Category Archives: Funds News

BVI Funds industry to partner with Help for Children

Hedge Funds Cares BVI Committee

Members of the BVI Hedge Funds Care committee are photographed with Renee Skolaski, CEO of Help for Children, fifth from right, during her visit to the BVI in early November.

Last week we had the absolute pleasure of hosting Renee Skolaski, the CEO of Hedge Funds Care, which recently rebranded as Help for Children, here in the BVI.

Help for Children (HFC) is a charity supported by the alternative asset management industry with international recognition, having divisions in the US, Canada, the UK, the Cayman Islands, Ireland and Hong Kong. Its mission is to prevent and treat child abuse using proven methods. HFC has distributed over $44 million in grants, positively impacting 87,000 lives on an annual basis.

Renee was here to help us set the cogs in motion for the establishment of a BVI division of HFC, an idea conceived by Rob Davis, the founder of HFC, Renee, and Phil Graham at an HFC event in New York earlier this year and which we, with other members of the Investment Funds Association, have been working to develop. This is such an exciting opportunity because funds raised in the BVI will go directly to fund BVI projects to prevent and treat child abuse here on our islands.

During the two days that Renee was here, we had a full schedule meeting professionals currently involved in the prevention and treatment of child abuse in order to understand the need here in the BVI. We learned that the BVI has enacted legislation and put in place procedures to address the treatment of child abuse. It also has highly motivated professionals who are working very hard to address this issue. A shortage of funding means that services are suffering and implementation can be challenging. There are so many potential projects that could be funded, and the support of a BVI division of HFC could make a huge impact.

On Wednesday evening, the Investment Funds Association in the BVI sponsored an event at Peter Island at which Renee spoke to members of the industry to drum up support. We were honoured to have Lorna Smith OBE, Interim Executive Director of BVI Finance, attend and speak at the event and to have her full support for this project. Given the positive response that we received from members of the BVI Investment Funds Association, we feel that we have a responsibility to grasp this opportunity for our community. We are totally committed to seeing a branch of HFC established here in the BVI.

Our fund raising will mainly take the traditional HFC form of one big-ticket gala event so keep an eye on our blog for a save the date. In the meantime, if you are a member of the BVI financial services community and your organisation would like to be a local sponsor, please get in touch with Phil  or me.

Brexit rollercoaster ride continues

The political and economic rollercoaster ride we’ve been on here in the UK since the EU referendum in June seems set to continue following Thursday’s High Court judgment in London[1]. The High Court held that the UK government doesn’t have the power to give notice to withdraw from the European Union under Article 50 of the Lisbon Treaty. Only parliament has the power to change domestic law in the UK and, as serving notice to leave the EU will affect rights under domestic UK law, the government can’t serve notice without parliament’s approval.

So, just as we’d started to get used to the idea of notice being served by the government in March 2017, with the UK then leaving the EU by March 2019, the Brexit process has now been thrown up in the air again.

Keep calm and stay in London?

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We bag ourselves a HFM hatrick

I was of course overjoyed with the news that my colleagues in our London office and Hong Kong office had been hugely successful in their respective HFM Awards Ceremonies as HFM is a leading global publication covering the hedge fund industry and these high profile awards (which are judged on the basis of client feedback) are undoubtedly very well regarded in the industry.

But, and I can shamefully admit to this fact only now, another part of me was a touch envious.

The feeling is comparable to the one of sitting on a substitute’s bench and watching your team romp home to a glorious victory without you. Whilst of course externally you smile and whoop with delight, there is another part of you that wishes you could just get a chance to run onto the field and contribute in some way to the success.

Well, our chance to do that very thing came when we found out a few weeks ago that we had been nominated in the US as well and so finally the BVI, Cayman and Vancouver offices had their potential opportunity; could we come on in the 80th minute and bang home the third and final goal? Continue reading

The Age of Uncertainty (a time of opportunity?)

During a recent visit to our London office, I had the privilege of attending AIMA’s Spotlight and Cocktail reception in London, the highlight of which for me was a keynote speech by Robert Peston. For those of you who were not in the UK in 2008 and 2009, Robert was one of the most prevalent economic commentators at the time (and, personally, a bit of a hero of mine).

The theme of Robert’s presentation was uncertainty and the question he asked us all to consider was whether, if 2007 was the age of absolute certainty (albeit, certainty that we were all about to suffer a painful and prolonged recessionary period), 2016 is the age of absolute uncertainty, politically and economically?

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Smoke on the Horizon: investment into Cuba

USA and CUBA currency

One of my favourite aspects of working in the offshore environment is that we get to speak to fund managers based all over the world about the latest hot and trendy investment opportunities. Over the last few years we have dealt with enquiries about bitcoin, crowd-funding, acquiring a portfolio of oil tankers and real estate opportunities in Puerto Rico to name but a few of the more intriguing conversations. It constantly keeps the team on our (permanently parked under the desk) toes and there is no doubt that recently we have been part of a very regular trickle of Cuba based conversations and how to maximise the gradual opening of the borders.

