operating Officer at private equity outsourced services provider Ipes in Guernsey, explains how the business has used transformative technology to drive itself forward IN THE TWO decades since Ipes was founded, fund administration has evolved considerably to keep pace with major regulatory changes and their associated demands. During that time, Ipes has established a strong track record of investing in new products and services and proactively supporting our clients in that ever-changing regulatory environment. We’ve demonstrated this through the introduction of services such as AIF Depositary in 2014, FATCA reporting in 2015 and The ID Register in 2016. Technology has been a significant aspect of our development. Investing in the best technology solutions has been a major focus for Ipes and has played a large part in how we provide our fund management services. Capital Tracker, for example, is our in-house web-based system. We’re fairly unique within our industry in our pure focus on fund services, so we didn’t feel that an off-the-shelf IT solution would provide us with everything we needed. Capital Tracker is completely integrated with our processes, which means that when our procedures change we can quickly adapt our system to suit our new needs. It was developed entirely with the requirements of private equity in mind, and is used for managing calls, distributions, cash movements, bookkeeping and investor reporting. From its initial iteration, we’ve progressed it in a number of ways, such as

adding on modules for depositary and AIFMD reporting to ensure that it meets our clients’ needs. From Capital Tracker, we evolved The ID Register (TIDR) in 2016. This was a major undertaking for Ipes, and something we strongly believed would benefit the industry and our clients. Private equity is a fast-moving area, but there’s traditionally been a real lag in the investor vetting process. The current paper-based process of investor due diligence is time-consuming and repetitive, requiring investors to submit the same information over and over again for every investment they make. TIDR is an online platform that allows individuals to create a profile for their due diligence requirements. An investor can provide their information once and then we can share it securely with lawyers and fund managers across the globe. We use real-time sanctions screening against global sanctions and PEP lists so that the information is always kept up to date. While we first launched TIDR with a complete focus on that due diligence service, the demand for it has resulted in us evolving it further. TIDR can now be used for investor reporting and ensuring that clients’ information is compatible with FATCA and CRS requirements. A key initiative in 2017 was to use that technology to make investor onboarding

and fund closing easier and quicker for our clients. We’ve now successfully supported a number of our clients with their fund closings. While the online platform is efficient and cost-effective, it’s also very secure – we’re aware of the importance of the information we hold and ensure that it’s protected. In the time that TIDR has been fully operational, we’ve had more than 19,000 individuals subscribe to the platform from a wide range of sources. Together with the personal service we provide, our technology has enabled Ipes to grow from its small start in Guernsey in 1998 to a team of 265 people across five European offices. We now work with 195 clients and provide administration and depositary oversight to $165bn in assets for 390 funds. According to Preqin (July 2017), we were ranked third globally among private equity fund administrators, by number of funds serviced last year, and we are the second largest fund administrator in Guernsey (Monterey Insight, 2017). As Ipes celebrates 20 years in business, we’re delighted to reflect on how far we have come, but are just as focused on looking forward. We’re certain more regulatory change will come, but innovative technology products have been a key part of our success so far and that’s one thing we expect to continue. n

Ipes’ team in Guernsey

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City Edition 2018 55


Private equity

A

privateaffair private equity investment in Channel Islands fiduciary firms shows no signs of abating, so will the positive sentiment it creates drive the industry to new heights?

Words: Dave Waller

BUSINESS IS NO place for the faint of heart these days. Take a company like FitBit – having helped pioneer wearable health tech, with nifty wristbands and smartwatches, the American upstart has since had to face giants such as Apple and Samsung, who have waded in using their vast resources to claim much of its territory. Thanks to support from various private equity groups, however, FitBit was able to fight back – beefing up its coffers and acquiring other companies to take its own offering up a league. Its struggles are far from over, but without that private equity muscle in its corner, FitBit would have no doubt collapsed in a wheezing heap long ago. Private equity has often been a force stepping in to change a company’s fortunes. And one area in which it’s been prevalent is the offshore financial services sector. Over the past 15 years, deals have been inked everywhere, from fund administrators to corporate services companies and private client providers. One deal partner, who has led a series of transactions in the space, describes the sector as a “private equity investor’s dream” – financial services offers a vast global market that’s steadily growing. It’s also heavily fragmented and

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crying out for consolidation. And it boasts the cash flows, high margins, sticky clients and predictable, recurring revenues that private equity loves. To cap it all, the Channel Islands have a reputation as a safe investment. “It began with the onset of regulation in the early 2000s,” says Jonathan Smith, Partner at Wyvern Partners. “Before that, the system was too opaque and you couldn’t see who the clients were. No one would invest in the Channel Islands. But the introduction of Know Your Customer requirements took away that final barrier, and the Channel Islands’ fiduciary sector was suddenly open for investment.”

DEAL MAKERS Indeed, in the past 15 years, private equity has been waving its wallet all over the financial services sector, and the deals are only getting bigger. When Candover bought Equity Trust from Insinger de Beaufort, the Anglo-Dutch private bank, for €182.5 million in 2003, it seemed ground-breaking. By 2017, when CVC Capital Partners was buying TMF Group for a whopping £1.75bn, it had become mainstream. In the Channel Islands, meanwhile, Vistra and JTC Group are just two of the companies that have been transformed by private equity, exploding from small bases to large global businesses in just a few years. The latter had its IPO on the London Stock Exchange earlier this year – something not likely to have happened without initial private equity backing.

It’s easy to see the appeal – private equity’s capital and guidance can help stimulate growth and expansion, allowing a business to become more professionalised through better systems, and better equipped to pursue acquisitions, allowing it to sell existing services to new jurisdictions or branch into new service areas. Consolidation can also help a company navigate costly regulation, by providing economies of scale. Owner-managers, meanwhile, are often drawn to the idea of using someone else’s capital as a means of de-risking their business – or as an enticing way out when the time is right. “Private equity deals are leveraged by bank debt and loan notes. Management invest in the equity – if the company doubles in size, the management’s share will go up a lot more than twice,” says Smith. “Lots of people have made their fortunes on private equity deals.” Yet mention of private equity may not elicit warm smiles everywhere. One common criticism is that private equity backers, for whom the lifecycle of a typical investment is a mere three-to-seven years, are too happy to risk pushing prices, margins and acquisition strategies hard, and may fail to integrate new acquisitions as well as they should – with a clear, negative impact on company culture and service levels. However, that’s changing. These days, private equity players are coming in with a better understanding of the businesses they’re buying. “They realise that if they

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don’t invest in the people and allow management to do their job of running the business, they don’t get the benefit of key value drivers such as organic growth and that which comes from fully integrated acquisitions,” says Mark Pesco, CEO of First Names Group. “So they won’t be able to create and maximise value when it comes to exit.” Pesco should know. First Names was acquired by AnaCap in 2012, a deal which, according to Pesco, has helped put First Names in the strong position it’s in today. “Without private equity, we wouldn’t have been able to move to new premises, bring senior hires on board, develop our business, launch innovative training plans, or invest significant money in IT and other systems,” he says. “We wanted to demonstrate to the market that you can bring a private equity backer into a group and still have a business that’s totally focused on investing in people. And in five years we’ve completed 15 acquisitions but also had double-digit organic growth – because they’ve allowed us to be just that. “Private equity has been really positive – allowing us to grow the business and safeguard it for the future.”

STATE OF INDEPENDENCE First Names is now one of the largest players in the increasingly consolidated sector. But for all the consolidation among bigger businesses or regional players, there are those for whom private equity simply

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doesn’t suit their needs. In fact, it remains perfectly possible for boutique firms to thrive as independent businesses. “There are highly specific aspects of the financial services world where it’s possible for an entity to bring itself into the spotlight despite being quite small,” says Wayne Atkinson, Group Partner, Corporate and Commercial at Collas Crill. “You just need something that distinguishes you in the marketplace – dealing with IP rights for high-net-worth individuals, for example, or green investment expertise, or knowledge of aircraft or shipping.

Private equity

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Private equity “There are firms that have yield in those areas that use it to become a significant proposition. And being more focused reduces the need to keep up to date with lots of areas of regulations.” Michael Betley is Chairman of Guernsey’s Trust Corporation International, which is currently celebrating 15 years of staunch independence, despite plenty of approaches over the years. He insists that his firm has won a significant amount of business precisely because it is independent, because many advisers and clients prefer the sense of security and familiarity it delivers. But, says Betley, forces will eventually conspire to make any company seek scale in order to compete with increasingly international rivals. “The business that wants to maintain control has to find patient capital providers,” he says. “Whether that’s family offices, or even clients of private client firms who’ll lend or take a small stake because they want to support management and help it achieve its strategic aims. Independents don’t have to surrender to private equity, but it’s only a matter of time before the imperative issues reach the surface.” As Betley suggests, capital can be acquired in a variety of ways these days. Trust Corporation has favoured harmonious mergers with like-minded organisations operating in complementary jurisdictions or service lines. But there are other options, as demonstrated in 2015, when Jersey-based corporate and fund administration provider Sanne listed on the Main Market of the London Stock Exchange (LSE). Sanne’s example was soon followed by PraxisIFM

Private equity’s capital and guidance can help stimulate growth, allowing a business to become better equipped to pursue acquisitions or sell existing services to new jurisdictions

on The International Stock Exchange and by JTC on the LSE, creating, in Betley’s words, a “new benchmark”. While an IPO still requires a certain scale, management can use it to inject capital into their business while keeping greater control than selling a majority stake to private equity. It is, therefore, an increasingly compelling option. “Four years ago, there weren’t really any listed trust companies,” says Jonathan Smith. “Now there are four. And the stock market takes a wholly different approach to valuation, which often means attributing far higher values than private equity does. There’s still a role for private equity, and many companies will still choose PE over an IPO, as TMF did. But now there are other alternatives.”

