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What has kept Guernsey practitioners particularly busy over the past year has been an increasing work flow from the M&A market, as one corporate lawyer points out: "It's Quite interesting in M&A transactions, there's a pick up which demonstrates that Guernsey is still a choice for business." Another partner agrees: "We see more local M&A work....

What has kept Guernsey practitioners particularly busy over the past year has been an increasing work flow from the M&A market, as one corporate lawyer points out: "It's Quite interesting in M&A transactions, there's a pick up which demonstrates that Guernsey is still a choice for business." Another partner agrees: "We see more local M&A work. It seems there is a lot of activity at the moment in Guernsey."

In addition, firms have seen an increasing number of foreign companies taking advantage of Guernsey vehicles to raise funds for purchasing assets in emerging markets, such as China, Russia and India.

"We're seeing it as a trend as well, It's clearly driven by investors' choice," says one practitioner. "Being the Guernsey vehicles with underlying assets, they're seeking listing on the London Stock Exchange in order to promote themselves to investors."

Another talking point was the approval in May of the jurisdictions ability to list its companies on the Hong Kong Stock Exchange. The benefit of such a development is, as one practitioner points out, "to attract investors in Asia into companies which are in the European time zone, but not within the European tax area".

On the banking side, firms are still seeing a lot of restructuring and refinancing work due to the financial crisis. Although things are picking up compared to one year ago, transactions are still taking a long time. "Banks are much more cautious than they used to be in terms of lending," says one partner.

However, this has led to competition between the banks for the good deals, as one corporate lawyer says: "If you have a deal which doesn't have attractive terms, then there's no bank will be interested obviously, but if you have a really attractive deal, then you're going to have a few banks competing for and looking to get that work."

Another talking point over the last couple of years has been the 2008 Company Law and its subsequent amends

Now the dust has settled on the legislation, practitioners think it has some credibility though they do not believe it has made a great deal of difference. "Overall, I would say it has had a neutral and a lightly positive response because of the additional flexibility and the outcomes you can achieve with that," says one partner and indeed it seems to be the additional flexibility that is valued most. "It has provided a lot of benefits for companies who want more freedom to distribute capital and to restructure, this makes our law more flexible, we certainly see the benefit of that."

In the equity capital markets, law firms have received very little work. "The market has been tight, there has been very very few IPOs, we've started to see a little bit more over the last six months." However, the bond market is more active as one lawyer explains: "We've done a lot bond listing and loan listing, but not the IPOs."

One clear trend in Guernsey last year was an increased activity in respect of repeat funds in stark contrast to new funds work which has proved to be quite flat. This is due to investors' lack of confidence to invest in brand-new promoters....

One clear trend in Guernsey last year was an increased activity in respect of repeat funds in stark contrast to new funds work which has proved to be quite flat. This is due to investors' lack of confidence to invest in brand-new promoters.

"Most of the activities are in relation to repeat funds for existing promoters operating here," explains one practitioner. "They follow on where they've got a pipeline of investors having the confidence to invest." Another agrees: "We have seen a number of existing clients want to take their existing vehicles and do additional fund raisings."

This led to a slight stagnation of the market in terms of the promoter base as one funds partner explains: "There are new funds being raised, but they're not by new people, we haven't seen the development in the sector that we saw in 2005 to 2007, so the market is pretty flat."

In addition, investors' appetite has been driven towards investing in alternative funds. This is born out of the unattractiveness of traditional investment and assets classes. "Cash, bonds, and listed securities are the last things that anybody wants to invest in," explains one funds lawyer.

In light of this investment environment, practitioners see an increasing work flow coming from private-equity and property-based funds as alternative choices. "You've got a lot of private equity funds, which are doing very well and there is also an increasing interest in property-based funds," says one partner and another agrees: "Guernsey is a strong private-equity fund jurisdiction, and still a choice for financial officers who're looking to raise private equity."

On the other hand, catastrophe insurance linked products have been increasingly active, linked in to the trend in alternative investments. "Guernsey is the largest European domicile for capital reinsurance. At the moment, the investors are looking at enhancing returns on anything interesting in catastrophe reinsurance, and this particularly followed the earthquake in Japan," says one lawyer.

Another talking point following last year's trend is the continuous transfer of funds managers from Cayman to Guernsey. "We've seen some transfer from Cayman, but at the same time, it's fair to say that Cayman seems to be doing very well, obtaining replacement business," says one partner, pointing out that "the highest regulated jurisdictions are now more attractive than the less well-regulated jurisdictions."

Linked closely to this is the impact of the Alternative Investment Funds Managers Directive (AIFMD), proposed by the European Commission to cover AIFMs' regulatory framework within the EU. Despite some initial concerns, Guernsey practitioners are quite positive towards its position in marketing Guernsey-based funds into Europe.

There had initially been confusion over how Channel Islands funds would be viewed under the directive, however as one partner points out: "If you are a fund manager in Guernsey, you're not prohibited from marketing your funds into Europe, that's the real result for Guernsey from the AIFMD," says one lawyer.

Another partner confirms that the final version approved by the EU in last November contained "significant concessions for third countries such as Guernsey. As a result we've seen an increase in instructions from clients who're looking to establish management operations in Guernsey or to migrate their funds to Guernsey."