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As the long-term offshore leader for the formation and domicile of hedge funds, and a hotbed of activity in the private equity market, the Cayman Islands has always been a trailblazer and a beacon for the efficient deployment of global capital. This reputation has endured over decades and remains as solid today, despite the modern challenges of high start-up costs and regulatory fatigue from seemingly ever-increasing and more complex international initiatives.
As established managers explore new methods of attracting capital, including seeding innovative funds and exciting opportunities in fintech and artificial intelligence, institutions are rejuvenating the investment funds space and raising vast sums of private equity capital, often well above initial targets. As the Cayman Islands enhances its fund offering, ahead of competitors both offshore and onshore, it remains the clear domicile of choice.
FIRST MOVER DRIVES PROGRESS
Estimated to account for some 75% of the offshore hedge fund market (source: Cayman Islands Monetary Authority (CIMA) Annual Report 2015/16), the Cayman Islands was the first offshore jurisdiction to regulate such investment vehicles, with the introduction of the Mutual Funds Law in 1996, some years before the term ‘hedge fund’ had been coined. Successive governments have capitalised on this, and have continued to support and help develop a vibrant funds industry. In fact, today, most of the larger institutional clients insist on their hedge fund or private equity vehicles being located in this reputable (and politically and economically stable) jurisdiction.
A highly-flexible corporate environment, and a cohesive working relationship between the public and private sectors, has seen fund legislation evolve and develop specifically to meet the desires of industry. At the same time, CIMA has maintained a robust regulatory framework, in keeping with ever-changing global standards, while remaining commercially attuned to eliminate any unnecessary impediments to business.
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Constant evolution maintains Cayman Islands fund leadership
This article was first published in Legal Business.