CONSOLIDATION TREND While the means of raising capital may vary, one thing is for certain: we’re going to see further consolidation in what remains a fragmented sector. Guernsey has 150 trust companies, for example; Jersey more than that. These businesses – and their owners – are maturing and seeking strategic options or exits. And, while IPOs will become more commonplace, the volume and scale of private equity deals is only going to grow too – with independently owned businesses and larger groups already backed by private equity, appearing up for grabs by other, bigger players. “Private equity firms are already significantly leveraging the financial services sector,” says Wayne Atkinson. “And there will come a time when they need to exit and we’ll see an ongoing cycle of deals as a result. The interesting thing is what happens to those companies next? We may see some business manager-led or staff-led buyouts; we may see private equity firms coming in again.” There are plenty of interested funds waiting in the wings to do deals, while other funds are coming up to exit, which means more companies returning to the market. Even seismic geopolitical shifts such as Brexit won’t stop the cycle, as it may simply provide more spoils for private equity, as management teams look to safeguard themselves against the uncertainty. With successful private equity players drawn back to the space, others coming in because it clearly works, and a handful of CVC-style giants performing megadeals, the Channel Islands’ private equity merry-go-round looks set to keep turning. n DAVE WALLER is a freelance finance writer

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The private equity merry-go-round Here are just some of the private equity highlights in the Channel Islands over the past 15 years. May 2003: Candover buys Equity Trust from Insinger de Beaufort for €182.5 million Sept 2010: Candover sells Equity Trust to Doughty Hanson, to merge with Doughty Hanson subsidiary TMF Group July 2012: AnaCap Financial Partners buys First Names Group

Aug 2009: IK Investment Partners acquires majority stake in Vistra

Mar 2012: CBPE Capital invests in JTC Group

Sept 2013: LDC backs MBO of Equiom

Feb 2014: Electra Partners buys Ogier Fiduciary Services for £180 million June 2016: Electra Partners sells Elian, formerly Ogier Fiduciary Services, to Intertrust for £435 million Oct 2017: TMF Group is acquired by CVC Capital Partners for €1.75bn March 2018: JTC lists on the Main Market of the LSE, with a market cap of £310 million

May 2015: Baring Private Equity Asia acquires a majority stake in Vistra Group Sept 2016: Inflexion Private Equity backs the management buyout of Bedell Trust, which rebrands as Ocorian

Jan 2018: AnaCap sells First Names Group to SGG Group

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Opinion

A

Publicaffair

Jonathan Smith, Partner at Wyvern Partners, examines how market listings are providing a viable alternative to private equity investment in fiduciary firms THE £310 MILLION flotation or initial public offering (IPO) of JTC Group that completed in March this year is, by any measure, a landmark event in the evolution of the Channel Islands fiduciary sector. Not only is it the latest development in the highly successful JTC story, but it also marks the first time that an openly private client trust administrator has been admitted to the Main Market in London. Wyvern Partners has been advising on deals within the fiduciary sector since the early 2000s and has seen investment in it evolve greatly during this time. In the early days, there were very few outside investors prepared to invest. Prior to regulation, third parties steered well clear of the sector and fiduciary businesses were owned almost exclusively by industry participants (such as professional services firms, banks or owner-managers). Regulation, however, changed all that. In the 15 or so years since regulation, private equity has transformed many companies in the sector from small local players to major global groups. But with the passage of time and the evident success of private equity in the sector, other types of investor have begun ploughing their money in. High-net-worth investors – often themselves users of fiduciary structures – have been behind a number of investments in the sector. The Ravenscroft Special Opportunities Fund, launched in 2016, was raised largely from high-networth investors and has been specifically targeting equity investments in trust companies. Angel investors, often from a fund background themselves, have been involved in several successful fund administration businesses. These investors are often prepared to take a longer timescale for their investment and don’t

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need to see such high returns, preferring a lower-risk/lower-return investment. Globally, however, the largest accessible sources of equity funding are from the listed capital markets. The story there with regard to the fiduciary sector has been gradual. Ten years ago, the ‘mantra’ was that the fiduciary market could never exist under the public gaze of the stock markets. In 2015, however, Sanne pulled off a spectacular listing when the private equity firm Inflexion launched it onto the main London market. The runaway share price following the IPO demonstrated that the listed equity investor had a wholly different view of valuation to what had gone before. This type of investor was prepared to value highly those companies that could demonstrate high-quality operations, strong growth, predictability and good margins and cashflow. Intertrust soon followed on the Amsterdam market – and while there

listed investors are less comfortable with high debt levels and value predictability and an ongoing dividend yield

was a ‘hiccup’ in their share price on the back of one set of results, the business has since recovered. Listed investors seek a different risk/reward profile than private equity investors. Whilst private equity investors seek internal rates of return of 25 to 30 per cent – often achieved in part through debt leverage and rapid growth through acquisitions – listed investors are less comfortable with such high debt levels and more highly value predictability and an ongoing dividend yield. It’s entirely natural, therefore, that as a sector develops, other equity investors are attracted. These IPOs, however, failed to herald the opening of the floodgates, and private equity has remained the prime source of equity funding in the sector over the past three years. TMF courted the listed markets on a couple of occasions, but ultimately chose private equity for the third time. Several Crown Dependency businesses have explored flotation only to be told another mantra that emerged following Sanne and Intertrust – ‘the listed markets will not accept companies that are too private client’. But in the fully transparent, compliant, post-FATCA, post-CRS world, many industry practitioners point to the lack of logic in this view. Why is a private client business so different to a corporate business in its attractiveness to investors? Both operate in a world of transparency in fully compliant, regulated markets and have similar investment characteristics. The listing of PraxisIFM on The International Stock Exchange last year was the first business to list setting out its stall as a balanced fiduciary business operating in private client, corporate and fund administration. JTC has successfully taken things a step further and set out its stall on the London Market. It won’t be the last. n

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Reputation

A matter of reputation

in the wake of The Panama and Paradise Papers, the media has unfairly lumped the Channel Islands in with more opaque jurisdictions – so it’s no wonder they’ve come out fighting

IF YOU WERE beginning to doubt whether the publication of the Panama and Paradise Papers would have any tangible effect on the global financial system, the UK’s recent move to force British Overseas Territories – including the Cayman Islands and the British Virgin Islands – to create and publish registers of beneficial ownership should have put those uncertainties to bed. The fact that the Crown Dependencies of Jersey, Guernsey and the Isle of Man managed to lobby their way to an avoidance of the same fate not only highlights their differing constitutional relationships with the UK, but also the higher esteem in which they’re held by Westminster and the City of London. While there’s acceptance in Westminster that the Crown Dependencies fall outside of its jurisdiction, the pressure is unlikely to disappear. And, as we’ve seen with the collapse of Mossack Fonseca (the law firm that was the source of the Panama Papers), the prosecution of the Head of the Angolan Sovereign Wealth Fund and the resignation of the Icelandic Prime Minister, the leaked files have had a variety of effects, even if not on the scale some may have expected. That the Channel Islands weren’t extensively involved in the leaked files that form the Panama and Paradise Papers bolsters the view that these are worldleading jurisdictions in terms of regulatory compliance. But as the debate within Westminster shows, that hasn’t stopped them being caught up in the same net. “To conflate the two sets of papers is slightly misleading,” says Dominic Wheatley, Chief Executive of Guernsey

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HEADLINE GRUBBING Having invested large amounts of time and money in both investigations, it’s natural that the media would want to make as much of the leaked files as possible. The problem for the press has been that, particularly in the case of the Paradise Papers, very little evidence of illegality has been found, and so stories have had to focus on name dropping. A sample of headlines includes: ‘The big names in the leak of offshore secrets’; ‘Scheme that let Gary Lineker avoid tax on Barbados home’; ‘Universities invested tens of millions offshore’; ‘From Harvey Weinstein to Shakira, the celebrities with offshore interests’. None of these stories suggest that anything illegal has taken place and so, rather than shining a light on criminality, they’re being used to explain, from a particular perspective, how the global financial system works. In the reporting, however, very little attention has been paid to differences between the Channel Islands and other, less reputable jurisdictions. “We’ve always been of the view that jurisdictions should be assessed based on their ability to meet and demonstrate

international standards, rather than on subjective labels,” says Geoff Cook, CEO of Jersey Finance. “If anything, the coverage has made us more determined to differentiate our position. Jersey is proud of how it’s grown to be a leading IFC and we continue to highlight what sets us apart from other jurisdictions – our world-class regulatory and legal framework, our expert workforce and our economic and political stability.” As can be seen from the headlines mentioned earlier, the press’s refusal to treat jurisdictions differently extends to confusing legal and illegal activity, at least at the headline level. “Any steps to

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Words: Kirsten Morel

Finance. “The Panama Papers had a certain amount of substance, but the effect on the Channel Islands was marginal because they weren’t directly involved. “The Paradise Papers didn’t have anything of substance in terms of bad practice; they were stories of public curiosity rather than public interest. But there’s been collateral damage because people tend to think of international finance centres as being the same. “However, in the City, people understand that the Channel Islands are at the quality end of the IFC spectrum.”


