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Piers Alexander, of Conyers, discusses Cayman’s popularity as a private equity funds domicile, and Asia’s potential within this space.
HFMWeek (HFM): What factors have made Cayman such a popular domicile for private equity funds?
Piers Alexander (PA): As with other off shore financial centres, the Cayman Islands attracts a high level of nonresident financial services business. The globalisation of business, enhanced mobility of individuals and sophistication of the off shore world have all increased the attraction of off shore financial centres. Some of the onshore factors influencing the growth in demand of the Cayman Islands include high taxation, overly complex laws, significant regulation and political and/or economic uncertainty.
Growth of the Cayman Islands is driven in part by the onshore need to conduct business on a stable, sophisticated, tax-neutral platform. Some of the characteristics of the Cayman Islands that contribute to its success in attracting investment fund business include its political and economic stability, legislative and judicial soundness, favourable tax regime, quick set up and low maintenance, active banking sector and high quality professional and support services.
A fund structure might not be capable of being suitable for everyone but, in the context of a global offering, considerations generally favour a neutral location, acceptable to the widest range of potential investors. Fund sponsors will therefore typically look to the reputation of a jurisdiction in determining where to establish the fund.
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Domiciling Private Equity Funds
This article first appeared in HFMWeek Special Report, Cayman Islands 2017