Guernsey: Raising Funds In Europe: Private Placement Still Works

Last Updated: 6 June 2017
Article by Wayne Atkinson

Most Read Contributor in Guernsey, October 2017

What does the future hold for the raising of funds in Europe? Wayne Atkinson of Collas Crill, on behalf of the Guernsey Investment Fund Association, takes a closer look.

With the arrival of the Alternative Investment Fund Managers Directive (AIFMD), many were quick to bemoan what they saw as the inevitable loss of their favoured route to market; the use of national private placement regimes in the key European markets to raise capital for a Guernsey fund vehicle. With the passing of a few more years, a Brexit referendum and more than a little regulatory delay, it is becoming increasingly clear that not only does this route still work, it is becoming increasingly advantageous when compared to the alternatives.

At the time of its introduction, Guernsey's dual AIFM regime was expected to provide great flexibility for fund promoters working from the island; those Guernsey managers marketing into Europe would ultimately enjoy the benefits of the EU-wide passport through the equivalence regime, those marketing entirely outside of Europe would have the flexibility to operate under Guernsey's existing rules without the need to comply unnecessarily with the AIFMD regime.

Whilst Guernsey's regime has been approved as having deemed equivalence the passport has not yet been extended to third countries due at least in part to the effects of the Brexit referendum. With negotiations now underway in light of the UK triggering the Article 50 process, the failure to extend the passport to third countries has meant that the use of the applicable national private placement regimes for third country funds must continue. From a Guernsey perspective, this cloud has turned out to have a definitively silver lining.

Nicholas Hofgren, director of Guernsey-based manager GFG Limited, notes that for him the issue of jurisdictional choice remains unchanged by recent events saying: "GFG analysed five EU jurisdictions and the Channel Islands when AIFMD was initiated. We considered Guernsey the optimal home state for cost, security and transparency. If we had to make the choice today, we would still choose Guernsey."

Whilst political delay is always frustrating to those looking to move forward, this delay in itself has created an additional flexibility for managers seeking options around marketing into Europe. Managing using an EU entity allows, and indeed ordinarily requires one to use, the AIFMD passport. Managing from Guernsey by contrast still allows managers to use the existing and familiar private placement regime.

Martin Scott, Director of IAG Private Equity Limited, commented: "Whilst the Brexit vote has undoubtedly created uncertainty in the investment fund sector, the likely continuation of the popular and straightforward national private placement regimes provides an opportunity for fundraising by reducing the marketing costs and easing the reporting burden for GPs until an agreement on financial services is in place between the UK and the EU."


For many managers, the passport has brought with it the realisation that in reality they have never needed to market EU-wide and never will. Most managers are focussed on a few major economies and the benefits of the passport in allowing marketing beyond their targeted investor base are an irrelevance at best. Diverting marketing spend beyond familiar targets like London, Frankfurt and Amsterdam is likely an unwelcome distraction at best.

Additionally, there are several logistical issues around the passport arising out of the way in which the directive has been implemented into the various national laws. Several Member States for example impose additional host fees and charges on AIFMD-authorised fund managers not based in their country. Others have gold-plated or mis-transposed the AIFMD wording resulting in additional documentary requirements or processes. So much for that universal 'passport'.


Going beyond the efficiency or otherwise of the passport, the increased regulation arising out of the AIFMD regime has led to an increased costs base and many EU-domiciled funds are finding their service provider and transaction costs significantly exceed those of their Guernsey counterparts. It may go without saying but for a fund manager seeking to achieve growth in a fund's value of a quantum significant enough to trigger a performance fee, spending on service providers or regulatory requirements will be unwelcome if a cheaper and equally viable (yet retaining regulatory substance) alternative is on offer.

Guernsey represents that alternative for many managers. For those seeking to target limited jurisdictions, and particularly those in the private equity space for whom the AIFMD regime is particularly ill-suited, the Guernsey regime is likely cheaper and quicker than launching through a European domicile.


Additionally, using a Guernsey vehicle and the private placement regimes allows the continued use of a structure the funds marketplace is familiar with and has always liked. Guernsey's in-depth service providers, infrastructure, quality boards and simple pragmatic regulation continue to be attractive for the same reasons they always were attractive. Having access to capital through a simpler, more cost-effective route is simply a bonus.

Peter Miller, an Executive Director at Ernst & Young LLP, notes: "We continue to see a positive attitude from asset managers towards Guernsey as a jurisdiction, with the key drivers for jurisdictional selection being the strength of the regulatory environment, competitive structural running costs and the quality of the offering from local service providers. These factors still appear to outweigh any perceived uncertainty Brexit may bring to the investment sector in Guernsey."

Arbitraging the Guernsey regime and the use of private placement into Europe against that offered by European domiciles and the passport will always be a case of 'horses for courses'. The exact requirements and workability of private placement are dependent entirely on a fund's target marketplace(s).

Private placement of Guernsey vehicles has been successfully used however to raise funds in amongst others:

  • The UK
  • Netherlands
  • Germany
  • Finland
  • Norway
  • Sweden
  • Belgium
  • Denmark
  • Ireland
  • Luxembourg

With any major decision, it is always worth running a cost-benefit analysis, the costs of launching in Europe and using the AIFMD passport are becoming increasingly clear, the benefits for those operating in the traditional fundraising arenas are perhaps less obvious. Meanwhile Guernsey continues to offer exactly what is has always offered; a cheap, effective, respected route to market.

An original version of this article was first published by Hedgeweek, May 2017.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.