Finance

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Finance

eradicate tax evasion should be applauded and must continue, but the blurring of the lines between legality and morality, and the confusion of legal tax avoidance with illegal tax evasion, is a concerning trend,” says Tim George, Partner at Withers Worldwide in London. In part, this trend is a response to people’s preconceptions, which Geoff Cook believes gets in the way of wider, healthier debate. “There will always be a small element who aren’t willing to listen because they’re following a preconceived political agenda,” he says. “That’s a shame, because having a sensible debate about global trade, overseas financial flows and cross-border investment would be helpful.”

PRESSING MATTERS Naturally, the media’s greatest concern is selling newspapers or attracting viewers and these are rarely achieved by going into detail or providing careful explanations in order to ensure the consumer is in command of all of the facts and understands every nuance. But that isn’t going to stop the Channel Islands from trying to set the record straight. “We’re constantly talking to the press, NGOs, political figures and other prominent people,” says Dominic Wheatley. “It’s one thing to respond at the times you need to, but I also do media days several times a month at which I remind people of our values, that we do adhere to all international standards of transparency and don’t tolerate aggressive tax evasion or money laundering. “It’s important we speak up on behalf of

62 City Edition 2018

Following the past two years of negative publicity, it will come as little surprise that the Channel Islands are planning to push back as strongly as possible

our communities and show that we do share other people’s values and believe that people should pay their taxes. But it’s a constant piece of work.” Following the past two years of negative publicity, it will come as little surprise that the islands are planning to push back as strongly as possible. But rather than limiting their focus to small groups of influential people, they will attempt to reach a much wider audience in 2018. “We’re working hard to change perceptions,” says Geoff Cook. “Our evidence-based research has been a strong part of our efforts in recent years, and has been increasingly helpful in explaining the positive role Jersey plays in driving crossborder investment, which benefits economies around the world. “Our strategy this year is to extend our message as widely as we can to the general public and show that, by working with

partners in business and the wider global communities, we can help create a better future where everyone benefits.” As Tim George points out, these are messages that the City doesn’t just understand but also believes, enabling those in the finance sector to differentiate between the Caribbean – including the British Overseas Territories – and the Crown Dependencies. “The Panama and Paradise Papers had their biggest impact on the Caribbean jurisdictions,” George says. “The Channel Islands appear to have emerged relatively unscathed. Different jurisdictions have different ‘sweet spots’, but the Channel Islands are consistently regarded as the ‘go to’ jurisdiction for most sectors. “They were ahead of the game in introducing robust regulatory regimes; legislation is generally introduced in a proactive way; the Courts are held in high regard; and there’s an impressive depth of high-quality service providers.” Guernsey Finance and Jersey Finance will no doubt be delighted to hear such views coming from London – though both are well aware that, when it comes to reputation, they’re preaching to the converted in the City. It will take a lot longer for them to be confident that the general public, like the City and Westminster, truly understand how to separate the Channel Islands from the Cayman Islands, and tax planning from tax evasion. n KIRSTEN MOREL is a freelance financial writer

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Stunning location, the sunsets are exceptional St Ouen, JerSey, channel iSlandS

Jersey Airport: 8 miles, St Helier: 13 miles Modernised Victorian Gothic residence overlooking the bay. 5 reception rooms, 5 bedrooms, 5 bathrooms, high ceilings, detached granite cottage, garden, patios & decked area, parking for 12 cars, stunning country and sea views, approx 5,649 sq ft, plans passed for swimming pool / entertainment complex. Qualified. Guide ÂŁ2.85 million

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Impressive secluded country home St JOhn, JerSey, channel iSlandS

Jersey Airport: 5.7 miles, St Helier: 6.6 miles Century House is located in the heart of rural St John with 5 reception rooms, 8 bedrooms, 7 bathrooms, sauna, hot tub, heated outdoor swimming pool, tree-lined driveway, total privacy, separate 2 bedroom staff cottage, lawns, landscaped gardens, vegetable area and orchards, approx 18,000 sq ft. Guide ÂŁ4.995 million

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Some of the best sea views in the west St Peter, JerSey, channel iSlandS

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Guide ÂŁ3.5 million

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Xxxxx

reLocation how the Channel Islands are proving an attractive place for individuals and businesses looking to set up in a new location Words: David Burrows WE’VE ALL SEEN the property series

on TV, where the presenter asks those featured why they want to relocate. The same themes usually emerge – a better commute, a more attractive, safer area to live. Essentially a better quality of life. Technology and the internet have certainly introduced a greater flexibility around how and where we work and live. It’s no longer a necessity to be based in a major city to fulfil career potential. Remote and home working has taken off and so too has business relocation, with companies considering the wisdom and expense of having an office in London or Paris. And even if they do want to keep a big city presence, do businesses really need to base most of their staff there? The Channel Islands have long been an attractive option to both businesses and high-net-worth individuals looking to relocate. A short flight away from the UK and a more agreeable tax regime are just two of the obvious advantages – but there’s far more to the story than that. As Jo Stoddart, Managing Director at Quintessential Relocation Consultants, explains, the islands offer businesses a great

68 City Edition 2018

deal. “Entrepreneurs who relocate really like the islands and the openness they experience,” she says. “And it’s easier to access the decision makers. If there’s a problem, it’s a lot easier to sort out if the people in authority are approachable and easily accessed.” Stoddart agrees that flat rate income tax in the islands is a factor, but stresses that inheritance tax – or rather the lack of it – is an equally big draw. “A lot of individuals have bust a gut to get where they are financially, and they don’t like the idea of their family being hit by a hefty IHT bill.” Kevin Lemasney, Director of High Value Residency at Locate Jersey, echoes Stoddart’s point about the tax angle, but argues that plenty of other islands or countries offer similar benefits. What gives the Channel Islands an edge, he insists, is their proximity to the UK, security, excellent schools and a good lifestyle. “My role is to bring high-net-worth individuals to Jersey,” he explains. “What most of my clients really like is the fact that the island is English-speaking, the currency is sterling and they’re a short flight from the UK.” These factors are highly significant when you consider where the majority of those looking to relocate are coming from. “Predominantly, our clients are from the UK,” Lemasney explains. “In fact, 85 per cent of our clients have British passports.

They may be looking to expand their business or are just seeking a better lifestyle. Jersey may not be the cheapest place to live, but it ticks most of the boxes for our clients. It’s similar to the UK, but different too.”

DOMAIN OF THE ULTRA-RICH? So, are those moving to the islands largely high-net-worth individuals or are those of more modest means relocating too? “It’s a real mixture,” Stoddart reveals. “There’s interest from the wealthy, but also from lawyers, bankers, accountants, entrepreneurs, teachers, vets and marketing specialists – not just those at the top end.” She adds that those in the legal and financial services sector appreciate the benefits of at least spending a few years in the Channel Islands. “Offshore experience always looks good on the CV and can provide a career boost.” As for the balance between individuals and businesses moving to the island, Lemasney argues that there’s a degree of crossover, with some individual clients establishing themselves on the islands and then setting up and growing a business. “We’re seeing architect firms, fund management companies, retailers and digital businesses coming to the island, and quite often the people behind these companies are the high-net-worth arrivals.” The rise in the number of entrepreneurs

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reLocation establishing a foothold in the islands is a growing (and positive) trend. Lemasney highlights another recent change. “The age profile of those coming to Jersey is changing. In the past four years, 74 per cent of high-net-worth people coming to Jersey haven’t yet celebrated their 60th birthday. In the past, those coming to the island would have been older.” Indeed, the perception of the Channel Islands as primarily a place for the wealthy to retire is beginning to change. As Stoddart points out, the demographics have shifted significantly. “We’re seeing people in their 30s and 40s wanting to work here and bring up their family on the islands. There are good schools and the quality of life is a big factor.”

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While there’s a range of businesses coming to the island, there are a few discernible patterns. The big attraction currently is for nimble, high-growth, technology-related businesses that are more to do with intellectual capital than an end-product off a production line. “We’ve seen plenty of online gambling companies looking at the islands,” Stoddart reveals. “Insurance companies, particularly in Guernsey, have successfully located here. For the insurance industry, there’s a good pool of talent already here and it’s also a good place to do business.” And when it comes to encouraging business to relocate, an accommodating government is often a plus. As Andrew Carey, Head of Locate Guernsey, explains,

businesses find most of what they want on the islands and if there are some elements to their operation that they can’t immediately source, then government does what it can to assist. “The Locate Guernsey role is that of a friendly guide. This takes various forms – answering questions, providing guidance, making introductions; all with a view to enabling a soft landing for the newcomer. And lately, we’ve been able to let certain businesses know about the Guernsey Investment Fund, and the mechanism by which that could lead to government investing in specific businesses.” The Guernsey Investment Fund was established in February 2018 with the intention of investing in projects and

City Edition 2018 69

Opposite image courtesy of VisitGuernsey Top image credit: Creative Commons – Danrok

reLocation


Image courtesy of VisitGuernsey

Relocation

businesses that have a Guernsey focus. Being accommodating and providing business incentives is all very well, but how easy is it to relocate given that the Channel Islands operate population policies? Is inward migration restricted in any way? “Yes, it is restricted somewhat,” is Jo Stoddart’s considered response. “Because the islands are small, we need to restrict who comes in.”

