Citco confident in Cayman

(CNS): Citco, the world’s largest independent fund administrator, has bought a competitor’s operation in the Cayman Islands showing confidence in the jurisdiction at a time when the country’s popularity is rebounding after a worrying trend of fund relocations. Wells Fargo has sold its Cayman Islands-based trust company to Citco for an undisclosed amount. The American bank’s portfolio will be integrated into Citco’s private client portfolio, the firm revealed, and serviced out of its Cayman Islands headquarters. Robert Thomas, managing director of Citco Trustees (Cayman) Limited, said the firm was pleased to have completed this strategic acquisition which he said would significantly expand and enhance Citco’s private client business in the jurisdiction.

“Our unique business model provides clients with access to the trustee services of highly trained and specialized legal professionals, as well as administrators. We look forward to working closely with our new clients to deliver the highest level of service,” Thomas added in a release from the firm.

Although Cayman saw a wave of funds relocating to jurisdictions such as Dublin and Luxembourg with fund registrations falling from 9,231 at the end of 2008 to 8,944 a year later, the trend is now reversing. Figures from CIMA this month showed that at the end of September mutual funds registered in the domicile had risen to 9,024 and all funds were at a promising high of 9,594.

Recently Mark Lewis managing partner at Walkers said registrations were are growing at some 60 funds a month (100 new against 40 closures). “We can be confident now that we are likely to see the high mark of 10,000 registered funds in Cayman passed again early next year,” Lewis told CNS.

The news of Citco’s purchase comes on the heels of news fromEurope that the Alternative Investment Fund Managers Directive will allow for the distribution of non-EU funds to professional investors in the EU through both a private-placement regime and a passport system. The private-placement regime, which has been the traditional method of distribution in the EU for non-EU funds, will remain in place at least until 2018. It is proposed that this regime will transition in 2015 to allow full access to an EU passport marketing regime to non-EU funds on the same terms as EU funds. EU funds will become eligible for a passport in 2013.

"The confirmation that non-EU fund managers will be able to continue marketing Cayman Islands, BVI and Jersey funds to professional European investors is excellent news for the industry," Rod Palmer, partner and Global Head of Investment Funds with Walkers said recently.

Despite perceptions that other jurisdictions may be safer Jennifer Thomson, partner said that Cayman had a long history of working with regulators worldwide and has a strong regulatory framework.