Opalesque Industry Update –Sturgeon Ventures LLP, the regulatory incubator, has established three of its fund manager clients in Malta, a jurisdiction it sees as set to attract an increasing number of start-up financial firms. |
Low cost, efficient regulation and access to the European Union are the three key attributes that are putting Malta increasingly on the wish-list of financial firms looking for a regulatory jurisdiction, says Seonaid Mackenzie, Managing Partner at Sturgeon Ventures.
The three clients that Sturgeon has guided to Malta include hedge fund Tertius European Absolute Return, which returned 5.42% in Q4 2011, putting it in the 93rd percentile of 1,150 funds in its sector*; Clerkenwell Capital, manager of the Clerkenwell Matterhorn Fund, a professional investor fund that invests in listed European real estate securities; and Sarum Partners, a private equity fund manager.
Tertius Capital and Sarum are now both domiciled in Malta while Clerkenwell Capital’s application is currently being processed by the Malta Financial Services Authority (MFSA).
According to the MFSA, the number of funds located in Malta has now grown to 500 with a net asset value (NAV) of 8 billion euros ($10.7 billion) from 165 funds with less than 5 billion euros NAV in 2006. Six fund management companies have re-domiciled to Malta since 2009.
Seonaid Mackenzie, Managing Partner of Sturgeon, commented: “Malta is a perfect regulatory jurisdiction for start-ups. It has a fast-growing financial services community and the authorities are very engaging and understanding. It is well on the way to becoming one of the world’s most highly respected financial centres.
“After frequent reconnaissance trips we are so well established in Malta that we can provide clients with an invaluable bank of local contacts and knowledge both in and outside of financial services, offering little extras such as local drivers, hotels and recruitment firms as well as lawyers and accountants.”
Adrian Elwood, Managing Director of Clerkenwell Capital, commented: “Malta is an onshore European jurisdiction offering a high level of investor protection but is sufficiently cost effective to attract start-up funds. It’s an up and coming jurisdiction seeking to establish itself and we are very pleased with how it has gone so far. Sturgeon works in the same way – it appreciates small businesses and is happy to grow with us over time.”
Mario Reinisch, Chief Executive Officer of Tertius Capital, commented: “Malta has many advantages for us. It uses the English language and the traditions of the UK legal system; it is about a third cheaper than Luxembourg to operate in, but you get the same service levels as in other centres; it is a sovereign country of good standing within the EU, with all important double taxation treaties in place globally; and it is part of the Eurozone”.
“We are also very pleased with Sturgeon as our regulatory platform. Sturgeon provides very strict and professional compliance services, but also appreciates the way we conduct our business. We looked at other regulatory incubators, but they were all fund platforms, managing money for their own accounts. A compliance provider has full information on our positions and strategies, so we prefer to work with a partner whose interests are aligned with ours.”
Oliver de Giorgio-Miller, a Director and Investment Committee member of Sarum Oncology Fund, commented: “Malta provides a very efficient and flexible regulatory regime for investment funds, characteristics which continue to contribute to the island’s increasing popularity as a European fund jurisdiction. The World Economic Forum Global Competitiveness Report has ranked Malta highly in terms of financial market sophistication, strength of regulation of securities exchanges, soundness of the banking system and reporting and auditing standards.
“We hold the Sturgeon team in high regard for the consistent professionalism, day-to-day and pro-active advice that it provides.”
Sturgeon specialises in helping entrepreneurs establish start-up financial services businesses, nurturing them through the initial regulatory phase until they can be directly regulated by the Financial Services Authority in their own right. Sturgeon provides advice on marketing, training, human resources, branding and compliance, helping companies to gain competency and prove their business models to the regulator. It also offers education and training courses covering: senior management obligations and governance; monitoring governance of fund directors; anti-bribery and anti-money laundering procedures; market abuse; data protection training; compliance induction for wholesale, private equity and real estate fund managers; and financial promotions. It believes it is the UK’s longest running regulatory umbrella in the institutional arena.
With the increasing focus on offshore governance for investors, Sturgeon is also advising offshore service providers, including those in Malta, in governance and supervision of directors of funds.
Sturgeon is finding that while many financial workers, especially those working in banks, might be encouraged to leave the UK for less draconian tax regimes, many are also tempted to stay in the City and set up their own businesses. The vast majority of inquiries it receives are from bank or ex-bank workers, many of whomwant to provide adviceon how to trade distressed debt. Their clients would include banks looking to rebuild their balance sheets.More foreign firms are also looking to locate new offices in London, trading on their own stronger currencies.
Sturgeon can help clients achieve direct authorisation straight away, either doing the work or delegating it to a compliance consultancy, or it can make clients appointed representatives of Sturgeon until they can attain directly regulated status and gain relevant competencies in their chosen future business field. Sturgeon is very creative in its structuring of funds, building workable models from which start-ups can benefit.
The start-ups are mainly asset management firms, corporate finance consultancies and third party fund raising operations. Sturgeon also works with established overseas companies looking to come to the United Kingdom, assisting them to become appointed representatives of Sturgeon.
Sturgeon Ventures LLP was founded in 1998 as a single family office, which invested in public stock markets around the world as well as private companies. The Partners’ love of being involved in the growth and nurturing of private companies led to the creation of the Incubator. Initially there was no sector focus for the incubator but in 2003 a sector specialisation began in financial services and wellness.
Sturgeon Ventures is also preparing to launch a number of funds, including the Wellness Fund. For more information, see the website: www.thewellnessfund.eu.
Sturgeon is based at London. www.sturgeonventures.com
Clerkenwell Capital Ltd is a London based boutique fund advisory company run by former Henderson Global Investors fund manager, Adrian Elwood. It is in the process of launching the Clerkenwell Matterhorn Fund, a Maltese domiciled professional investor fund (PIF) which will seek to generate absolute returns by investing in listed European real estate securities. The Fund is to be managed by a Maltese Self-Managed Committee with a directional long/short mandate and will target a return in excess of 5% per annum. Clerkenwell Capital is an appointed representative of Sturgeon Ventures.
The Tertius European Absolute Return Fund is a sub fund of the Tertius Sicav plc. It is incorporated and regulated in Malta as a Professional Investor Fund and was established to provide stable returns in all market environments. The strategy targets equity-like returns with low drawdowns. The Fund is managed by a Maltese Self Managed Committee, which is advised and marketed to Professional Investors by Tertius Capital Advisory Limited FRN # 550232. Tertius Capital is an appointed representative of Sturgeon Ventures.
Sarum Capital LLP provides institutional fund raising for the oncology sector; institutional and intermediary fund raising activities for the Sarum Investment SICAV Plc; exit strategies including finding corporate buyers for investments in the SICAV; and advice on M&A opportunities. The SICAV is an unregulated collective investment scheme located in Malta and this is managed by a Self Managed Committee in Malta. Sarum Partners LLP is a strategic management consultancy to the oncology sector.The Partners also provide scientific, technical and other industry related advice to Sarum Investment SICAV Plc, an unregulated collective investment scheme located in Malta, this partnership is giving no investment advice. Sarum Capital is an appointed representative of Sturgeon Ventures.