Isle of Man wins rich Middle Eastern clients
Middle East, India, China and Brazil are growing sources of business as HNWi’s from those markets seek to invest in the UK with Isle of Man advisers.
30 June 2017
The latest consolidation flowing through the Guernsey fiduciary market is a sign of a healthy and mature market, according to the head of Guernsey Finance. Dominic Wheatley, chief executive of the agency tasked with promoting Guernsey’s financial services sector, believes there is more M&A to come. Already this year, trust and corporate services provider Equiom has announced the acquisition of Virtus Trust Group, and fiduciary and fund administration firm Estera has taken over Morgan Sharpe and Heritage Financial Services.
Wheatley confirms Guernsey, in line with the global industry, has three types of fiduciary companies: those that are the subsidiaries of major international banks, those that are private equity owned, and the independents. He adds: “Different clients have different preferences as to what they like. Some high net worth individuals like their family office to be run by someone with a big balance sheet, and some like the personal service and continuity you might associate with an independent. Others like the efficiency that might be seen to come with a private equity owned outfit. These deals give a range of options to clients, which is healthy for the industry.”
Equiom has added twenty-five people through its deal with Virtus so that it now has close to eighty staff on the ground. The plan is to continue growing organically building up to 110 people, according to Rick Brooks, managing director of Equiom Guernsey, who says the jurisdiction remains a priority for the firm.
Virtus was founded in Guernsey in 2005 with offices in the Cayman Islands, New Zealand and the US. Brooks says of the local market: “There are a number of businesses, a bit like Virtus, that were created ten to fifteen years ago who are looking to realise return on the capital and energy employed in the business, whilst also gaining new sources of capital to allow further development.”
Much of the consolidation in the market is being driven by the growing international demands of clients. Equiom wanted to capitalise on Virtus having acquired a US public trustee license in the state of South Dakota some years ago. “As we developed our work for international families, we realised that we needed US capability,” says Nick Moss who co-founded Virtus, “because it is our view that not only is the UK non-dom business in long term structural decline and an increasingly difficult business to administer, but also many large international families have a lot of cross-border and US connections. We needed the capability to handle these types of issues, particularly on the death of a non-US settlor with US family members, as well as standalone structures for US persons and assets.”
Having this well-established partnership in place with the South Dakota Trust Company puts the business at a significant advantage, argues Moss: “While we are looking at the US domestic market as a growth opportunity, our key focus to date has been international families with cross-border or US connections which is one reason Latin America has been a successful client base for us.”
Equiom sees plenty of other opportunities for growth out of Guernsey. Some of those come from cross-border work, says Brooks: “PTC or Purpose trust and company structures are being used more in terms of consolidation of clients’ wealth, and particularly for international clients, where they are looking for some control, and the same is true for foundations.” He adds there is also a growing use of private fund structures for investments in commercial property on a joint ownership basis.
Wheatley finishes his comments by highlighting other growth areas in Guernsey. “The pensions industry has new regulation pending to attract new work and the aircraft registry is starting to pick up excellent quality business.”