MANAGING THE POPULATION Kevin Lemasney says the current population of Jersey is 104,000 and the number is currently growing at 1,000 a year, which he says is manageable. And the reason it’s manageable is because an increasingly larger proportion of those relocating are younger people who bring in new skills and employment opportunities. Simon Torode, Founder and CEO of Livingroom Estate Agents, explains that each island has individual policies to restrict inward migration, based on knowledge of how best to protect each jurisdiction. He stresses, however, that though the islands may appear topographically similar, they conduct business in very

differently ways. These differences are clearly evident in the property markets – not just house prices, but in who actually qualifies to buy and settle as a resident. “I’d say it’s especially easy to relocate to Guernsey if the relevant criteria can be met,” Torode states. For those not in the high-net-worth bracket, Guernsey isn’t prohibitively expensive. The value of Open Market properties has reduced, allowing a greater choice under £1 million – five years ago this simply didn’t exist. As Torode explains, when you compare the cost of purchasing in Guernsey against London, and the enormous growth there within the last five years, Guernsey property shows relative value. It’s a different story in Jersey, as Stoddart reveals. “You can move to Guernsey and find a house for £600,000 or £700,000. In Jersey, you need a housing licence and a minimum annual income of £725,000 before you’re eligible.” Whether individuals have the wealth to satisfy property rules or have permits to work here (and subsequently rent), those who relocate provide real economic value to the islands. As Torode explains: “The Open Market community in Guernsey alone contributes over £70 million in net tax to the public purse – not including other areas of employment, investment and so on, which have been estimated at over £400 million.” So yes, while there may be hoops to jump through, the Channel Islands offer a tempting proposition for those looking to relocate. And in doing so, the ‘new blood’ helps to ensure the islands remain inspiring places to live and work. It’s a virtuous circle. n DAVID BURROWS is a freelance writer

CASE STUDY How Daub Alderney made the move Daub is one of the largest online gaming operators in the UK, with more than a 25 per cent share of the UK online bingo market. Part of the Stride Gaming Group, the company has offices in London, Manchester, Mauritius, Israel, South Africa, and, more recently, in St Peter Port, Guernsey. Zak Cronje, CEO of Daub Alderney (pictured), says establishing an operation in Guernsey has been a marked success. The firm has doubled in size in the past two years and plans to do so again in the next 12 months. Cronje explains that Guernsey was selected as a location because of a number of factors. “Our gaming licence was provided by the Alderney Gambling Commission, which is one of the most respected regulators for operators in the UK and other markets. And there were a number of gaming operators already established within the island, which provided a good basis for building a team.” But what about recruitment? Not a problem, according to Cronje. “There’s a saying that you hire for attitude and train for skills,” he says. “While the gaming sector has been in Guernsey for a number of years, it’s still relatively new and, as such, it’s a challenge finding people with specific sector experience. “Our strategy is to grow our own experts from the local community. We have moved people to our Guernsey offices who possess a wealth of gaming experience, and they play a vital role in nurturing local talent.”

the channel islands in figures Jersey

31

20

new inward investment businesses approved

high-value resident relocations

GUernsey

£95 million

high-value resident property purchases

Source: Locate Jersey, 2017 figures

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9

15

53

personal relocations

business relocations

jobs created

Source: Locate Guernsey, 2017 figures

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City Edition 2018 71


Technology

Do the Channel Islands Dream of Electric Sheep? 72 City Edition 2018

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Technology

Words: Ben Jordan

The Channel Islands have been bigging up their digital capability for some time – but exactly how is that translating to success on the ground?

SILICON VALLEY HAS always dreamed of self-made

micronations where entrepreneurs can flourish; a ‘techie island’ where elite libertarians can tinker and invent, free from heavy-handed government interference. The Channel Islands may not have realised tech entrepreneur Peter Thiel’s ‘libertarian utopia’ just yet, but it’s not through lack of trying. The islands have a developed economy, some of the fastest fibre in the world and the byte-size to beta any concept. Both governments have pledged to diversify their economies to shift their reliance on the finance sector, and both have committed to rolling out gigabit fibre broadband to every premises by next year. The States of Jersey’s Chief Executive, Charlie Parker, recently addressed the Chamber of Commerce with a digital roadmap for the island’s public services. And Guernsey’s Digital Greenhouse has released its Digital Strategy to drive economic growth through the digital sector. But, while everyone may well agree that digital is important, is all of this just clever rhetoric, or has there been tangible progress in the technology space? Tony Moretta, CEO of Digital Jersey, certainly thinks it’s the latter. “Jersey has many digital assets,” he says. “We have an advanced telecoms infrastructure, with three 4G mobile networks providing some of the fastest mobile speeds in the world, and we have fast fibre gigabit broadband, setting us way ahead of 98 per cent of the developed world. When I speak to technologists off-island, they can scarcely believe it.” With all this sophisticated infrastructure, it seems that more people within the UK tech industry need to be made aware of it. The focus, then, must be on marketing the island within target jurisdictions such as the City. But, aside from faster internet speeds, how can Jersey distinguish itself? “The fact of our small size means it’s relatively easy to get key decision makers around the table to change infrastructure and innovate quickly,” explains Moretta. “We have our own legal system, own government, own economy. This is very compelling to investors and tech companies in the City. Within one small room, we can sit down with leading representatives from both government and industry, three telcos, one water company, one electricity company and major financial firms. We’re agile enough to make things happen.”

With the right infrastructure, government support and keen public interest, is local industry getting behind the digital transformation? The finance sector represents approximately 13 per cent of the Channel Islands’ population and an intimidating chunk of their GVA. With a stampede of fintech unicorns shooting for the same private banking clients, it makes the islands’ digital transition particularly immediate. Ove Svejstrup, Associate Partner at EY Guernsey,

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THEORY INTO PRACTICE


Technology played an integral part in creating EY’s ’Fintech in the Channel Islands’ survey, which set out to understand the thoughts of local businesses and gauge how the financial services sector has been responding to the evolving demands created by the emergence of fintech. “We saw an incredibly enthusiastic response from across the entire financial sector in both islands” he says. “The industry as a whole was embracing digital transformation as something that drives business efficiency and they wanted to be involved. “The larger firms were particularly excited about the potential of the islands as a test-bed for innovation, where we can test out new financial technologies and roll out to other jurisdictions.” While fintech is undoubtedly intriguing, from the ground level it’s challenging to see its practical applications in the islands. Svejstrup, however, is enthusiastic about some of the latest developments within EY Guernsey. “We’ve developed an audit platform called WAM Apps. This uses advanced analytics to extract data from our admin systems and streamline conversations with our asset management clients. It helps us to benchmark relevant findings, so we can implement this into strategy – and we’re already using WAM for tax and FATCA reporting.”

The islands have a developed economy, some of the fastest fibre in the world and the byte-size to beta any concept

DIGITAL IDENTITY

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three years to help people of all ages to retrain and enter the digital sector,” Moretta continues. “It’s been a huge success – we have a 90 per cent success rate and have seen graduates enter blue-chip companies or even launch their own start-ups.” The digital skills deficit is also a chief concern for the Channel Islands’ finance sector, as EY’s fintech survey highlighted. “Local firms were concerned about a lack of island resources with appropriate skills,” says Ove Svejstrup. “We need to get more data out on fintech in the islands, so companies can do a cost/benefit analysis and plan ahead through training and capital investment.” Aonghus Fraser underlines the scale of the problem if the islands don’t act now. “We need to re-educate school leavers to not just plump for a job in finance,” he says. “Cambridge University recently published a research project on the BBC website called ‘When is my job going to be automated?’. It looked at low-skilled administrative jobs and calculated the automation risk based on technology trends. One in particular stood out for me – legal secretaries have an automation risk of 98 per cent by 2040. This role is roughly the equivalent of our ubiquitous fund administrators, who could be rendered obsolete in the next 20 years.”

GOVERNMENT SUPPORT Across the pond in Guernsey is the Digital Greenhouse. The initiative is part of the States of Guernsey’s Economic Development Department and works to implement digital strategy in partnership with industry. Digital Greenhouse is brokering partnerships within higher education and industry to create a slipstream for digitally enabled graduates. Fresh initiatives such as KPMG’s Digital Degree Apprenticeship scheme bore fruit last year, with a BSc student at Exeter joining the Channel Islands’ Digital Team.   A 2018 PwC report in Guernsey highlighted the need for a fintech environment and the regulation to

There have also been significant developments in the Know Your Customer (KYC) and Client Due Diligence (CDD) space. Aonghus Fraser, CEO at Atam ID Technologies, recently published a white paper on the case for a ‘digital identity’ platform in Jersey to verify a customer’s identity through the blockchain. He explains: “For any kind of identification process, you present your passport and it’s put in an in-tray to prove you are who you say you are. With digital ID, your passport photo can be cross-referenced with virtual images pulled from social media and online sources – and machine learning and AI can be used to verify the document itself. Digital verification can give us a greater level of confidence when analysing the risk profile of a client, so firms can swiftly approve low-risk transactions, such as a house purchase, which drives efficiency on every level. “Blockchain, or distributed ledger technology, gives us the means of doing that. It creates a tamperproof decentralised network that mitigates against identity fraud and human error. A unique key can be shared between two parties to prove beyond any doubt that the ID was verified by a machine with a date and time stamp.” This technology really pays dividends too. “Incredibly, Estonia estimates that they saved two per cent of their GDP with the introduction of digital signatures,” says Fraser. “That’s a staggering saving – equivalent to their annual defence budget.” So, exciting times ahead. But if the digital transition is to be realised, the islands need people who are both trained to use and make sense of the data. Tony Moretta agrees. “We recently released our Digital Skills Strategy, which addresses any shortfall in skills and sets out our plans to attract talent from around the world. We also undertook a detailed analysis with Exeter Business School to assess the quality of digital education in the island. We strongly believe that to create a digitally enabled workforce we need to prioritise teaching digital skills in schools.” “We’ve also been running a coding programme for

