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Cayman moves to shore up position in Asia

The Cayman Islands move to shore up position as the jurisdiction of choice for Asia’s hedge fund and UNHW markets

The Cayman Islands has taken steps to reaffirm its position as the fund jurisdiction of choice for Asian investment managers and ultra-high-net-worth individuals looking for an offshore solution.

As reported by the Financial Times, a delegation led by Cayman Islands Minister of Financial Services & Commerce, The Honourable André Ebanks, MP, visited both Singapore and Hong Kong this month with an eye towards advancing plans to establish the Cayman Islands’ first office in the region.

Cayman has long held plans to open an office in the region to better serve the increasingly active market for offshore investment structures, and to build on the ties that the Islands have with this very important region.

A Cayman Islands Asia office likely be tasked with further promoting the benefits associated with Cayman’s investment product portfolio, support key stakeholders in the region, and helping investors engage with the islands offering through the setup and management of funds.

Cayman’s portfolio of investment structures caters to a wide range of fund types and structures. Combined with the jurisdiction’s tax benefits and a stable legal & regulatory regime, it continues to be a popular jurisdiction for Asian investors to both establish and feed into international investment structures.

In recent years, both Singapore and Hong Kong have approved new Cayman-style fund structures that offer investors the benefits of lightly taxed structures and government subsidies to support some of the set-up costs.

Uptake of Singapore’s new “Variable Capital Companies” has exceeded Regulator expectations, with 889 having been set up since its introduction in 2020. Meanwhile Hong Kong’s “open-ended fund companies” have experienced slower but sustained growth with a more than 30% increase in uptake during 2022 compared to the previous year.

Whilst there are a far greater number of such vehicles in the Cayman Islands, the introduction of these competing structures has introduced fresh competition to the prompted greater expediency from the Islands to establish a physical presence in the region.

The trip also provided an opportunity for the Cayman Islands delegation to meet with hedge fund executives, fund lawyers and trade bodies for the private equity, hedge fund and venture capital industries and demonstrate their commitment to promoting the Islands’ financial services industry on the international stage.

Speaking at an event hosted by Cayman Finance at the National Museum of Singapore on May 18th, Hon. André Ebanks, commented, “With high quality, well-regulated products which are supported by our world class professionals, the Cayman Islands is a global financial services centre of excellence and we need to ensure we work in positive collaboration with other centres of excellence for the benefit of our respective communities to thrive in this decade and beyond”.

Catalyst’s Co-Founding Partner and Managing Director – Private Equity, Frank Ferrara commented, “We view the prospective opening of a Cayman Islands office in either Hong Kong or Singapore as a very positive move for the jurisdiction. Cayman’s tried and tested financial services product is second to none, and with so many of the Islands’ service providers and stakeholders operating in the region, this feels like a natural progression. The importance of the Asian market can’t be underestimated, it is commonplace for US-based Private Equity and Real Estate funds to attract capital from Asian investors via Cayman blocker corporations. Providing representation in the region can only help to build upon the ties between the two centres.”

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