Malta’s product flexibility is well suited to start-up managers
Circle Partners (Circle) is an independent fund administrator with offices across the EU, the Americas and Hong Kong. Circle has the ability to advise on set ups of funds and guide start-up and emerging managers through the whole process of bringing a new fund to market in all major fund jurisdictions.
By extension, Circle has a large network of local counter-parties based in Malta and as Peter Jakubicka (pictured), Business Development Manager at Circle explains: "We can offer a ‘one-stop shop' solution from the set-up phase through to launch including brokers, custodians, auditors; basically all of the functions that are required for the proper functioning of a fund in Malta. This makes the whole process of licensing a lot faster."
With the UK in the midst of Brexit, low-cost jurisdictions like Malta offer a beacon of light for start-up managers, keen on establishing an EU regulated hedge fund. As Jakubicka notes, the ability of having a regulated structure allowing for investments from institutional investors, while keeping the costs relatively low, is an attractive proposition. "Furthermore, the fact that there is a rich variety of service providers available in Malta is also important," says Jakubicka.
Another attractive feature of Malta is just how flexible it is, from a structuring perspective. The island operates a Professional Investment Funds (PIF) regime alongside the Alternative Investment Funds (AIF) regime under AIFMD, Protected Cell Companies in a sub-fund arrangement, as well as the most recent addition; the Notified AIF or `NAIF', which does not require MFSA authorisation. Not to mention UCITS funds.
"This level of flexibility," says Jakubicka, "helps managers to structure their product in the most efficient way without any compromises and helps to create various groups of investors, such as HNWIs, institutional or UHNWIs. It also gives managers the opportunity to choose whether to access the market faster with a NAIF, with a slightly higher cost of appointing an AIFM, or launch a PIF, which has a considerably longer launch date but is a more cost-efficient structure."
Speaking about trends this year, Jakubicka observes that they have been twofold, with clients choosing to launch either lightly regulated structures, or heavily regulated structures.
"We have advised clients regarding the best possible structure for them and, most importantly, connected the dots on the island. Due to a heavy regulatory environment, there are many functions and service providers to consider when setting up a fund. Price ranges can be quite challenging for someone that is not so familiar with the local environment," comments Jakubicka.
In this regard, Circle Partners is well placed. The firm's local network literally includes all service providers on the island. "Combined with our global network, this gives us a competitive edge. We have preferred partners on the island, and based on our past experience, we can recommend the most suitable, and capable parties to each individual client we work with," adds Jakubicka.
Jakubicka offers the following advice to those thinking of setting up in Malta: "Firstly, consider the time to market. If the launch needs to be done as soon as possible then a NAIF is the right choice. Secondly, will the fund be self managed or managed by a third party AIFM? If the former, one of Malta's regulated fund structures (PIF or AIF) would be advisable."