When Raul Castro took over from his brother as President of Cuba in 2008, he began a long-anticipated process of political and economic reform. As a result of his strategy, the stagnant economy has been gradually coming to life, galvanised by a fledgling private sector. Diplomatic advances have been made, animosities are thawing and, slowly but surely, relations with overseas nations are being restored. With this sea change comes the possibility of direct foreign investment, a prospect historically laden with regulatory obstacles and risks – from both sides.

It is easy to see why there is excitement surrounding Cuba’s development. The tourism industry is set to explode and the relaxation in travel restrictions for Americans opens a previously-untapped market of over 300 million potential visitors. Such a vast influx of people will require utilities, hotels, ports, roads and telecoms; truly massive investment is required to improve the current infrastructure and there is cautious optimism from sponsors eager to participate in the process and Cubans looking forward to the resulting developments.

Indeed, it is the tourism sector that US News largely focused on in the following article as the best way to invest in Cuba as a US citizen:

http://money.usnews.com/investing/articles/2016-03-21/7-ways-to-invest-in-cuba

But rather than related company stock-picking, what about direct foreign investment? Is there a way for US based investors to capitalise directly on some of the infrastructure opportunities for example?

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Who you gonna call?

16-09-19-marc-parrott-hfm-trophyIt seems like almost six months since I was in Shanghai to present at the 2nd Annual Hedge Fund China Summit 2016 and to enjoy plenty of the vino tinto at the awards dinner afterwards where my firm, Harneys, picked up the trophy for “Best Offshore Law Firm for Hedge Funds”.

Wait, that’s because it was five months ago.

And what a five months it has been.

Shortly after picking up that award, I was thrilled to hear that my colleagues in our London office had been named Best Offshore Law Firm – Client Service at the HFM European Hedge Fund Services Awards, announced on 21 April 2016.

The HFM Awards are high profile in the global hedge funds industry and the client service award is independently judged based on the relative strength of client testimonials and market feedback. The awards recognise Harneys as having provided leading client service, innovation and expertise to our valued hedge fund clients of all sizes, from start-up hedge funds and emerging managers to global multi-billion dollar investment institutions. That is what we do.

Now, when I say thrilled … what I actually mean is … indignant that my colleagues in London would seek more glory than their far more humble colleagues battling away day and night here in the buzzing hub of economic activity that is Asia.

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Who’s in charge of Tax Policy in Europe?

Many of our readers will no doubt have heard about the recent decision by the European Commission that Apple’s tax structure in Ireland breached the EU state aid rules. But what, you may wonder, does that have to do with offshore funds? For me it raises an important question of principle of who should be deciding international tax policy for multi-national corporations and other companies – including investment funds – that operate on a cross-border basis in Europe.

As we’ve blogged about before, the OECD’s been busy working on its BEPS plan  to try to make the international tax system more joined up  – and limit some of the mismatches that multi-national and other companies have for years (completely legally) used to reduce their tax bills.

Here in Europe, the European Council’s also been working on introducing legislation building on BEPS and the Commission’s 2015 Action Plan for Fair and Efficient Corporate Taxation in the European Union, via the Anti Tax Avoidance Directive. So far, this all looks suitably co-ordinated and sounds sensible when you bear in mind the Commission’s website statement that “National governments are responsible for raising taxes and settling tax rates…The EC Treaty does not specifically call for direct taxes (income and corporate taxes) to be harmonised.”

So how then does the 30 August 2016 state aid decision by the Commission about Apple’s tax structure in Ireland fit into this?

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Cayman LLCs – up and running

Idea Bulb Concept Drawing on Blackboard

They’ve been talked about for a while by our bloggers and contributors but the moment has now come for the Cayman LLC, which has been available for registration since 13 July and numerous of which have already been formed. The Cayman LLC was introduced to meet the requirements of North American managers and intermediaries who use Delaware LLCs and want a flexible offshore version, and Cayman lawyers dealing regularly with North American clients are particularly excited about now being able to offer a “Cayman” version. Its introduction also highlights Cayman’s responsiveness to market demand as it continues to maintain its position as the dominant brand in North America for funds structures.

So what makes the Cayman LLC – or limited liability company, to give it its full name – so interesting?

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Preparing for the demands of institutional investment in an era of transparency

As an emerging manager who has set up a BVI incubator fund with the backing of friends and family, the two to three-year incubation period is time to prove your credentials and build a solid track record with the ultimate aim of attracting sophisticated and institutional investors. However, there is so much more to do during that period than prove that your investment strategy stands up to scrutiny.

