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Spotlight On...
Cayman Island Investment Funds
SPOTLIGHT ON... Jason Allison & Rolf Lindsay, Partners with Walkers
“The world’s most prominent financial institutions and international investors have grown extremely comfortable over the years using Cayman as a domicile for cross-border corporate activity”
J advising Q Q Walkers
ason Allison is a partner with Walkers in the Cayman Islands working in the Global Investment Funds Group. He advises on Cayman Islands corporate and investment funds law, with particular expertise institutional clients on all aspects of
structuring and establishment of private equity funds and hedge funds, and the related downstream M&A and corporate finance aspects. Rolf Lindsay is a partner in Walkers’ Global Investment Funds Group whose practice focuses primarily on private equity funds and their activities, and encompasses the structuring of fund sponsor vehicles, the formation of alternative investment funds and the consummation of transactions undertaken by them.
What more can you tell us about your firm?
focuses principally on corporate and
international finance law with an emphasis on investment funds, private equity and capital markets and structured finance. Our firm delivers clear, concise and practical advice based on an in-depth knowledge of the legal, regulatory and commercial environment in the British Virgin Islands, the Cayman Islands, Ireland and Jersey.
What levels of PE activity are you seeing in your jurisdiction?
The global private equity industry is in excellent shape, as demonstrated by the huge fundraisings that have taken place during the past 18 months by the leading industry players. The world’s most prominent financial institutions and international investors have grown extremely comfortable over the years using Cayman as a domicile for cross-border corporate activity and it is the natural choice, or default jurisdiction for the major US private equity houses which dominate the global market. US private equity houses currently occupy the top five slots on
the Private Equity International 300, the key industry ‘league table’ and have pulled in a combined $123 billion in fund raising over the past five years.
Exempted Limited Partnerships are the most popular vehicle for private equity funds in the Cayman Islands and 2013 was an extremely active year – with the number of partnerships registered pushing above levels last seen in 2008. From all the indications, 2014 is shaping up to be a good year as well.
An interesting observation from 2014 from a private equity standpoint, is that having traditionally been recognised as the jurisdiction of choice for fund formation by the major industry players, Cayman Islands corporate vehicles are now being used to a much greater extent for the downstream M&A activity taking place as the funds put to work the high levels of cash that have been raised during this bumper fundraising phase.
As significant levels of investment are made in emerging markets, uncertainty over local laws and regulations means that dealmakers greatly appreciate that any disputes would be settled at the Cayman Islands corporate level, without being exposed to the vagaries of Chinese law, for example. The Cayman Islands offers a highly flexible statutory regime and a sophisticated legal system based on English Common Law - with ultimate recourse to the Privy Council in London. Investors have the ability to raise capital efficiently in a tax neutral environment, and to structure complex acquisition vehicles with infinite flexibility. The benefits that accrue, as a result, to investors and the jurisdictions in which they deploy their capital are significant.
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What changes are you expecting to see in the future?
Going forward, institutions will continue to play a greater and more influential role in the private equity
industry, however start-ups are still an important feature and we are seeing the entrepreneurial spirit of the investment funds sector come through, particularly as individuals spin out of previously successful shops. The institutions have the ability, clearly demonstrated in the past 18 months, to raise vast sums of capital and the power to dictate the terms of investments. They also have the infrastructure required to absorb the ever increasing cost of regulatory compliance as the sector still comes to terms with the changes implemented since the global financial crisis. If the activity of the last five years is anything to go by, the lion’s share of the fund raising and capital deployment activity will continue to flow through the Cayman Islands.
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What are the most important challenges facing the Cayman Islands?
In the years immediately following the global financial crisis, there was a period when the Cayman Islands was required to demonstrate its flexibility and responsiveness during a challenging period for the financial services industry. Today it is very much business as usual in the jurisdiction, as the Government has successfully negotiated the imposition of the various international initiatives and is putting into place the mechanisms required to enforce compliance. Additionally, prior rhetoric from politicians in certain G20 nations has since given way to an understanding that jurisdictions such as the BVI, the Cayman Islands and Jersey are at the forefront of jurisdictions that enforce robust anti- money laundering policies and procedures.
Connect
Jason Allison Tel: +1 345 914 6358
Email: jason.allison@walkersglobal.com
Rolf Lindsay Tel: +1 345 914 6307