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03 September 2020
As the world emerges from the COVID-19 pandemic, every industry must take stock and evaluate the changes that are here to stay and the adaptations required to suit the new environment. This article examines the developments in and resilience of Guernsey's funds industry.
The past few months have been extraordinary, so it will come as no surprise that as the world moves out of crisis mode through the rest of 2020, the pandemic has provided both a catalyst for change and a chance to take stock and consider how Guernsey is positioned to build on its funds offering in this changed environment while continuing to meet clients' expectations in terms of stability and service.
One of the biggest factors for business continuity and businesses' ability to weather the pandemic successfully has been technology and its facilitation of remote working, which has enabled smooth service delivery throughout lockdown. If utilising technology to its full potential to prepare for every eventuality was not top of the agenda for all funds businesses before the pandemic, it will be now.
Guernsey-based funds professionals worked agilely before the pandemic and were used to frequent travel and remote working. However, the enforced nature of lockdown has pushed them to rely on their technological infrastructure to a much greater degree – not just by supporting remote working, but also by prompting more extensive use of the tools at their disposal. Data room and e-signature platforms have become necessary, as signing contracts and completing transactions in person has been impossible. In these few short months, videoconferencing has also come into its own after years of being viewed as a handy add-on.
Guernsey's geographical isolation has also had its benefits. It has escaped much of the difficulty caused by the pandemic and has been fortunate to be able to get back to a semblance of normality already. Continued travel restrictions do mean that physical attendance at events may not be possible for some months – perhaps the remainder of 2020 – but service providers continue to develop strong relationships across the private equity industry by other means. There is still a strong desire to develop opportunities and relationships and the types of event on offer have adapted to meet that demand.
It is not just the way in which funds professionals work that will change. There is huge promise for private equity and debt fund offerings in the healthcare, technology and green and clean sectors. Importantly, the entire the funds industry – lawyers included – is thinking about issues around environmental sustainability throughout the full lifecycle of private equity funds and other vehicles.
Businesses are thinking about how to travel smarter to reduce their carbon footprint and, where a total reduction is impossible, ways to mitigate any negative impact in a meaningful way. They are looking at whether their IT systems are optimised for environmental sustainability, how they source their energy and how they integrate technology into less obvious parts of their business to achieve more sustainable outcomes. Funds jurisdictions must be alive to all of these issues and more.
It has been clear throughout the pandemic that the Guernsey government continues to support the funds industry and recognises the importance that private equity and sustainable finance play in the longevity of Guernsey as a financial centre. The cancellation of Guernsey's Annual Funds Forum was disappointing, but its swift adaption by Guernsey Finance into a well-received online forum followed by the inaugural Sustainable Finance Week was promising. The Guernsey funds industry is fortunate in that it has largely been business as usual, which means that the government continues to work with industry and the Guernsey Financial Services Commission to look forward to future developments to the country's funds offering beyond the pandemic – and indeed Brexit.
The funds industry has also played its part. The Guernsey Society of Chartered and Certified Accountants and the Guernsey International Business Association have worked with the Revenue Service to give comfort to industry on the application and interpretation of Guernsey's substance regime throughout the pandemic.
What is clear is that with continuing developments such as the fast-tack licensing of managers of overseas collective investment schemes and the Green Fund regime, Guernsey remains an attractive destination for private equity managers looking to launch new funds or migrate their management of funds to Guernsey. In particular, the Green Fund regime is in the right space to meet investors' needs, and Guernsey is well placed with its green private equity principles, demonstrating its thought leadership in this space.
An earlier version of this article was published in the Guernsey Press Q2 Review supplement.
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