In an age of increasing transparency, it is vital that you use the incubation period to start preparing for a time when you will need to meet institutional-style demands in terms of your operations. It is still early days – and you may still fall below AUM thresholds for complying with extraterritorial regulation – but there is a level of infrastructure and reporting that sophisticated and institutional investors will expect before they are going to invest. Continue reading

A view from Shanghai: sunshine funds on the rise in China

Private Equity Funds and Fund of Funds in China, also known as ‘Sunshine Funds’, are growing rapidly. In this guest post, my colleague and Managing Partner of Harneys Shanghai Kristy Calvert explores the reasons behind this trend.

The Asset Management Industry is one of the fastest growing business sectors in China. Privately managed (non-retail) funds in China, often referred to as ‘sunshine funds’ by local practitioners, have traditionally enjoyed a largely unregulated environment – unlike the mutual funds industry, which is heavily regulated by the Chinese Securities Regulatory Commission (CSRC).

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We won!

It was a packed room at The Lawyer Awards last week – all 1250 of us anxiously hoping our firm would be crowned winner – and with few categories so fiercely contested as Offshore Law Firm of the Year, we were definitely on the edge of our seat.

The Lawyer kept us entertained while we waited, though. With hours of comedy from Dara Ó Briain, a rocking band and a beautiful River Thames fireworks display, it was a glittering celebration of a year of hard work and success across the legal industry – and judging from the crowd still packed on the dancefloor at 2am, a night that many didn’t want to end.

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UK Votes to Leave the EU – what does Brexit mean for Offshore Funds?

So, the pound’s tanked, world stock markets are in turmoil, Scotland and Northern Ireland are considering whether to leave the United Kingdom so they can stay within the EU and the Prime Minister has announced his resignation. Last week’s vote to Leave the EU has certainly had a profound (and depressingly predictable for those of us who voted Remain) impact on the UK economy and politics already, with a long period of uncertainty yet to come. The financial services industry in the UK is likely to be significantly affected by Brexit, with various international investment banks having now announced that they’re reviewing their operations here, given the uncertainty over whether they will still be able to passport their financial services and products across Europe from London.

But what impact will Brexit have on Cayman and BVI offshore funds and how they’re marketed into Europe?

 

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Hands on your buzzers – BVI funds conference

Our BVI funds team was out in full force today at a conference we hosted for the BVI financial services community.

As a new way to involve our audience, we put the power in the people and invited our attendees to submit questions for us to answer in a wheel of fortune-style quiz.

When the submissions started rolling in, they ranged from specific and technical points on CRS, FATCA and AML (anti-money laundering) legislation in the BVI to general questions on the state of the funds industry – and some more controversial questions about the Panama Papers. There were moments when we wondered whether we had made the right decision in asking for the views of the public – a feeling that may well have echoed the sentiments of David Cameron on this historic Brexit vote day.

With Phil as quiz master, we played for points and competed for a $500 award from Harneys to one of four local charities. Between us, we managed to tackle the questions and, I hope, keep the attention of the audience. Our regulatory expert, Mirza, dazzled the floor with a few of his spectacularly technical responses. I am happy to report that, despite lagging behind in the first rounds, I came through at the end and won the cash prize which we donated to the HIV and AIDS foundation in the BVI.

Here are a few pictures of us in action.

 

Contestants

 

Audience

 

Speakers

Long Live The King: Why LeBron James Helps Justify Performance Fees

For those that are not aware, LeBron James just transcended his sport. Playing against a team that some have described as the best ever and down 3-1 in the Finals (a position that no other team in NBA history has ever come back from), he produced some of the greatest basketball the world has ever seen. Hell, some of the greatest sporting performances the world has ever seen.

He threw up numbers that are mind-boggling and yet he was far more than that. Leading a decidedly average supporting cast, there was something about this Cavaliers team that clearly just kept on believing in their superstar.

Because that’s what he is.

One of the tired narratives that you regularly hear when discussing sport is why people who throw/kick/catch a ball for a living deserve to be paid such ridiculous sums of money. Continue reading

Countdown to the referendum – what could Brexit mean for offshore funds?

Here in the UK the debate is intensifying around the EU referendum on 23 June on whether the UK should remain in or leave the EU. With not long to go to the vote, for obvious reasons a lot of the discussion about the impact of any “Leave” vote has been on the UK economy and UK citizens. Many onshore UK law firms have set out in detail the exit mechanism that would be involved following a vote to Leave and their thoughts on how it could affect the legislative landscape in the UK for financial institutions and investment managers. If the UK votes to remain in the EU, we can expect going back to business as usual in most areas, although quite how the Conservative party will re-unite itself after all the recent mud slinging remains to be seen. However, a Leave vote and subsequent Brexit from the EU could also have a much broader effect around the world, in ways that haven’t necessarily grabbed the headlines so far.

So what impact might any Brexit have on Cayman and BVI offshore funds and how they’re marketed into Europe?

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