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Specialist administrator directory: Impact studies
What impact do you anticipate Brexit will have on your business?
SGG has operations in a number of European jurisdictions such as Luxembourg, Amsterdam and France, which are becoming good domicile options for a number of funds, asset management companies and banks relocating from the U.K., as well as for several major insurers from the United States.
If you take Luxembourg, for example, there are a number of big names which have chosen this jurisdiction as their new EU hub, including the insurance giant American International Group Inc., private equity firm Blackstone and the asset managers M&G Investments.
Luxembourg, Amsterdam and Paris are all seeking to leverage upon its expertise and its strong position in the financial industry to secure access to the European market for those firms.
When it comes to future prospects, the shape of the future trading relationship between the UK and the EU remains to be seen, and whether there will be any degree of access to the internal market, or what other arrangements will be in place. This is why it is difficult at this stage to foresee mass and rapid relocations from London to the continent – whether to Luxembourg, Amsterdam or elsewhere – since the negotiations are complex and still have some way to go.
In terms of what we have seen in Luxembourg over the last 15 months, I would not say that it is a mass exodus from London to this or that location, but rather a targeted relocation of certain activities.
Taken together, I would say that these developments suggest that there will be continued interest in using Luxembourg as a platform, both from UK fund managers and wider market players, as Brexit becomes a reality.
What figure, statistic or industry development have you found particularly interesting over the past year and why?
We have witnessed an appetite for impact investment from asset managers. Sustainable investment is not just a trend but a way of doing business, The European Commission is now considering whether asset managers and institutional investors can be further encouraged to ensure sustainability when taking decisions. For instance, a public consultation was launched at the start of the year, which invites the industry and wider stakeholders to offer their views on how ESG factors could be incorporated into decision-making. This shows that this will take on even more importance in the future.
Institutional clients are also pushing for AIFM services and are either increasingly in-scope of AIFMD or are opting in as a marketing tool due to the global growth of AIFMD as a brand.
This is leading to an increased number of management companies and depositary services alongside traditional fund administration. We have seen a steady growth in Luxembourg, the Channel Islands and the Cayman Islands among institutional clients. The Channel Islands and Cayman, which are experienced in operating as non-EU jurisdictions, are helping managers distribute in the EU via the National Private Placement Regime (NPPR).
Regulated funds are not in strong demand. Investors want a regulated manager and a reputable jurisdiction, though are more relaxed about regulating at the fund level, which is helpful as it increases the risk-based approach and reduces some administrative burden and cost.
JUSTIN PARTINGTON – GROUP FUND SOLUTIONS LEADER
Country of origin: Luxembourg
When founded: 1953
Number of employees: +825 (following completion of acquisition of First Names, the number of people will be 1,700)
Total assets under administration: €203 billion
Total assets under administration in Europe: €45 billion
Senior executives: Serge Krancenblum (Luxembourg), CEO; Christiaan van Houtven (Luxembourg), COO; Justin Partington (Luxembourg), group fund solutions leader