Craig Cordle
Partner
Guernsey
Fundraising in the global investment space has undergone a significant shift in recent years driven by a range of factors, among them: evolving investor preferences as new generations of investors come through, technological advancements and regulatory changes in emerging jurisdictions.
Guernsey, with its long-standing reputation as a global leader in fund establishment, has witnessed both challenges and opportunities arising from these shifts. From a Guernsey legal funds perspective, it is critical to understand how these changes in fundraising trends are impacting the launch and operation of new funds and decision making for new promoters.
The rise of digital private equity fundraising platforms
The rise of digital platforms has significantly shifted funds flow and access to capital for both investors and managers. Online fundraising platforms (and blockchain-based technologies) have made it easier for fund managers to engage with investors on a more accessible and user-friendly platform, to raise capital more efficiently. Crowdfunding platforms and tokenisation vehicles have facilitated direct connections between funds and investor pools, creating a solution not always requiring the full suite of traditional intermediaries (such as banks and brokers).
For Guernsey-based funds, these new platforms offer both opportunities and challenges. Guernsey's robust legal and regulatory framework for fund structures, such as Guernsey's Private Investment Fund (PIF) enable a level of flexibility and security that appeals to international investors exploring this space, including first time manager.
Regulatory and tax developments and their impact on fund structuring
Finding the right regulatory balance around transparency, risk management, investor protection for fundraising practices is a key issue for manager and investors alike. Regulatory and tax regime changes, particularly in jurisdictions like the EU, UAE and the UK, have had a direct impact on the structuring of investment funds and their distribution channels.
For new fund launches, these global regulatory developments require careful consideration by managers and promoters of funds. In particular, governance and reporting requirements need to be considered from the outset in purview of the applicable jurisdiction's requirements and market standard expectations. The increasing emphasis on investor protection, alongside requirements for higher levels of transparency, has meant that some promoters are opting for more sophisticated legal structures with increased regulatory oversight.
Increasing focus on ESG investing and its value to new generation investors
Environmental, Social, and Governance (ESG) factors have gained prominence as core matters in investment decisions, with investors increasingly demanding transparency and accountability from fund managers (and their advisers) regarding their sustainability practices. No longer is ESG a growing 'trend' but is very much a staple and expectation by investors that the fund and its advisors have considered and addressed from the outset.
ESG considerations have inevitably extended to fundraising, with growing interest from ESG-focused funds putting value on source of capital (whether from institutional or retail investors) as much as the focus on the underlying portfolios, to seek to align funds flows with any specific ethical/sustainable focus.
From a Guernsey legal perspective, Guernsey has been proactive in adapting its legal framework to meet the needs of the growing ESG focused and transparent market. The Guernsey Green Fund (GGF) certification, for example, provides a strong signal to investors that a fund has met rigorous standards of sustainability and is genuinely committed to environmental impact. However, even funds not seeking full GGF status are seeing fund managers being required to demonstrate how their marketing, reporting, and operational practices align with both local regulations and global ESG standards.
Even from the outset of fundraising, promoters and managers are increasingly required to be offering investment opportunities which provide proper disclosure and reporting to address emerging regulatory issues around ESG. This has been accelerated in the fundraising space given an emerging generation of investors which are more alive to and aware of the importance of ESG in their investment decision making process than has arguably been the case with their predecessors.
The role of institutional investors in fundraising
Another key trend that has shaped the fundraising landscape is the growing dominance of institutional investors. Pension funds, sovereign wealth funds, and the established private equity houses continue to play a central role in capital raising for new funds. These institutional investors tend to prefer well-regulated, familiar structured investment vehicles with track records that offer both performance and security. As a result, fund managers launching new funds are paying greater attention to the structures and regulatory frameworks that appeal to these investors.
Guernsey’s strong track record in establishing, administering and managing funds for institutional investors has made it a preferred jurisdiction for many. The jurisdiction’s focus on compliance, robust legal structures, and investor protections has made it an attractive proposition for institutional capital. As these investors seek to deploy more capital into alternative asset classes, Guernsey funds are well-positioned to facilitate this growing trend, especially in the private equity, real estate, and infrastructure spaces.
Conclusion
The fundraising landscape for new funds is rapidly evolving, driven by changes in technology, investor priorities, and regulatory frameworks. For fund managers and new promoters looking to launch new funds in Guernsey, understanding these shifts and the implications they have on structuring, fundraising methods and timeframes, and global investor expectations is critical.
If you are interested in learning more, please reach out to one of our investment funds specialists.
