International Capital Flows, a report commissioned by the States of Guernsey and supported by Guernsey Finance, has analysed the economic benefits provided to the UK and Europe by the Guernsey funds market.
The majority of the inward investment is deployed into long-term tangible assets, including private equity, infrastructure and commercial property. All of these asset classes can provide economic and social benefits to the UK.
The report estimates that European investment managers earn £1.8bn of fees from managing Guernsey funds, of which £1.1bn is earned by those in the UK. UK investors, such as pension funds, also benefit from using Guernsey as it gives them a far wider access to investment opportunities outside of Europe. The report concludes that Guernsey is used as a conduit for international capital flows, bringing together investors from many different countries and facilitating their access to global assets.
The report was written by Head of Advisory Ashley Paxton and Advisory Senior Manager Antony Prynn, both from KPMG in the Channel Islands. Data was provided by local investment managers and administrators and interviews were conducted with London-based industry experts including lawyers, LSE sponsors and investment managers.
Ashley Paxton commented “We are delighted to have been involved with International Capital Flows, and to have the opportunity to utilise our experience, expertise and network in the funds market to analyse the benefits that the flow of investment capital through Guernsey brings to the UK, European and global economies”
Deputy Kevin Stewart, Minister for the Commerce and Employment Department, said: “The picture that has been built up will ensure a greater understanding of the funds sector, and of Guernsey as an international finance centre. Over the coming weeks and months we will be using the analysis in our meetings in London and Brussels, and with governments, regulators and international bodies – indeed, we are already doing so.
“Guernsey is a partner of the UK and Europe's growth and prosperity agenda, and this report emphasises that partnership.”
Dominic Wheatley, Chief Executive of Guernsey Finance, said: “The report demonstrates Guernsey’s expertise as a funds centre and as a facilitator of global investment into the UK, European and global economies – a message we have been delivering for a number of years. The investment Guernsey facilitates into the UK and elsewhere can bring about significant economic and social benefits to those economies. It is also interesting to note the scale of internationalism of the funds industry itself with 90% of the £1.8 billion fees generated from Guernsey domiciled funds going to EU service providers.”
KPMG in the Channel Islands is the market leader in the Guernsey funds sector, auditing 46% of funds by NAV according to the 2014 Monterey statistics and providing a full suite of audit, tax and advisory services.
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