Earlier this month Guernsey’s funds sector gathered in the City of London for one of the biggest events in the sector’s calendar.

Imperium’s Barry McClay, Charlotte Parr and Carys Bromley attended the event and share their key takeaways.

The Guernsey Funds Forum commenced with an enlightening opening keynote speech delivered by Miles Celic, CEO of TheCityUK. Celic highlighted the substantial economic impact Guernsey’s fund sector has on the UK economy. He noted £57 billion has been directed into UK assets, significantly boosting the British economy. He also recognised the pioneering role of the Guernsey Green Fund, the first of its kind, in setting a benchmark for sustainable finance.

With the UK General Election on the horizon and current economic uncertainties, Celic stressed the importance of effectively communicating and delivering growth within the finance industry. His insights set a compelling tone for the discussions that followed.

Capital Raising in Today’s Economic Climate

Naoshir Vachha, Partner at Anthemis, addressed the challenging fundraising environments of 2023 and 2024. He acknowledged the struggles faced by emerging Managers in raising funds and noted that even large Fund Managers are experiencing longer and smaller fundraising rounds. Despite these challenges, Vachha reassured that the situation is more stable compared to 2008.

He highlighted the significant impact of the 64 upcoming elections worldwide, which will shape the economic landscape next year. Vachha pointed out the crucial role family offices are playing in filling the fundraising gap, capitalising on risk opportunities. He also emphasised the potential opportunities arising from climate change and noted the growing investor comfort with Guernsey as a jurisdiction.

The exploration of SPVs and sidecar vehicles was also mentioned, along with the attrition of emerging managers.

Emma Silcocks, Group ESG Manager at Bluefield Partners LLP, discussed the political landscape, particularly the Labour Party’s expected support for the net zero target and long-term energy transition. She predicted that policymakers would increasingly compel businesses to comply with ESG standards. Silcocks noted the prevalence of ESG questions in due diligence questionnaires (DDQs) and anticipated that Labour would intensify green commitments if successful in the UK elections.

Eve Ellis, Partner at Ropes & Gray, provided insights into fund managers’ cautious approach towards new structures and preference for different jurisdictions.

Ellis also touched on significant regulatory changes in recent years, particularly in ESG and the European regulatory framework. She emphasised the importance of considering ESG holistically, from regulation to global perspectives, and across organizational strategies. Aligning and strategizing ESG messaging early was deemed crucial.

Exploring the Future of Funds

Lavanya Raghavan, Partner White & Case LLP shed light on the evolving role of continuation funds. Initially used for end-of-life packages, these funds are now applied to well-performing single assets, solving liquidity issues and driving innovation in deal terms. Raghavan underscored the significant value GPs find in continuation funds.

Sarah de Ste Croix, Partner at Stephenson Harwood, focused on the impact of secondaries, driven by dry exit situations and the need to return money to investors. She noted the significant activity around LP portfolios in recent years.

Matt Ong, CEO & Founder of Ctrl Alt discussed the emerging trend of tokenisation, describing it as a buzzword with substantial potential for creating liquidity. He highlighted tokenisation as the next generation for accessing alternative funds but stressed the necessity for a robust legal framework around these funds.

A timely statement on tokenisation was released by the GFSC.  The Commission said it demonstrated its support for innovation and recognised the role tokenisation could play in improving the efficiency within capital markets. You can read more here.

Summary

The Guernsey Funds Forum provided a comprehensive overview of the current and future state of capital raising and fund management. Keynote insights and panel discussions underscored the importance of adapting to economic challenges, regulatory changes, and emerging trends such as ESG and tokenization. The forum highlighted the resilience and innovation within the finance industry, setting a positive outlook for the future.

It is clear Guernsey’s Funds Sector is set to thrive with innovation and stability at the heart of the island’s offering as a domicile of choice.