Private equity post Brexit

James Orrick, Managing Director of PEA in Guernsey, shares his views on the implications of Brexit on private equity in Guernsey.

  1. Guernsey has a thriving private equity (“PE”) sector with many resident European PE groups.  How will the UK decision impact upon the general PE workflows that we see here?

Brexit and future European elections will provoke some slowdown in activity whilst we wait to hear if the UK continues to have access to the Single Market. In the midst of the uncertainty that Brexit has ushered in, we should remember that Guernsey is in a strong position as a stable jurisdiction and that we have a good relationship with the EU as a third country in our own right. Our professional service providers supporting the PE industry in the UK, Europe and beyond are nothing but adaptable and well placed to weather out the storm.

Brexit is impacting some UK PE firm’s ability to fund raise, with some deals being stalled, primarily as a result of cornerstone institutional investors having second thoughts about committing funds, particularly for UK based deals. But elsewhere PE funds are benefitting from the weakened sterling.

As the plan for Brexit unfolds there will undoubtedly be a resurgence of activity. It’s worth remembering that PE firms are not unused to dealing with geopolitical and economic uncertainty and in due course will adapt and refocus on generating premium returns throughout challenging times.

Funds will continue to be raised post-Brexit and Guernsey will be ready and waiting to support that activity.

  1. How, if at all, will navigating the regulatory landscape change for fund managers when considering Guernsey?

Guernsey is a well-regarded international finance centre which is partly why PE firms continue to establish their funds here. Regulation continues to get more complex.  However, the skillset and knowledge of the individuals working in the financial services industry means that we are well placed to manage these challenges practically and efficiently.

Let’s not forget that corporate service providers have been regulated since 2000 and are well versed in coping with changes to regulation. Take for example Guernsey’s latest commitment to establish a central register of beneficial ownership. Whilst some jurisdictions may view this as yet another administrative burden, the experience of those in the industry and the proactive approach they apply, places Guernsey ahead of other jurisdictions with respect to being at the forefront of global standards on regulation, international tax cooperation, transparency and anti-money-laundering best practice.

  1. PEA has offices in Guernsey, Denmark and Sweden.  How might Brexit impact upon your overall service offering?

PEA has been operating onshore in the EU and offshore in Guernsey since 2003. As a third party service provider we employ staff with appropriate skills, knowledge and expertise in each location that can cope with any situation that is thrown at them.  Being a relatively small administrator we are also very flexible and adaptable and so we will continue to evolve to meet our clients’ needs.  Our current clients continue to raise funds from external investors in and outside of Europe. Not only that, our clients continue to find interesting investment opportunities and financing. So regardless of Brexit, our clients can expect to enjoy the same excellence of service, expertise and governance that they always have.  For us, it is business as usual.

For a deeper discussion on how PEA can help with your investment structuring needs, feel free to call James in Guernsey:

James Orrick / +44 1481 730988 / jo@peadm.com

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