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Guernsey launches the Private Investment Fund

16 November 2016

Written by James Travers

The Guernsey Financial Services Commission (the Commission) announced the launch of the Private Investment Fund (PIF) at their annual industry presentation today.

Philosophy of close relationships

The PIF recognises that certain investment funds are characterised by a relationship between management and investors that is closer than that of a typical agent and accordingly, the Commission is prepared to dispense with the formal requirement for information particulars such as a prospectus.

An example of a closer relationship is that between a limited partner and fund manager within the private equity industry.

The PIF, which can be either closed or open-ended, should contain no more than 50 legal or natural persons holding an economic interest in the fund. One exception is where an appropriate agent, such as an investment manager or occupational pension scheme, is acting for a wider group of stakeholders,

While there is a limit imposed on the number of investors in the PIF, no attempt has been made to limit the number of investors to whom the PIF might be marketed – a feature not available under comparable regimes in other jurisdictions.

Quick to market

Under the new rules, the fund will benefit from an application process that can be completed in one business day. Strong corporate governance is ensured by a manager licensed under the Protection of Investors (Guernsey) Law. The manager also benefits from an application process that can be completed in one business day. To further improve regulatory timescales, the two processes may be completed in tandem by the Commission.

As part of the application process, the fund manager provides warranties on the ability of the investors to assume loss. Considering that the PIF is predicated on a close relationship between management and investors, the Commission considers this a reasonable representation and would treat any failures in the process leading to signing such warranties very seriously.

Rules

For more information, The Private Investment Fund Rules 2016 can be found via the Commission's website here.

We are connected

The PIF is the result of discussions held between the Commission and industry, commencing with the Manager Led Product (MLP) which was launched in May at the Guernsey Funds Forum.

These discussions acknowledged a gap in the current suite of investment products available within the Bailiwick, specifically between the existing authorised and registered collective investment schemes on one hand and those products which the Commission does not consider a fund on the other. The PIF will contribute to better defining this previously grey area and may be joined in that space by a further investment product (or products) in the future.

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