Fiona Le Poidevin, chief executive of Guernsey Finance, has just returned from India where she was showcasing how Guernsey can help meet India’s investment needs.
The Indian economy remains both a fascinating and complex one. While a recent forecast by the Reserve Bank of India saw growth projections scaled down to five per cent for 2013/14, this figure is still attractive to those in the West who are looking to provide inward investment.
Guernsey’s funds industry, with its considerable experience in infrastructure funds and raising capital through European markets, is well placed to assist India with the challenges it faces in its development.
For example, the recent London Stock Exchange (LSE) listing of Guernsey closed-ended investment company The Renewables Infrastructure Group (TRIG), illustrates the capabilities that exist through using Guernsey as a domicile in which to structure and service alternative investment vehicles. It was the UK’s largest initial public offering of a clean-power company, having raised more than GBP300m to invest in a wind and solar energy generation assets across Europe.
Guernsey also has experience of incorporating India-focused funds and providing other services for the Indian market. Indeed, a number of Guernsey investment fund structures have already listed on European exchanges with the aim of investing in Indian infrastructure. India Capital Growth Fund, iEnergizer, Indus Gas, Kolar Gold, Skil Ports & Logistics and Mytrah Energy are all Guernsey-incorporated entities which are currently listed on the Alternative Investment Market (AIM) of the LSE.
Indus Gas and Mytrah Energy are particularly relevant on the energy front. Indus Gas, an oil and gas exploration and development company, was incorporated as a limited company in Guernsey in 2008, to explore, develop, produce, distribute and market hydrocarbons, including natural gas, in India. Mytrah Energy on the other hand is one of the largest wind-based independent power producers in India with an operating portfolio of 310MW of wind energy assets spread over seven projects across four states in India.
These funds all use the LSE, but a key attraction of using Guernsey is that structures can also list on other global exchanges, such as the Channel Islands Stock Exchange (CISX), Euronext Amsterdam and the exchanges in Frankfurt, Toronto, Australia and Hong Kong, among others. Indeed, it is worth bearing in mind that there are more non-UK entities listed on the LSE markets from Guernsey than any other jurisdiction globally.
The Indian regulator has also recently removed the requirement for Indian companies to be listed in India as a pre-condition to list and raise capital abroad. Subject to certain criteria, Indian companies are now able to list directly on exchanges such as the LSE, which could lead to a new wave of companies utilising Guernsey’s capabilities.
The net asset value of investment funds under management and administration in Guernsey reached more than GBP286bn (USD458bn) at the end of June 2013, up 5.6 per cent on a year earlier. Private equity and venture capital have also experienced particularly strong growth, reaching more than GBP87bn (USD140bn) at the end of June 2013.
Guernsey has built a wealth of experience and first-class infrastructure for the structuring, management, administration and custody of the widest range of funds.
The island plays host to a broad selection of administrators, ranging from independent, boutique providers to large, multinational organisations, many with bespoke IT solutions. Guernsey’s funds industry can also draw on the services provided by the island’s banking, wealth management and insurance sectors. It is also supported by a comprehensive network of investment, legal, tax, audit, accounting and actuarial advisers, including international law firms and accountancy firms.
The Guernsey Financial Services Commission ensures that funds follow the appropriate local or international codes of corporate governance, while the island’s pool of experienced and well-qualified non-executive directors reassures investors and promoters that Guernsey service providers are working to the highest standards.
External agencies such as the UK Government, the IMF, OECD and the Financial Stability Board continue to place Guernsey within the very top tier of leading international finance centres globally.
Relationship with India
Guernsey practitioners have been active in the Indian marketplace for some time, but held their first official trade delegation to India in October 2010, when they met with government, regulatory and business officials, as well as practitioners from the local finance communities. Notable developments since the trip have been Guernsey signing a Tax Information Exchange Agreement with India in 2011 and Guernsey-headquartered Nerine Group becoming the first independent fiduciary from the Channel Islands to establish a full service office in India in 2012.
The signs are that India and Guernsey can significantly build on their current relationship. Indeed, I have just returned from speaking – with Rajat Ganguly, founder and managing director of RKG Consulting – at the International Taxation conference in Mumbai where we were able to showcase how Guernsey is fully equipped to provide Indian institutions with the right solutions to meet their objectives.
An original version of this article was published in the Indian Business Law Journal.