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Technology

underpin it, which forms a key part of Digital Greenhouse’s newly released ‘Digital Strategy’. This isn’t just hot air, Guernsey is incubating Barclays Eagle Labs to implement fintech solutions. It also spearheaded a recent cyber security project with Northern Trust. Lucy Witham, Economic Development Head of Digital in Guernsey, explains the organisation’s key role in accelerating the islands’ skills economy: “One of the things we’re looking at is overhauling the Guernsey school curriculum to make computing skills a compulsory subject of study right up to Year 11. This is about digital empowerment and developing strong pathways to digital career opportunities post-16.” The States of Guernsey is heavily invested. Chief Information Officer Colin Baudains outlined his plans, at an April IoD Breakfast Seminar, for all Guernsey households to have 5G before the UK. With all this public funding – £9 million in eGov spending in Jersey – the islands need to balance the books. Sony’s recent high-profile collaboration with JT to test its Internet of Things capabilities was a significant coup for Jersey. Tony Moretta explains how it came about. “We teamed up with JT and Digital Catapult, our London counterpart, on an off-island PR campaign to highlight our high-speed connectivity. Sony saw that and recognised the potential of Jersey as a test-bed for IoT. Incredibly, Sony had never tested their IoT tech anywhere outside Japan and they chose Jersey. “With success stories like these, our local IT resource was massively up-skilled, with access to next generation training and technology. It’s a win-win, as this creates more activity in our economy and upgrades us as a digital society.”

FUTURE FACING Right now, the market is active and healthy, but with an eye on the future, what’s the digital forecast for the Channel Islands? “The islands need to carve their own niche and build technical expertise in specific areas.,” says Ove

Sony recognised the potential of Jersey as a test-bed for I o T. Incredibly, Sony had never tested their I o T tech anywhere outside Japan

Svejstrup. “I’ve learned from my time in Guernsey that this is a tight-knit community that works well together. The decision chain is short enough to move fast and get things done and we have world-class connectivity. This creates fertile ground for investment, as businesses need this infrastructure before private capital is invested.” Whether a sandbox, test-bed or ‘walled garden’, it’s safe to say that both government and private industry are speaking the same digital language and doing their utmost to sell the islands as the location where tech solutions can be tinkered with before being shared with the world. Time will tell whether this leads to long-term investment from the big players. Aonghus Fraser neatly frames the options: “We can either fight against the digital transition and ultimately get left behind, or we can embrace it. We can create an automated, seamless experience for business with a digitally skilled population supported by world-class infrastructure. This is how we attract outside investors. The responsibility can’t just lie with government and the private sector; it’s also down to islanders to upskill – because your island needs you.” n BEN JORDAN is a freelance technology writer

The Channel Island Sandbox Much has been said about the Channel Islands as the perfect test-bed for businesses to develop and launch new innovative products, without the high cost and complex legal, government and regulatory barriers they would face in other cities or markets such as London. Digital Jersey has launched the platform Sandbox.je to elevate Jersey as the location of choice for organisations wanting to test concepts, products and services prior to launch. Tony Moretta, CEO of Digital Jersey, gives three definitions of a sandbox: l Technical – A safe, secure platform to test a new technology, product or service without affecting the wider system l Regulatory – Organisations such as the Financial Conduct Authority in London

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can sanction the testing of certain products and services where regulation doesn’t yet exist l Playful – A digital playground where entrepreneurs can experiment with pioneering solutions to see what works before rolling out to the wider market But what does the whole sandbox concept mean in reality? UK data analytics firm Meteomatics wanted to use specialist weather drones in Jersey’s airspace to run tests and more accurately predict the weather – drones had never been used like this before. Aside from unpredictable weather being an important issue for Jersey Airport, this is the kind of thing the islands can facilitate easily because they control their own airspace and their own Met Office, and they have the aviation authority to say yes.

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THE AGENDA The Agenda is compiled by Businesslife’s Fashion and Lifestyle Editor, Thom O’Dwyer.

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1. SUPERMODEL SIMPLICITY Yasmin Le Bon represents the classy, cool, stylish look that Winser London is all about. These are easy-to-wear, versatile, interchangeable pieces for chic, professional, high-achieving, working women. It’s no mistake that the supermodel is the brand’s muse and roving ambassador. Here, she’s wearing a chic doublebreasted jacket with high-waisted softly pleased trousers. It’s striking in its simplicity. Jacket, £399; trousers, £249, www.winserlondon.com

INSIDE THE AGENDA: ACCESSORIES, BOOKS, CYCLING, DRINKS, FASHION, FOOTWEAR, JEWELLERY, WELLNESS Everything you need for a more stylish life.

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2. ULTIMATE WORKING WARDROBE It takes a working woman to understand the wardrobe needs of other working women. And style-savvy entrepreneur Kim Winser is just that woman. Her pedigree in the fashion world is impeccable – the first female director of Marks & Spencer, CEO of knitwear giant Pringle of Scotland, and special adviser to Natalie Massenet, who founded online shopping giant Net-a-Porter. After spotting a huge gap in the market for affordable, easy-to-wear, luxurious clothes that work for every shape and every occasion, and that transcend climates and countries, Winser London was launched in 2013. What started as a luxe digital fashion shopping portal has since expanded. It now also sells through pop-ups in various locations and through networking groups. Retail outlets include two stores in the UK, as well as concessions in better UK department stores. The Forever Five collection – an edit of essential wardrobe classics – was introduced last March to celebrate the label’s fifth anniversary. Pictured from the collection is the bestselling Grace Miracle Dress, available in nine gorgeous colours and made from double Ponte di Roma stretch jersey. This is power dressing with the Wow Factor. Winser has definitely found its niche market and is rapidly becoming the working woman’s go-to brand for top-quality, impeccably made, not-too-structured, practical clothing. £150, www.winserlondon.com

3. PICNIC PERFECT While the sun is still shining, get onto Yumbles, the biggest curated marketplace for artisan food and drink online – pronto! Why? Because it’s your only hope of getting hold of summertime in a bottle – the fast-selling strawberries and cream flavour Limited Edition Picnic Gin. Lovingly made by the Poetic License Distillery in Sunderland, it really is the perfect drink to serve while dining al fresco. Try it with premium elderflower tonic water over ice, garnished with a succulent fresh strawberry. Or make a summer punch with luscious summer fruit and lemonade. Delish! All the artisanal spirits produced by the Poetic License Distillery are made in small batches using traditional techniques, but are blended with bold, unconventional modern flavours. Everything that comes from the still – affectionately named ‘Gracie’ – is carefully crafted to ensure that every sip is packed with character. Mother’s Ruin never looked – or tasted – so delectably enticing. £34.95/70cl, www.yumbles.com

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4. SPA NIRVANA To recharge those batteries after a gruelling week in the City, head straight to Knightsbridge and check into the luxury spa at the Bulgari Hotel London. Considered by many as the crowning achievement of the hotel, the Bulgari Spa is the height of fitness-fashion opulence. Lavishly crafted from onyx, oak and Vicenza stone, the 2,000 square metre spa is one of the largest and most exclusive in central London. Recalling the elaborate splendour of the Roman baths, the massive green and gold leaf mosaic pool, surrounded by gracefully draped alcoved beds and loungers, is positively eye-boggling in its grandeur. This urban oasis of tranquility also offers a vast array of personalised treatments, therapies, therapeutics, gentleman’s grooming and beauty procedures, including a 24-carat gold rejuvenating facial. But if you really want to unwind and achieve the ultimate in relaxation, check in for the to-die-for Synchronised Four-Handed Massage. It’s two-hours long, and when you leave that treatment room you’ll feel like a totally new person ready for anything. Rooms from £500 per night; treatments from £70; www.bulgarihotels.com

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THE AGENDA

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5. FENG SHUI YOUR DESK FOR SUCCESS Feng Shui has apparently helped Madonna, Kelly Brook, Chaka Khan and, bizarrely, ex-England cricketer Geoffrey Boycott to establish a better, more harmonious and proactive flow of energy in their places of work. While many may think: ‘Er, no way – too flakey for me’, some big businesses, including British Airways, firmly believe that the ancient Chinese art can help increase health and happiness as well as boost morale and productivity. So, it may just behoove you to think about giving your office a Feng Shui shake-up. Practical Feng Shui for the Office: Finding Your Individual Balance in the Workplace by Kathryn Wilking will tell you everything you need to know about bringing positive energy to your working experience. Feng Shui’s ‘bagua grid’ maps the primary aspects of our lives and values. For instance, air purifying plants such as palms or ferns work well in the area representing wealth and prosperity. Most importantly, declutter! Clutter causes fatigue. So, get rid of those nasty little Post-It notes everywhere. And whatever you do, don’t go for a glass-top desk – it’s see-through and will trap your ideas and creativity. Oh hell… go buy the book and work it out for yourself! £16.95 hardback or £11.67 paperback, www.iuniverse.com or www.amazon.co.uk

6. ON YER BIKE! In recent years, German firm Canyon has emerged as one of the most exciting and sought-after brands in cycling. Last year, the Canyon Urban 8.0 won the coveted Design and Innovation Award. For the casual urban commuter, or even the weekend warrior, the bike offers the perfect mix of utility and design. With a frame of lightweight aluminium, it’s durable and infinitely more manoeuvrable than other bikes. It’s been designed to help you weave your way through traffic and around tight corners. The shifting duties are taken over by the amazing Shimano Alfine 11-Speed internal gear hub, optimised for city commuting. A huge plus for this bike is that, in lieu of a conventional chain, the Urban 8.0 uses the Gates Belt Drive System. So there’ll be no more oil stains on the trousers when you get to work. Furthermore, the wheels have been secured with Hexlox anti-theft measures to prevent pilfering. You’ll be so taken with the Urban 8.0, that you’ll actually look forward to leaving for work in the morning. £1,749, www.canyon.com

