South Africa managers pick up on Guernsey investment solutions

05 December 2019

Written by James Crawford Guernsey Finance

Investment managers in South Africa continue to be attracted by the opportunity not only to reinvest outside of the country, but also to attract capital from overseas institutions and high net worth individuals into the country – and are finding that Guernsey investment funds are the perfect fit for their ambitions.

We have discovered on previous trips to the country that EU UCITS funds are something of a default, but South African clients should be aware that there is no need to use those structures compared to a Guernsey “Class B scheme”, which is quicker and more cost-efficient to launch, and offers managers far more flexibility and control, without the burden of European regulation and compliance.

I have just made my second trip to South Africa in the space of a few weeks, promoting Guernsey’s expertise in funds, private wealth and international pensions, having been a regular visitor on business a decade ago.

There is clearly significant strength in the business ties between South Africa and Guernsey in funds. Not only do some of the big names in investment in South Africa have a presence in the island, in recent years that relationship has been growing significantly.

Why would South African managers structure their funds in Guernsey? There are many compelling reasons.

South Africans often invest their offshore allowance into mutual funds operated by the same fund managers who manage their money at home, but domiciled in an offshore finance centre such as Guernsey.

Following relaxation of exchange controls, investment managers in South Africa have realised not only the opportunity to reinvest client money outside of the country, but also to encourage capital from overseas institutions and high net worth individuals into the country.

SA managers will be aware of the European UCITS funds, but Guernsey’s message is to look beyond the obvious. We say that UCITS are often misused, with more than 90% of the capital invested bearing the burden of European regulation and compliance unnecessarily.

A Guernsey “Class B scheme” is much quicker and more cost-efficient to launch, offering managers far more flexibility and control than a UCITS, with a disclosure-based model in drafting particulars which allows for the widest possible investment powers.

A Protected Cell Company structure, pioneered in Guernsey more than 20 years ago, provides flexibility not available elsewhere, and a PCC is suitable for both hedge and mutual fund managers going offshore for the first time. PCCs are often used in investment management with different cells used for different strategies.

Guernsey is Europe’s leading specialist centre for private equity administration; the number one location outside of the UK for London-listed funds; is whitelisted for substance by the European Union and the OECD; and offers a simple funds regime with respected and responsive regulation.

As South African managers seek the comfort of stability, security, sustainability and substance in politically turbulent times, Guernsey offers the solution. The value of a Guernsey platform is already well known to a number of established South African managers, and more are picking up on the opportunities offered all the time.

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