The launch in recent months of two investment structures – one aimed at international firms’ staff and the other at “green” investors, highlights how offshore centres aim to stay on the front foot.
The Channel Islands of Guernsey and Jersey have rolled out two investment structures in recent months as the jurisdictions continue to compete while keeping a wary eye on Brexit.
Jersey has unveiled its Jersey International Savings Product, aimed at firms that want to create savings plans for employees. These ISPs are targeted specifically at multinational firms with staff often working away from home.
In Guernsey’s case, last year it launched what it said was the world’s first Green Fund product of its type, hoping to tap into an international trend of environmentally-themed investments.
At a time when international financial centres are having to differentiate their “brands” – mindful of cross-border investment uncertainties kicked up by Brexit and other forces - the islands are trying out new ideas to stand apart.
Other innovations of recent years have included Guernsey’s image rights registry of 2012 and Jersey’s foundations law of 2009.
Jersey’s ISPs enable multinational and international companies to set up savings plans in Jersey for non-resident employees. It is anticipated that the product will have a particular appeal in the Gulf region, practitioners say.
“We are already seeing interest in the new ISP model, because we have a large practice based around international employee savings and benefit trusts. We expect this to develop into a significant workstream complementing the existing flows of work with Middle Eastern clients in particular,” Katharine Neal, a trust specialist at offshore law firm Ogier, said in a note. (It should be noted that Jersey Finance opened an office in Dubai last year, an example of how such promotional organisations are marketing their IFCs around the world.)
The Jersey ISPs are different from pensions because they can provide benefits before the age of 50, and can be set up to trigger payments in cases of redundancy, ill-health or divorce, Neal said.
The new law was approved and enacted for the start of 2019, but Neal pointed out that specific guidance notes have not been issued yet. Neal points out that Jersey trusts set up as ISPs will have to meet the criteria of being irrevocable trusts, with at least one trustee based in Jersey, with the purpose of the provision of benefits to employees.
A few days ago ADM Capital’s food-focused Cibus Fund closed at more than $320 million after it was designated as the first Guernsey Green Fund. Subscriptions for the fund, launched in 2017, stood at $208 million at the end of September 2018. By the time it closed a month later, after registering as a Guernsey Green Fund in mid-October, it stood at $322 million, ADM Capital said.
Last summer Guernsey launched the Green Fund product, and rules stipulate that three-quarters of a fund’s assets by value must meet specified green criteria. Permitted investment areas include renewable energy, efficient energy generation, energy efficiency, agriculture, waste and waste water and transport.
“Our vision is that the confidence in the robustness and legitimacy of the Guernsey Green Fund helps make the sustainable capital raising process that little bit easier. In a way it is our contribution to climate change mitigation,” Dr Andy Sloan, chair of Guernsey Green Finance and deputy chief executive, strategy, for Guernsey Finance, said.