This past year we have seen a confluence of geopolitical tensions, climate crisis, macroeconomic shocks and other events that have created instability in the investment landscape.
Evidence has demonstrated that in times of crisis, investors must stay the course and look beyond the short-term volatility to areas of burgeoning opportunities. The British Virgin Islands (BVI) investment business and funds sector has proven to be a bright spot amid the crisis. The BVI continued to attract a range of funds and investment businesses from around the world. Investment business increased by 17% over the same period in 2021, and the number of new funds registered increased by 32% over 2021 figures.
The BVI’s fund business encompasses investment management, fund administration, fund custodian, fund auditor and fund directorships. Catering to a broad mix of funds from open-ended to close-ended, hedge funds, equity and bond funds, the BVI is also a hub for multiple asset classes – from private equity and venture capital to real estate, infrastructure and commodities – underpinned by the BVI’s robust yet practical funds regulation and legislation.
More recently, we have seen the increasing appeal of the BVI among family offices, which, as they grow and develop, require the flexibility that BVI fund structures offer. Hybrid funds have also proved to be popular for the same reasons. The BVI has capitalised on crypto’s rise by demonstrating private sector expertise and an innovative regulatory framework. The much-publicised “crypto winter” has thrown up challenges. However, the BVI remains one of the go-to jurisdictions for crypto or digital asset-focused funds. In particular, the BVI has been able to cater to small and medium-sized managers, incubator funds, “friends and family” funds and venture capital funds in the crypto and digital asset space.
With its growing crypto community across the professional services spectrum, the BVI has the expertise to deal with any troubled projects, commercially and sensibly. This should give institutional investors and company founders a significant level of comfort to secure investment sufficient to ensure the digital asset space thrives.
The BVI has also embraced the increased international focus on environmental, social and governance (ESG) investment considerations. This is particularly relevant now, considering the resources sector’s challenges and the movement to green energy.
In this report, the experts examine the gamut of BVI funds. Mourant’s Saraid Taylor and Ian Montgomery discuss how start-ups use BVI incubator funds to strike the right balance of complying with regulatory requirements while maintaining and scaling their businesses.
Conyers’ Eric Flaye says hybrid funds offer the flexibility for managers to invest in listed equity or tokens or liquid cryptocurrencies while investing in something less liquid like seed equity, warrants or instruments subject to lengthy lock-up periods and investing schedules.
Harneys states that the BVI boasts a wealth of knowledge and expertise when advising on distressed assets and corporate turn-around. At the same time, Hatstone outlines the steps for forming and operating investment funds by family offices.
O’Neal Webster’s Kerry Anderson and Christopher Simpson detail the variety of choices of BVI funds to suit different managers, investor types, and structures. Appleby’s Jeffrey Kirk explains why the BVI remains a highly attractive domicile for PE and VC funds.
Rounding out the report, PwC’s Alexander Lower takes us through fund closure from a solvent wind-down perspective to insolvent situations. On the crypto front, we hear from Walker’s Paul Waldron that while the BVI’s cautious approach mirrors international sentiment, it remains a very attractive jurisdiction to launch a crypto or digital asset-focused fund.
It is still undetermined how soon the global economic recovery curve will begin tilting upwards. Ultimately, however, we are excited about the opportunities ahead and confident that the BVI will continue to build on its success and reputation as one of the world’s premier fund centres.
