The fund services industry in the British Virgin Islands has been reinvigorated over the past few years, notably through the rapid growth in the number and size of international law firms as well a
The fund services industry in the British Virgin Islands has been reinvigorated over the past few years, notably through the rapid growth in the number and size of international law firms as well as the establishment of various new fund administrators.
This development has provided international fund promoters with an interesting alternative to the Cayman Islands, the market leader for domicile of collective investment vehicles in the Caribbean. An increasing number of managers and promoters that have used Cayman as a fund domicile in the past are considering other options due to cost issues, an important factor especially for smaller funds.
The BVI has fund legislation dating back to 1998 and had 2,781 regulated funds established by the end of the first quarter of 2008, according to the regulatory authority, the BVI Financial Services Commission. This impressive total may actually be just the tip of the iceberg, taking into account closed funds which – formed as Business Companies – are outside the scope of fund regulation and thus no statistics on their number and size are available.
However, there is no doubt about the significant development of the industry since the early 2000s. All major law firms in the Caribbean have now offices in the BVI, seeing the potential of this well-regulated and competitive jurisdiction, and a surge in the number of licensed administrators reflects the growing number of domiciled funds.
ATU Fund Administrators (BVI) has been a player in the BVI since the introduction of fund legislation in 1998 and indeed has a management and administration licence numbered 98/001, reflecting its status as the first ever licensed entity.
As part of an international group with complementary services for incorporating legal structures as well as banking and custody, we can offer one-stop shop solutions and act as an incubator for new and unconventional funds, such as new frontier funds, or for emerging managers.
Our portfolio of fund mandates also includes structures established in Cayman and in neighbouring Anguilla. Having an experienced team of highly qualified fund administrators, all chartered accountants, ATU can provide individual and flexible services driven by clients’ requirements rather than a standard service offering.
The credit crunch and its economic fallout have stemmed neither the growth of the industry nor our own portfolio of funds, but have affected the investment approach of recent fund projects. Promoters and managers are re-evaluating their planned offerings to focus on lower-risk and longer-term strategies. We also detect increased interest in private equity as well as long/short equity and global macro strategies.
The focus of the Financial Services Commission on assessment of investment managers protects investors in BVI mutual funds by ensuring that individuals making investment decisions are professional and qualified. It is in the long-term interest of the jurisdiction and its service providers that should a fund fail to be successful, it is not due to lack of credentials on the part of its licensed investment manager.
As a tried and tested administrator, ATU goes beyond the requirements of current regulation in its internal quality standards. For example, we insist that all our regulated fund mandates are subject to an external audit, believing that this represents ‘good hygiene’ for the fund promoter and service providers as well as investors.
Peter Reichenstein is managing director of VP Bank and Trust Company (BVI), the parent company of ATU Fund Administrators (BVI), and current head of fund services
