Discipline is one of the key traits of any successful fund manager – sticking to the core investment strategy and avoiding style drift. And in some respects, the same is true of offshore jurisdictions.
Over the years, rather than try to compete for mega-funds with the Cayman Islands, the BVI industry has instead focussed its efforts in carving out a reputation as the natural home for mid-sized and emerging managers across both the hedge fund and PE/VC fund space.
Relative market positioning is difficult to quantify in the unregulated PE/VC space, as offshore regulators do not maintain statistical data for unregulated funds, but as Eric Flaye, head of Conyers’ BVI funds practice in London, observes: “Anecdotally, we have seen a lot of activity and interest in private equity fund formation and related transactional matters in the BVI during the past 18 months or so, and industry practitioners in the BVI seem quite bullish about BVI’s prospects and growth trajectory in the near term.”
In June 2019, BVI Finance reported that the BVI enjoyed an 81 per cent increase in the number of new limited partnerships formed in Q1, citing figures from the BVI Financial Services Commission, the BVI’s financial regulator. Overall, some 56 new limited partnerships were established, compared to 31 in Q1 2018. In total, the number of active limited partnerships is fast approaching 1,000 (977 in June 2019). This growth can be attributed, at least in part, to the new BVI Limited Partnership Act, which was enacted in December 2017.
“The new Act has proven immensely popular and a great success for the BVI and its funds industry in a very short period of time,” says Flaye. “The situation in the BVI was quite unusual in that prior to the introduction of the new Act we had a number of private equity clients who would use company structures as closed-end funds, rather than more conventional limited partnership structures, which was less than ideal on many counts.”
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BVI LPs Enjoy Strong Year-on-Year Growth