Fund Management

Cyprus Sees Launch Of New Funds Distribution Platform

Editorial Staff, 15 December 2020

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UK asset manager chooses Cyprus to launch a new low-cost funds distribution hub.

Financial and wealth services provider Ganita Group has launched a new Cyprus-based platform that aims to become a "one-stop shop" for fund managers wanting to launch low-cost investment strategies, the firm said.

Managed by Ganita Asset Management, the platform will provide operational, regulatory and distribution services to start-up UCITS funds, the group said. The asset arm is expected to launch seven sub-funds on the platform, under Cyprus Securities and Exchange Commission rules, by the end of January, and offer “passporting” for UCITS and AIFM funds in the European Union and for distribution outside the bloc.

“We are in discussions with several more fund managers who are interested in launching Cyprus funds, who want to take advantage of this operations and distribution hub,” Ganita Group CEO Paul Smith said, including managers from outside the UK. "We want to offer them a very cost-effective solution that at the same time comes with real distribution opportunities through our established wealth management and IFA network," he added. He called the service "a complete package" for those who want to create new funds that will also be screened for ESG-compliancy.

The firm, based in Newcastle and launched in 2008, says it will also provide office space in London for managers who want to use the service.

“This is a new world, and we believe it requires a new way of doing things,” said Rajesh Nair, fund director at the group. Asked by this service why Cyprus was chosen, Nair said it was mainly about "speed to market." The firm has put the timeline at 3 to 6 months rather than 12 to 18 months in Luxembourg and Ireland, a double tax treaty lowering the costs, and EU membership. The bloc's UCITS IV Directive "allows managers to leverage the strengths of the more established domiciles; these strengths are important due to our target of recruiting new, talented fund managers who maybe can't afford the cost or the time it takes to set up in these other domiciles," Nair added.

Strategically located in the eastern Mediterranean between Asia, Europe, and Africa, and a gateway to the Middle East, Cyprus has found itself in hot water recently defending its offshore reputation. 

The island has often been dubbed Moscow on the Med for the number of wealthy Russians its light tax and regulation has attracted, as well as being a safe place inside the EU to park assets beyond the mercurial reach of the Russian state. Russians have been the largest recipients of the island's "golden visa" programme since it began in 2013.

The scheme came under fire in 2015 when the government was found fast-tracking the citizenship of fugitive financier Jho Low, even after Low was suspected of milking billions from Malaysia’s 1MDB state investment fund. (Low has denied the allegations, and he remains at large.) More recently, an Al Jazeera investigation in October implicated more government officials in "selling" passports underhand.

The EU, it seems, has had enough, launching legal action against Cyprus and Malta last month for how they are administering their programmes, which have been a revenue source, netting Cyprus roughly €6 billion in real estate sales over the last few years. Similar schemes operating in Bulgaria and Portugal are also on the EU's watchlist. The commission is concerned that the programmes are open to money-laundering and tax evasion if not properly policed. Cyprus has since terminated its programme.

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