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7. HAPPY FEET The coolest shoe on the SS18 catwalk was the slingback, featuring the new, more sensible, ‘midi heel’. And the gorgeously wearable, soft leather, lower-heeled slingback pictured here by Kurt Geiger is just what the chiropodist ordered. Introducing the ontrend 85mm midi-heel to a classic court style, the shoe is punctuated with flashes of nude at the toe and features the born-again slingback strap. This shoe is the season’s everyday essential. Work-a-day chic never looked or felt so good. There’s a Kurt Geiger shop in the middle of the City at One New Change, so have a look for yourself at the other snazzy little numbers on offer this summer. And the price is also just right for the working woman’s purse. £139, www.kurtgeiger.com

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8. FIT FOR A PRINCESS Fashion pundits call it the ‘Meghan Markle Effect’. We call it ‘Princess Power.’ Prior to the royal wedding, HRH was photographed in February wearing a small-but-classy cross-body bag by Strathberry, a relatively unknown Scottish luxury leather goods label. Within minutes of the pap pics hitting the press, the bottle green East/West Mini bag had sold out. Despite the same style coming in myriad other colours and colour combinations, it was the bottle green one that everyone simply had to have. Effortlessly elegant and timeless – much like HRH herself – the bag is defined by structured, clean lines and the iconic Strathberry bar closure. Made in Spain using the finest calf leather, it features two inside compartments, as well as the Strathberry branded hardware and a dual-length chain shoulder strap. Amazing how a couple of pictures can put a small label on the map in an unprecedented way. £395, www.strathberry.com

9. LUXURY FIT When it comes to bastions of British style, the grand cobbler GJ Cleverley must be one of its leading lights. Its origins are in the period just after World War I, when George Cleverley joined bespoke shoemaker N Tuczec – then considered ‘the Rolls Royce of shoemaking’. After working there for 38 years, he started his own business in 1958. Since then, GJ Cleverley’s client list has read like Who’s Who – Winston Churchill, Apple CEO and philanthropist Tim Cook, Sir Jackie Stewart, David Beckham and Sir Elton John. Die-hard fan Sylvester Stallone enthuses: “Cleverley shoes are absolute art pieces! Fantastic presentation and exquisite quality. They cannot be surpassed.” Most recently the revered brand provided Sir Daniel Day-Lewis with his wardrobe of shoes for the award-winning film Phantom Thread. After 60 years, business is still booming. So, the Cleverley staff of shoemakers must be doing something right... Pictured, left to right: ready-to-wear shoes £525 and £795; bespoke shoes £3,800, www.georgecleverley.com

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10. THE GREAT BRITISH BRIEFCASE When Samantha Cameron wasn’t fulfilling her marital-politico role at Number Ten, she was working as Creative Director at Smythson of Bond Street. And she single-handedly managed to turn the rather démodé manufacturer of luxury stationery, leather goods, diaries and notebooks founded in 1887, into a voguish international brand leader. Now owned by the Guernsey-based Tivoli Group, and well and truly back on the fashion map, the brand has seven stores in London – including at 7 Royal Exchange Buildings – and concessions worldwide. The Greenwich Briefcase, pictured, is a perfect example of a timeless addition to any working man’s wardrobe – scrupulously crafted in Italy from tactile woven leather. The sleek case features sculptural panels and sports a boldly striped canvas lining. Finally, the zip-fastening, smooth leather front pocket features the italicised brand name, with a silver hot-stamped logo and discreet blue stitch trademark on the leather zip tab. Fits the fashion brief beautifully! £885, www. matchesfashion.com

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11. NEW SMART-CASUAL There are times outside of work when a tailored jacket or even more dressed-down blazer are just too stuffy and stiff for the more casual occasion. Leave it to that self-proclaimed ‘founder of the British Kit’, Hackett London, to come up with a hip alternative. The Technical Blazer, pictured, is crafted from a soft, fluid technical fabric. The laid-back unstructured jacket will bring a large dose of sophistication to any man’s casual clobber. With its cool, inky blue hue, this really is a versatile, take-you-anywhere kind of jacket. With four roomy front pockets to stash your stuff, the jacket features a three-button fastening, high narrow convertible lapels, traditional working cuffs, and double back vents. Be it picnic, pub or pizzeria, this is a wardrobe prerequisite for every stylish, cosmopolitan working man. So, take yourself down to Hackett in Broad Street, guys – it’s a treasure trove of classically cool essentials. £375, www.hackett.com

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THE AGENDA 12.GO FOR BESPOKE London is undeniably the global capital for bespoke men’s tailoring. Mostly centred in Mayfair’s Savile Row, style-wise nothing much has changed there since the 1930s. Price-wise, a Savile Row suit starts at around £3,000, with an average of £5,000. It takes at least six months to make a suit and a minimum of four fittings, and it’s traditional Savile Row Classic or nothing. But if you can’t stretch to Savile Row bespoke, haven’t the time or energy for endless fittings, and would prefer a less ‘stiff upper lip’ look, there are many more options – one being Gresham Blake. This smart menswear and tailoring establishment is on the doorstep of the City in Spitalfields. Unheard of in male-dominated Savile Row, the resident tailor at Gresham Blake is a woman. And Lillie Edge certainly knows the business. On your first visit, she’ll talk you through the many options – both style and fabric choices – and your measurements will be taken and carefully notated. She’ll then develop your own personal pattern, which is constructed into a loose canvas toile. Every tiny detail of the suit will be hand-finished and hand-sewn. You can also work with the design team to personalise your suit and perhaps create your own print lining. There are also a multitude of exclusive woven or jacquard suiting fabrics to choose from. And the fantastic news is that the cost of a two-piece bespoke suit at Gresham Blake will amount to marginally less than all the taxi fares for multiple fittings on Savile Row! You’ll also be able to soak up a bit of culture during your fittings – this hip tailoring establishment has turned cutting edge art gallery, thanks to #GBArtWall. Over the next 12 months there will be an exhibition of an artist’s work, with each artist creating a suit inspired by the work exhibited. Fashion and a bit of culture – what’s not to like? Two-piece suit, from £800, www.greshamblake.com

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SPECIAL OFFER The amazing folks at Gresham Blake in Spitalfields are offering a 20% discount on their made-to-measure services to all Businesslife readers – just quote ‘Businesslife’ and this will be applied by Lillie at the point of payment.

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13. FINISHING TOUCHES In fashion, it’s the little things that count. Sophisticated, elegant dressing is all about paying attention to the tiniest details – like the perfect jewellery. With a shop in the City, if you want the rarefied, the unique and the beautiful, head straight to Tateossian. It’s a treasure trove of luxury designer jewellery at a wide range of price points – some sky-high, others incredibly affordable. Regardless of price, everything is special. The unique 18-carat rose gold South Sea Baroque pearl necklace, pictured, is a real expression of timeless elegance. It’s perfect on its own or worn with the gorgeous matching South Sea Pearl Baroque drop earrings. For the guys – and equally attention-grabbing – are the Limited Edition Round Cable meteorite cufflinks. An authentic, natural, centuriesold Gideon meteorite fragment is beautifully encased in sterling silver and framed by a twisted 18-carat gold chain. And the Campo Del Cielo Meteorite Lapel Pin – made from a meteorite fragment found in Argentina – is another statement-making piece of masculine jewellery. Both cufflinks and pin have a vast amount of galactic history. As someone once said: ‘Luxury lives in the finer details’. Necklace, £2,350; earrings, £650; cufflinks, £1,095; lapel pin, £135, www.tateossian.com

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

Active Group is a multi-faceted, multijurisdictional financial and business support provider, with professional teams providing competitive, innovative solutions in a personalised way. Whatever you need to achieve your business goals, Active can assist with flexible and bespoke solutions. Operating in Guernsey, Jersey, the Isle of Man and Malta, the services we provide include Compliance and Risk Management Solutions, Licensee Management, Family Office Support, Company Secretarial Support, Business Incubation, and General Consultancy and Project Support. We work in all aspects of the financial services industry so can provide the business solutions you need, whatever area of the industry you inhabit. We work with you to tailor our service to your requirements. You have the ideas, we provide the execution. Give the task to Active and rest assured that we will get the job done, in time and on budget. Whatever you need to achieve your business goals, Active can assist with flexible and bespoke solutions. Contact: Active Group, 1st Floor, Tudor House, Le Bordage, St Peter Port, Guernsey GY1 1DB Tel: +44 1481 711822 Email: info@activeoffshore.com Or book an appointment from our website Web www.activeoffshore.com

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Appleby is one of the world’s largest providers of offshore legal advice and services. Uniquely positioned in the key offshore jurisdictions of Bermuda, BVI, the Cayman Islands, Guernsey, Isle of Man, Jersey, Mauritius and the Seychelles, as well as the international financial centres of London, Hong Kong and Shanghai. We are also the only firm to have offices in all three British Crown Dependencies. Our services include: l Corporate l Dispute Resolution l Private Client & Trusts l Property

Ashburton Investments is an investment manager offering discretionary portfolio, multi-asset and specialist fund solutions to international private and corporate clients including family offices, trustees and wealth managers. While the rest of the industry may have had to come to terms with how the global financial crisis changed the world for their clients, we have simply carried on doing what we have always done – delivering risk adjusted returns through all market conditions.

