Guernsey Funds Go Green
Friday, May 07, 2010

Guernsey is becoming home to an increasing number of ‘green funds’, according to Andrew Boyce, a Partner at Carey Olsen, who said that Guernsey investment advisers are investigating new offerings to adapt to the changing landscape resulting from the global financial crisis.

“This ability to seek out new markets means Guernsey is one of the first offshore jurisdictions to see a real evolution in the concept of ethical investing,” said Boyce. “The idea of investing ethically is nothing new but now a growing number of investors are seeking more from their investments, making the impact on the social and natural environment a priority and a key decision-making factor in placing those investments.”

“There are an increasing number of investors who want to do more than simply not invest in ethically questionable funds. They are now taking a positive approach and the emerging new trend in funds points towards socially responsible investment (SRI) in funds with a ‘green’ or ‘cleantech’ focus or element.”

He said that Guernsey’s reputation as a financial, and in particular a funds centre, is proving an attraction for green funds:

“Guernsey has the solid infrastructure, flexible laws and regulation, and tax efficiency to get it right. Guernsey ticks all the boxes for traditional funds and promoters are therefore confident in its ability to host green funds."

“The global focus as well as the very breadth and scope of the asset class makes it more unlikely that this area will suffer a bubble (with the inevitable ‘bust’),” Boyce said, although he did note they were not without risk.

“Returns in this evolving area are highly speculative and investors must have both patience and a high risk appetite. By its very nature green investment needs to gain a critical mass quickly, but some projects are just looking for the first GBP1m to get their idea off the ground so it does not necessarily mean enormous amounts of money initially. Footballers and the newly-wealthy as well as institutions and old money are attracted to the variety available within green funds and more and more people are looking to give something back," Boyce writes in an article 'Growing Green Funds in Guernsey,' originally published in Contact magazine last month.

Carey Olsen was recently instructed to advise on the establishment of a multi-jurisdiction sustainable forestry fund for MSS Capital and Oxigen. The Guernsey-based fund is an Incorporated Cell Company with three initial incorporated cells of varying terms – 15 years, five years and one year with GBP100m in each cell.

Carey Olson recommended a number of options; in the case of the 15-year cell for example, the firm advised on investing in the acquisition and management of Agarwood and Teak plantations. “Teak is known for its high-end furniture production while Agarwood has different, highly lucrative applications, [each with long-term production processes],” the firm explained.