Guernsey’s finance industry had a stable second quarter and is already showing signs of renewed growth in the second half of the year.
Previously released figures from the Guernsey Financial Services Commission (GFSC) showed an uptick across each of the investment funds, banking and insurance sectors during the first quarter of the year.
This has continued in the insurance sector, where there has been net growth of 37 entities between the end of last year and the end of July 2013. However, the net asset value of investment funds under management or administration in the Island fell GBP10.5bn (3.5 per cent) during the second quarter of the year and total deposits held with Guernsey banks decreased GBP0.8bn (0.9 per cent) during the same period.
Fiona Le Poidevin (pictured), chief executive of Guernsey Finance – the promotional agency for the island’s finance industry, says: “The performance during the first quarter of the year was very pleasing but we recognised at the time that external factors, such as rising stock markets, were playing their part. The new figures for the second quarter show a relatively flat but stable picture and this is understandable when we consider that during the period we saw a correction in the wider equity markets.
“However, the industry is also showing signs of renewed growth during the second half of the year, with figures for the insurance sector showing continual increases in the net number of entities domiciled in the Island and there is anecdotal evidence from the funds sector of a pick-up in business coming through the pipeline, especially in the closed-ended, listed space.”
Figures from the GFSC show that the total value of deposits held by banks in Guernsey fell by GBP0.8bn (0.9 per cent) during the second quarter to reach GBP89.7bn at the end of June 2013. This leaves deposits 13 per cent lower than at the same time a year ago.
Le Poidevin says: “These are difficult times for the banking sector and Guernsey is not immune from the impact. However, despite continued global deleveraging and low interest rates, the Guernsey banking sector has stabilised to remain at around the GBP90bn mark at the end of the second quarter.”
The GFSC’s quarterly report for the investment funds sector showed that the net asset value of funds under management and administration in Guernsey decreased by GBP10.5bn (3.5 per cent) during the second quarter of the year to reach GBP286bn at the end of June 2013. However, this represents an increase of GBP15.2bn (5.6 per cent) on a year previous.
The Guernsey closed-ended sector was valued at GBP137.5bn at the end of June – up GBP0.5bn (0.4 per cent) during the quarter and up GBP11.4bn (nine per cent) compared to 12 months earlier. Guernsey domiciled open-ended funds reached a net asset value of GBP49.7bn at the end of June 2013, which was a decrease of GBP4.4bn (8.1 per cent) during the quarter and down GBP3.4bn (6.4 per cent) year on year. Non-Guernsey schemes, where some aspect of management, administration or custody is carried out in the Island, fell by GBP6.6bn (6.3 per cent) during the quarter to reach GBP98.8bn at the end of June 2013, although that is GBP7.2bn (7.9 per cent) higher than the value at the end of June 2012.
Le Poidevin says: “It is important to recognise that we remain in a tough environment and yet this is the first quarterly decline we have experienced in more than a year; the value of funds business is still GBP10bn higher than at the end of December 2012 and our core closed-ended sector continues to grow. Indeed, since the end of the second quarter we have seen some notable developments which give rise to optimism for renewed growth during the second half of the year.”
Le Poidevin points to the repeat business of private equity fund Better Capital PCC raising another GBP185m in what is its fourth fundraising period and Doric Nimrod Air Three – the latest in a trio of Guernsey-based investment companies – which successfully completed its initial public offering on the Specialist Fund Market of the London Stock Exchange (LSE) and listing on the Channel Islands Stock Exchange (CISX).
She highlights new business in the form of the innovative Bluefield Solar Income Fund, which raised GBP130m in listing on the LSE at the end of July and The Renewables Infrastructure Group (TRIG), which raised GBP300m on listing on the LSE in what Bloomberg has described as the “UK’s biggest initial public offering of a clean-power company”.
Le Poidevin says: “These examples demonstrate that Guernsey is not only winning repeat business from existing promoters but that other groups are also recognising our strengths, most notably within the closed-ended, listed sector and in particular where there are investments into niche asset classes such as cleantech.
“We have also seen increased activity in the Insurance Linked Securities (ILS) asset class and this is driving business in the funds sector as well as the insurance space where there continues to be significant growth. This is across a range of business but there has been notable growth in the number of cells being established as fully collateralised reinsurance vehicles for ILS.”
The GFSC’s monthly statistical update for the insurance sector shows that there has been net growth – incorporating additions and surrenders – of 37 international insurance entities domiciled in Guernsey during the first seven months of the year, reaching a total of 774 at the end of July 2013. This is up 13 from the end of May and eight from the end of June.
Le Poidevin says: “Guernsey’s finance industry is in a positive position as we enter the final part of the year and Guernsey Finance will continue to work hard on both protecting the business we have in our traditional core markets and developing new streams from emerging and niche markets.”
