IFLR 1000
The Guide to the World's Leading Financial Law Firms

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."

Carey Olsen maintains its position in tier one of the funds table this year after competitors strongly affirmed its leading position in the market. "We wouldn't argue with Carey Olsen's ranking, they're very good at investment funds," says one rival, while another one agrees: "I saw a lot of funds work from Carey."

Client feedback has been very encouraging and positive. They highlight the firm's "relationship building" and "high speed of service" as its most valuable feature for them. "The most important thing for us is the speed of the service and the relationships that Carey Olsen has built with us, which very much mirrors the company's culture. For example, they don't have voice mail, and they don't have all the things that irritate clients. They treat every client as if that is very important to them," says one,

Andrew Boyce came in for personal praise. "He is very knowledgeable in the funds sector. He's a very strong leader and time manager, with a significant value in managing the legal process, often involving proactive interaction with other law firms," says one. "He has created unique structuring solutions in the Guernsey funds space. He makes commercial recommendations, and he has a good grasp of what's a legal issue and what's a commercial issue."

One of the notable deals led by Boyce last year saw the firm acting for Inflexion on the establishment and regulation of its buyout fund, which is a closed-end registered collective investment scheme. It had raised £375 million by October 2010.

In a similar deal Ben Morgan advised AnaCap Debt Opportunities' on the set up and regulatory work in relation to a fund worth £100 million at final closing. Elsewhere Tom Carey also worked on the establishment of a £380 million Alchemy Special Opportunities Fund II. The capital raised will be invested in financially distressed European companies through debt and equity securities in order to achieve risk-adjusted returns.

"They understand the English law perspective as well as the Guernsey law perspective. They're very good at providing us with good explanation of complex questions. They come up with new ideas, come up with good solutions to problems, so they certainly have the ability to be innovative and creative," one client comments on both Morgan and Carey. "They're good people to work with."

Another outstanding deal saw the head of the corporate and finance group Graham Hall advising Distressed Debt Investment Fund's $197.2 million capital raising, and a further raising amounting to $244 million by last October. One competitor says: "Graham stands out considerably from others, he is the leading lawyer in a true sense for Carey." While another one agrees: "Graham Hall is very well-known from investment funds and he's definitely very good."

The firm also increased its capacity last year with the hire of former Bedell Cristin partner Christopher Anderson. He specialises in buy out, mid-market and secondary funds, as well as the establishment and regulation of captive insurance and reinsurance structures.

Mourant has consolidated its leadership alongside Carey in the funds market this year. "Tier one is Carey Olsen and Mourant Ozannes, and I would agree with that," says one competitor.

This is substantiated by client feedback, with partners Andrew Walters and Gavin Farrell singled out for praise. "Technically, they're 100%, they're very proactive. They understand the requirements of investment funds thoroughly. They provide a number of suggestions to achieve the aim," says one client.

Last year, Walters advised on the establishment of a £270 million collective investment scheme and admission of its share to trade on the main market of the LSE. The fund was the second largest London-listed investment fund offer in 2010.

In the private-equity area, Farrell headed the team advising the establishment of a closed-ended fund, with a $420 million capital commitment investing in international offshore oil and gas service industry. "I understand that Gavin Farrell has been listed as a leading lawyer in investment funds, and he's very good there," says one rival.

In terms of the team's quality, one client says: "Their legal knowledge is very comprehensive, extending beyond the Guernsey jurisdiction itself. They're able to understand other jurisdictions' structures, and can suggest structures that you don't have in the market. Basically they have both national and local capacities."

One of the biggest deals last year saw partner Darren Bacon working on the formation and launch of iCON Infrastructure Partners, a €1 billion closed-ended infrastructure fund investing primarily in Europe and North America.

Another highlight saw partner John Lewis advising on the formation of Clarion ICC, a structured product platform for the issue of preferred securities.

The team's "responsiveness" and "quick reaction" towards clients' enquires has earned them praise. "They're very responsive for phone calls and e-mails, it's very rare if you don't hear from somebody very quickly," says one client, while another adds: The firm's managing associate Andy Lowe was also praised in this regard: "I thought Andy is very contactable, and he would response quickly to stuff."

Newly-elected partner Frances Watson also receives client approval. "What makes Ogier stand out is in particular Frances Watson, she really really knows what is a fund, a fund manager, she has been around, and she knows how to be commercial. She just understands what our clients need."

One of the biggest transactions last year saw lead partner Roger Le Tissier acting for Burford Capital on its further £110 million fund raising, which is one of the largest capital raisings for a litigation fund. Elsewhere he also acted for alternative asset management firm CQS on its diversified fund establishment and LSE listing.

Another highlight saw partner William Simpson advising on the establishment of World Shariah Funds (WSF) as a collective investment scheme. WSF is one of a small amount of shariah-compliant funds established in Guernsey, and the firm's first experience in advising this type of fund in the jurisdiction. "William Simpson is very strong in investment funds," says one rival.

This ability to understand the needs of new funds is particularly valuable as one client says: "They're extremely good at working out what you need. For example, if you're establishing a fund in Guernsey for the first time, they know all the hurdles you could possibly face, and they prevent those divisions, so they're very good at saying this is the way to do it, or is that what you want. They guide you through very well."

Bedell Cristin saw its funds capacity reduced last year when partner Christopher Anderson joined Carey Olsen. "Bedell suffered a big loss with the move of Christopher Anderson, so it's going to be difficult for them to come back from [where they were]," says one partner. The market will wait to see how the firm reacts.

A notable example of the firm's work last year saw them advise Global Mutual Fund PCC on its open ended fund with an excess of 50 cells. The team also acted on the closing of the Gilde IV fund.

The firm also acted on the launch of Energy Venture IV, a Nordic private-equity fund with a capacity of $250 million.

General market opinion suggests that newly merged Collas Crill is still some way behind the top firms in terms of funds work. "We saw Ozannes a lot, Carey a lot, Collas a little bit," says one competitor.

In line with the market, partners Jason Romer and Paul Wilkes advised on a $100 million GoldenPeaks fund migrating to Guernsey. The move allowed the Cayman fund structure to meet Guernsey investors' requirements and align with the domicile of the manager.

On top of that, the duo also helped Meteor Asset Management to establish a $500 million bond fund as a Q-scheme, which is a rarity in recent times in the jurisdiction.

Wilkes was involved in another notable deal as the firm acted for Innovatis PCC Guernsey in relation to its €111 million share listing on the Channel Islands Stock Exchange, issued by one of Innovatis' cells OFX strategy fund.

Another outstanding deal saw partner Sean Cheong (who has recently moved to Singapore) act for The Red Fort Partnership to set up an open-ended fund structure, investing in companies operating in gold and metals industry.

Among Appleby's highlights last year was partner Barney Lee's advice to two private-equity funds in relation to issues arising from a dispute between the promoter and investment adviser. The deal is worth $440 million.

Elsewhere Lee teamed up with partner Alex Last to advise Stenham European Shopping Centre Fund on its €300 million asset management. This allowed the manager's proposed migration to Guernsey to go ahead and established the fund as a Guernsey registered closed-ended investment company.