Quick Guide to Guernsey’s Private Investment Funds (PIFs) Regime
Background
The Guernsey Private Investment Fund (PIFs) regime is a popular route to market for Venture Capital Managers, start-up Managers and Family Offices. This is due to the regime’s ability to be quick to market with a light touch regulatory framework while providing the security to investors of being a regulated collective investment scheme.
The light touch regulation is achieved by PIFs targeting professional investors, limiting investors to a maximum of 50 in total coupled with the Guernsey Regulator (the Guernsey Financial Services Commission (the GFSC)) focusing its regulatory monitoring on the appointed Guernsey Fund Administrator’s declarations, policies and procedures and on-going monitoring of the PIF.
The Three Guernsey Routes
There are three types of PIFs that are available, noting each is limited to a total of 50 investors, these are:
- Route 1 – the POI Licensed Manager PIF: This is the original PIF model and most commonly used route whose specific criteria are:
- The appointment of a Guernsey Licenced Manager.
- No limit on the number of potential investors who can be marketed to.
- Limits on investors in and out in any 12-month period (30 new investors per year max).
- Route 2 – the Qualifying Private Investor (QPI) PIF: This is popular with Managers that already have a regulated presence in another jurisdiction. Specific criteria are:
- Does not require a GFSC licensed Manager, instead an existing regulated Manger in another jurisdiction can be appointed.
- It is aimed at investors who meet the criteria of being a QPI i.e. able to evaluate the risks and bear the consequences of the investment.
- The Guernsey resident licensed fund administrator of a QPI PIF is required, as part of the application process, to declare to the GFSC that it has effective procedures in place to ensure the PIF is restricted to sophisticated investors only.
- Limited to marketing to only 200 potential investors.
- Route 3 – the Family Relationship PIF: This is aimed at Family Offices / Families as an alternative to traditional family structures for a bespoke private wealth vehicle as a fund. Specific criteria are:
- Does not require a GFSC Licensed Manager.
- Requires a family relationship between investors i.e. either share a family relationship or are an ‘eligible employee’ of the family and meet the criteria of being a QPI.
Features Applicable to All Three Routes
The following features apply to all three PIF routes:
- A one business day turnaround at the GFSC for the PIF applications;
- No requirements for private placement memorandum (PPM) or other information particulars, although it is common for a PPM style document to be provided to potential investors;
- Can be closed-ended or open-ended;
- A Guernsey licenced fund administrator must be appointed
- A Guernsey based non-executive director be appointed
- Must be audited
- AIFMD – is eligible for marketing through NPP (article 42); and
- Conflict of interest requirements apply to the directors managing the PIF.
Conclusion
A Guernsey Private Investment Fund is a flexible and efficient option for Venture Capital / Private Equity Managers, start-up Managers or Family Offices seeking to establish a bespoke investment fund that meets their specific needs and requirements. Offering a streamlined regulatory framework and a range of investment options, PIF’s are a valuable tool for professional investors and family offices looking to grow and diversify their wealth.
Dixcart and Additional Information
Dixcart is licensed under the Protection of Investors (Bailiwick of Guernsey) Law 1987 to offer PIF administration services and also holds a full fiduciary license granted by the Guernsey Financial Services Commission.
For further information on the establishment and administration of a private investment fund, please contact Steve de Jersey at advice.guernsey@dixcart.com