For more information visit our website www.applebyglobal.com

Multi Asset is not the latest investment trend to us. It has been the cornerstone of our business since inception, supported by our experienced and longstanding equity specialists.  For more than 35 years, we have invested in what makes sense. Our product set and approach to investments has evolved over time to suit ever changing market conditions but the underlying constant is that we understand our clients need to effectively manage risk and we put them at the centre of our thinking. 

Wendy Benjamin Managing Partner, Jersey Group Partner*, Guernsey wbenjamin@applebyglobal.com

Globally, Ashburton Investments has over £9.1bn under management as at April 2018 with offices in the Channel Islands, United Kingdom and South Africa.

* Not admitted in Guernsey

Contact Laythamm Malorey E: laythamm.malorey@ashburton.com T: +44 (0)1534 512010

Members of the Jersey and Guernsey offices regularly advise London City and international law firms on all legal aspects of offshore corporate, finance and investment fund transactions and arrangements in the Channel Islands.

www.ashburtoninvestments.com


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

We aim to assist in the provision of personal service to meet your requirements. Ask us. Being vigilant and proactive in the face of a fast changing legal, economic and fiscal landscape. We can provide the focus to your solution. Try us. Our team has many years of experience dealing with a wide range of clients in different countries. We look to provide good corporate governance to achieve your aim. Contact us: Wendy Warder – Senior Trust Manager wwarder@baccata.co.je Lisette Le Creurer – Senior Trust Manager llecreurer@baccata.co.je Justin Clapham – Client Director jclapham@baccata.co.je Áine O’Reilly – Client Director aoreilly@baccata.co.je Tim Cartwright – Consultant tcartwright@baccata.co.je www.baccata.co.je Tel: 00 44 1534 870670 Regulated by the Jersey Financial Services Commission

Carey Olsen is a leading offshore law firm. We advise on Bermuda, British Virgin Islands, Cayman Islands, Guernsey and Jersey law across a global network of nine international offices. We are a full service law firm working across banking and finance, corporate and M&A, investment funds and private equity, trusts and private wealth, dispute resolution, insolvency and property law. Our clients include global financial institutions, investment funds, private equity houses, multinational corporations, public organisations, sovereign wealth funds, high net worth individuals, family offices, directors, trustees and private clients. We work alongside all of the major onshore law firms, accountancy firms and insolvency practitioners on corporate transactions and matters involving our jurisdictions. Our advice is delivered by an approachable and experienced team of globally-minded lawyers who work in partnership with our clients to help them achieve their objectives. We have the expertise and resources to handle the most complex international transactions combined with a personal approach to business. Contact:

Equiom is fast becoming the stand-out business in the professional services sector, with a strong presence in Europe, Asia, the Middle East and The Americas. We provide a range of innovative and effective business partnering solutions. Our experienced and highly qualified teams support corporations and high-net-worth individuals around the world with their fiduciary and related support service needs. We are an independent, company focused on strategic thinking and quick responses to clients’ requirements. We continually seek to develop our product range, in order to provide an unrivalled range of options and opportunities. Equiom’s Jersey and Guernsey teams have a wealth of experience relating to the set up and administration of trusts and companies and the market-leading knowledge required to appropriately protect clients’ assets. Equiom (Jersey) Limited is regulated by the Jersey Financial Services Commission. Equiom (Guernsey) Limited and Equiom Trust (Guernsey) Limited are licensed by the Guernsey Financial Services Commission. Equiom Trust (South Dakota), LLC is licensed in Guernsey by the Guernsey Financial Services Commission and in South Dakota by the South Dakota Division of Banking.

jerseyco@careyolsen.com T +44 (0)1534 888900

Contact: Equiom (Jersey) Limited 3rd Floor One The Esplanade St Helier, Jersey JE2 3QA

www.careyolsen.com

Tel: +44 1534 760100

guernsey@careyolsen.com T +44 (0)1481 727272

Email: jersey@equiomgroup.com Web: www.equiomgroup.com

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Estera is a leading global provider of fiduciary and administration services. Established for over 25 years, Estera provides corporate, trust, fund and accounting services to clients across the world. It has 500 highly qualified professionals across 12 jurisdictions: Bermuda, BVI, Cayman, Guernsey, Hong Kong, Isle of Man, Jersey, Luxembourg, Malta, Mauritius, Seychelles and United Kingdom. Estera collaborates with clients and their advisers to deliver smart, considered and most of all practical solutions, whether in a single location or across multiple jurisdictions. Our commercial focus, attention to detail and responsiveness coupled with a resolute commitment to the delivery of service excellence, is what sets us apart. Contact: Richard Prosser Group Director Richard.prosser@estera.com +44 1534 844 844 www.estera.com Estera Trust (Jersey) Limited is regulated by the Jersey Financial Services Commission.

About EY EY is a global leader in assurance, tax, transactions and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. Our strong network has enabled us to build close working relationships with our colleagues in EMEIA and across the world. This allows us to respond quickly to our CI clients’ needs, drawing upon our industry experience across all our services lines. To discuss how we can support your business, please contact one of our partners below: Andrew Dann, Managing Partner, Assurance E: adann@uk.ey.com T: 01534 288 655 Richard Le Tissier, Partner, Assurance E: rletissier@uk.ey.com T: 01481 717 468 Chris Matthews, Partner, Assurance E: cmatthews@uk.ey.com T: 01534 288 610 David Moore, Partner, Assurance and Advisory E: dmoore@uk.ey.com T: 01534 288 697 Wendy Martin, Partner, Head of Tax CI E: wmartin1@uk.ey.com T: 01534 288 298 David White, Head of Tax, Guernsey E: dwhite1@uk.ey.com T: 01481 717 445

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Fiduchi is an independent multi-family office, trust, corporate and yacht services provider. We are owner managed free from the pressures of Private Equity, Corporate and Institutional ownership. We focus on the following three service areas: Private Wealth: We provide bespoke solutions to family offices and a broad range of HNWIs, entrepreneurs, business leaders and large families from all over the world. Corporate Services: including Real Estate, Capital Markets and Employee Services. Yacht Services: (formally Jersey Yacht Management Limited) are leading specialists in the offshore yacht, megayacht and superyacht services industry. We have a thorough knowledge of all aspects of yacht ownership structures, yacht registration, tax, administration and crew employment and payroll. For further details contact: David Hopkins - Managing Director +44 (0) 1534 755 111 david.hopkins@fiduchi.com Robert Ayliffe - Executive Director +44 (0) 1534 755 124 robert.ayliffe@fiduchi.com Darren Hocquard - Executive Director +44 (0) 1534 755 101 darren.hocquard@fiduchi.com www.fiduchi.com Fiduchi Limited is regulated by the Jersey Financial Services Commission.


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

Highvern Trustees is a leading provider of wealth structuring, governance and advisory services to an international client base of high-net-worth individuals, their families and businesses. It offers senior industry expertise and client focus, developing long-term, sustainable client relationships by working closely with and getting to know the individual ambitions of every client with whom it works. Highvern Fund Administrators provides a fully tailored suite of bespoke fund services to investment managers and family offices across private capital markets including renewables, private equity, real estate and debt. Both businesses are built on cutting edge technology, truly independent ownership and a team of experts with the shared vision of responding to client needs in a flexible, timely and constructive manner. To discuss how Highvern can help you or your business achieve your goals please contact : Family Office Naomi Rive, Group Director + 44 (0)1534 480601 naomirive@highvern.com Private Client Miles Le Cornu, Group Director + 44 (0)1534 480603 mileslecornu@highvern.com Funds Aidan O’Flanagan, Head of Funds + 44 (0)1534 480690 aidanoflanagan@highvern.com Email: info@highvern.com www.highvern.com Highvern Trustees Limited and Highvern Fund Administrators Limited are regulated by the Jersey Financial Services Commission

IAM Advisory provides an independent and comprehensive service offering advice and support for our clients in all material aspects in the management of substantial investment portfolios, whether managed directly through funds and /or externally through discretionary managers. The service is unique in its approach and suitable for anyone with a direct or fiduciary responsibility for investments, irrespective of the size or complexity of the investment portfolio. Our international client base includes high net worth private individuals through family offices, trusts, professional intermediaries, charities, pension funds and government reserve funds. The quality of our service is reflected in the loyalty of our client base and their recognition of the complexity of this specialist function and the need for it to be undertaken in a manner that adds value through risk and cost control with the opportunity for incremental investment returns. For further information contact Simon Bowden, Director + 44(0) 1481 716575 simon.bowden@iamadvisory.com www.iamadvisory.com Licensed by the Guernsey Financial Services Commission and the Jersey Financial Services Commission and regulated by the Financial Conduct Authority.

