Henry Freeman recently joined We Are Guernsey as Strategic Adviser alongside other non-executive and advisory roles. In this article he reflects on what keeps Guernsey’s finance industry at the vanguard of finance centres globally.
As an investment manager and then an investment banker, I’ve spent the bulk of my career in London but have also been based across the Channel Islands at various points and now settled in Guernsey. Throughout my career, I have worked with managers and service providers from across the world as a corporate broker which focused on London Stock Exchange listed investment companies.
A key attraction moving back was the quality of the finance industry here. Simply put, the pool of expert and experienced service providers in Guernsey is deep – be they lawyers, accountants, fund administrators, fiduciaries, insurers… the list goes on. This rich finance industry ecosystem, developed over more than 50 years, has enabled Guernsey to become the jurisdiction of choice for private equity, infrastructure and alternative asset funds, captives, insurance linked securities and other insurance vehicles, family offices, trusts and foundations, pension funds and investment managers.
There is clearly no resting on laurels though. The regulator, the Guernsey Financial Services Commission (GFSC), has had a busy year of new applications and the total value of funds is up over 20% over the past year. The pipeline also remains healthy. Guernsey has clearly responded well to the challenges presented by the global pandemic, with service providers remaining flexible in the way they work with both clients and their key assets – their people.
Flexibility and responsiveness to change are required to remain relevant in an increasingly competitive world and the island has always embraced innovation across asset types and structures. The GFSC readily makes itself available to discuss new ideas and concepts ahead of formal regulatory applications and, there are also various “fast-track” applications which can speed up the time to doing business.
This makes Guernsey a great destination for innovative financial products. For example, 2021 saw the launch of one of the first bitcoin ETFs globally, and it was perhaps not a surprise that a Guernsey company was the first special purpose acquisition company (SPAC) to be listed on the London Stock Exchange since new rules came into force – Guernsey already being home to more London Stock Exchange (LSE) listed companies and funds than anywhere else, other than the UK. I should also point out that as a London-based corporate broker, many of my LSE listed corporate clients were Guernsey companies and funds so I have first-hand experience of the quality of service, efficiency, and knowledge base available here.
Innovation isn’t just seen in the type of financial products and investments that are domiciled or managed here, as the island has also embraced fintech – amongst other initiatives, at the end of last year the investment fund industry saw the first deployment of blockchain technology for the private equity market. This solution brings efficiency to interactions with stakeholders, greater data transparency and reduces transaction friction, all streamlined through a distributed ledger technology. This important development further enhances Guernsey’s reputation as a leading private equity hub.
No discussion of investments and finance should ignore ESG matters, and Guernsey has once again led from the front in this aspect. Guernsey has been and continues to be a leader in sustainable finance and ESG matters more generally. Guernsey has long been the jurisdiction of choice for listed and private renewables and infrastructure funds. It was also the first jurisdiction globally, to establish a regulatory regime around sustainability, with the creation of the Guernsey Green Fund and Guernsey Green Finance and one of the first to join the United Nations’ Financial Centres for Sustainability.
Guernsey Green Finance continues to engage internationally, with a presence at the recent COP26 conference, as well as attracting and working with proactive organisations and companies, as the world transitions to a more sustainable future. This focus on ESG as well as the innovative and flexible approach to finance products saw the launch of the first ever humanitarian catastrophe bond globally – a Danish Red Cross-sponsored bond covering volcanic eruption. The bond uses a Guernsey insurance linked securities structure and has also been listed on The International Stock Exchange (TISE – itself a Guernsey success story as this Regulated Investment Exchange headquartered here with listings totalling more than £450bn).
I have no doubt that Guernsey and its finance industry will continue to evolve with innovation, technology, and sustainability and this, allied with the stability and security of the jurisdiction and its internationally recognised regulatory and legal frameworks, should ensure it remains at the forefront of global finance centres and a dynamic place to business going forward.