We’re a global leader in providing expert administrative services to clients operating and investing in the international business environment. We have more than 2,500 employees in Europe, the Americas, Asia and the Middle-East. We deliver highquality, tailored corporate, fund, capital market and private wealth services to our clients, with a view to building long-term relationships. In the Channel Islands we offer a pan-island service, providing a comprehensive range of services to our clients and business partners wherever they may be located:Corporate services Fund services l Real estate l Capital markets l Private wealth l Employee benefit services l l

We pride ourselves on providing professional, personal and multijurisdictional services to our clients across the globe. For further information, please contact: Simon Mackenzie Managing Director Intertrust, Jersey T:+44 01534 504 000 simon.mackenzie@intertrustgroup.com Paul Schreibke Managing Director Intertrust, Guernsey T: +44 01481 211 000 paul.schreibke@intertrustgroup.com www.intertrustgroup.com Regulated by the Jersey Financial Services Commission and licenced by the Guernsey Financial Services Commission

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KPMG in the Channel Islands is a leading provider of professional services, including audit, tax and advisory. With offices in Jersey and Guernsey, we employ over 260 members of staff across the two islands. We work closely with clients, helping them to identify and grasp opportunities, and mitigate risk. KPMG’s global network enables us to draw on international resources to meet clients’ needs. KPMG member firms are located across 154 countries and employ more than 200,000 people around the world. With passion and purpose, we work shoulderto-shoulder with clients, integrating innovative approaches and deep expertise to deliver real results. Jersey Jason Laity Chairman jlaity@kpmg.com Andrew Quinn Head of Audit andrewquinn@kpmg.com John Riva C.I. Head of Tax jriva@kpmg.com Robert Kirkby Advisory Partner rkirkby@kpmg.com Guernsey Neale Jehan Managing Director njehan@kpmg.com Tony Mancini Tax Partner amancini@kpmg.com Ashley Paxton C.I. Head of Advisory ashleypaxton@kpmg.com www.kpmg.com/channelislands

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At Moore Stephens in the Channel Islands, we are proud of the long-standing relationships that we have built with our clients. Over the years we have earned an enviable reputation for our high quality products and services. These include Private Client Services, Family Investment Companies and Fund Services. It is our independence and experience that enables us to provide complete solutions that are tailored specifically to our clients’ needs and requirements. As a member of the Moore Stephens International network, we can provide an in-depth cultural and technical understanding of different markets around the world. We look forward to the future and to building further long-term relationships. To find out more, please contact: Trust & Corporate Services Jersey Angus Taylor angus.taylor@moorestephens-jersey.com Guernsey Sam Bird sam.bird@msgsy.com Fund Services Nick Solt nick.solt@moorestephens-jersey.com Telephone: +44 (0)1534 880088 www.moorestephensci.com Regulated by the Jersey Financial Services Commission and Licensed by the Guernsey Financial Services Commission

PRAXISIFM is an independent, ownermanaged, listed company with headquarters in the Channel Islands. Originally established in 1972, we were formed following the 2015 merger of Guernsey-based Praxis and Jerseybased IFM and employ around 430 staff globally. We listed on The International Stock Exchange in April 2017. We provide a wide range of bespoke, professional services: l Private Client & Corporate Services l Fund administration and management l Pension services l International Expansion Services Majority owned by our management team, we specialise in: l Providing innovative but conservative solutions; l Working alongside advisors to add value for their clients; l Building strong, long-term relationships; l Taking advantage of niche areas of growth in onshore and offshore markets. l To discuss how we can help you contact: Private Client & Corporate Guernsey: Rob Fearis, Managing Director +1481 737602 Jersey: Richard Kearsey, Managing Director + 1534 835821 Funds: Sam Shields, Head of Fund Marketing + 1481 737692 Pensions: Richard Garrod, Managing Director + 1481 755558 Praxsifm.com The PraxisIFM group of companies are regulated by the Guernsey Financial Services and the Jersey Financial Services Commission.


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

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? When we work with you we really listen, to understand you better. We’ll get to know you, your business and your goals. Then we’ll share what we’ve learned to help you get there. We want to deliver the value that you, our clients, our people and our communities are looking for. Talk to us about your issues and aspirations. For further information, please contact:

RBS International RBS International was formed in 1996 and is headquartered in Jersey. We provide banking services to personal, private, commercial and financial institution customers through branches in Jersey, Guernsey, the Isle of Man and Gibraltar. We also support the alternative investment funds industry through new branches in Luxembourg and London, which opened in 2017. We have over 1,600 employees with a non-executive led board of directors and a local management team.  At RBS International, we build longterm partnerships, working collaboratively to understand our customers’ needs and create tailored solutions to help them grow and prosper. Our corporate banking relationship teams provide insight and expertise in the sectors and locations where we operate. When combined with digital banking technology in the form of an intuitive, multi-currency platform, we aim to maximise the value we bring to every customer we serve.

John Roche, Partner, Guernsey Phone: +44 1481 752040 Email: john.roche@pwc.com

For more information visit: www.rbsinternational.com

Karl Hairon, Partner, Jersey Phone: +44 1534 838276 Email: karl.hairon@pwc.com

The Royal Bank of Scotland International Limited (RBS International). Registered Office: Royal Bank House, 71 Bath Street, St. Helier, Jersey, JE4 8PJ. Tel. +44(0)1534 285200. Regulated by the Jersey Financial Services Commission.

Follow us: @PwC_CI www.pwc.com/jg

The International Stock Exchange (TISE) provides a responsive and innovative listing and trading facility for companies to raise capital from investors based around the world. From its offices in Guernsey, Jersey and the Isle of Man, TISE offers access to a regulated marketplace from within the European time zone but outside the EU. The Exchange provides a convenient and cost-effective service for listing a wide range of products, including: l trading companies; l investment vehicles; and l specialist debt securities. In total, there are more than 2,000 listed securities on the Official List. For more information, please contact: Fiona Le Poidevin Chief Executive Officer Tel: +44 (0) 1481 753000 Email: info@tisegroup.com Website: www.tisegroup.com Twitter: @tisegroup TISE is a registered trademark of The International Stock Exchange Group Limited (Guernsey registered company number 57524). It wholly owns The International Stock Exchange Authority Limited (Guernsey registered company number 57527), which is licensed by the Guernsey Financial Services Commission to operate an investment exchange under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. The registered office of The International Stock Exchange Group Limited and The International Stock Exchange Authority Limited is at Helvetia Court, Block B, Third Floor, Les Echelons, St Peter Port, Guernsey, GY1 1AR.

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www.vg.je It’s as simple as…partnering with people you trust. VG is one of Jersey’s largest award winning independent providers of fiduciary and administration solutions. We administer a wide range of trusts, foundations, companies, partnerships and funds, established in Jersey and other jurisdictions. For over 35 years our clients have trusted us to protect and enhance their wealth. Established in 1982 and truly independent, VG can be decisive, dynamic and different. Our range of services demonstrates our core strengths in: l Funds l Family Wealth l Real Estate l Islamic Finance and Shariahcompliant structuring VG’s top 50 clients have been with us for more than 10 years on average and 40% of our staff have been with us for more than 10 years. Get in touch. For further information please contact: Claire Malkoun Group Head of Business Development cmalkoun@vg.je 01534 500493 Richard Fagan Director rfagan@vg.je 01534 712438

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Viberts is dedicated to providing outstanding legal advice and customer service, both in Jersey and internationally. Our clients range from private individuals to multinational corporations, local businesses and public authorities. We are large enough to offer a full service but small enough that each client has direct contact with one of our partners. We always take a pragmatic approach so that we can deal with matters as efficiently as possible, but we are also compassionate and understanding when it comes to sensitive issues. We partner with other specialists across the globe where required to bring you the best possible advice and representation. Our range of bespoke legal services includes: l Commercial l Employment l Family l Litigation l Personal l Property For expert legal advice, please contact us today. E: info@viberts.com T: +44 (0) 1534 888 666 W: www.viberts.com

At Wyvern we are proud of our unique blend of expertise and approachability. As an independent corporate finance advisory firm, we have an enviable reputation in the fiduciary and fund administration sectors advising on over 35 completed transactions. These include arranging trade sales, management buyouts and fund raisings. We advise companies, shareholders, management teams and investors. Whenever you need us you will receive the advice and support you require, directly from our partners. Our services include: l Mergers & Acquisitions l  Management Advisory l  Debt Advisory   To discuss how we can support your business, please contact one of the partners below. Jonathan Smith Partner Direct: +44 20 7355 9854 Mobile: +44 7720 838 745   Peter Bowman Partner Direct: +44 20 7355 9852 Mobile: +44 7768 534 648 For more information visit our Website www.wyvernpartners.com


Expertise in action. Globally. PraxisIFM is a global, independent, owner-managed, listed company providing expert administration services. Private Client Corporate Funds Pensions International Expansion

Guernsey: +44 1481 737600

Jersey: +44 1534 835835

praxisifm.com


“A cut above the competition.” LEGA L 5 0 0

25

17/17 We are tier one for all our practice areas in The Legal 500 UK rankings.

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

100

9/10

We advise more LSE-listed clients than any other offshore law firm.

We represent nine of the world's top 10 private equity firms.

No.1

8/10

We are the leading adviser for listings on The International Stock Exchange (TISE).

We represent eight of the world's top 10 banks.

US$100bn

c

We advised on the world's largest ever investment fund – the SoftBank Vision Fund.

1st We advised on the launch of the world's first regulated, cryptodenominated fund.

46% We advise on nearly half of the new investment funds business across Guernsey and Jersey.

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

OFFSHO R E L AW S PECI A LI ST S BER MU DA C APE TOW N

BR I T I S H V I R G IN ISL A N D S H O N G KO N G

LON DON

CAYMA N ISL A N D S SI N GAP ORE

GU ERNS EY

JERS EY

careyolsen.com

BL Magazine - City Edition 2018  

In this, our very first City Edition, we take an in-depth look at the relationship between the Channel Islands and the City of London. We fo...

BL Magazine - City Edition 2018  

In this, our very first City Edition, we take an in-depth look at the relationship between the Channel Islands and the City of London. We fo...