“This is very much our USP,” according to Paul Govier, the company’s head of investment funds in London. “We are a true global firm operating in the major investment fund jurisdictions working with the leading hedge funds and their international advisers. We give impartial advice without any vested interest in the outcome. There is no one-size-fits-all solution and it is critical that we are able to assist clients or their existing UK or US counsel in analyzing, impartially, the various options. Then we help them form the entity and maintain it for them – from cradle to grave. No-one else really does that like us.“
Innovation is central to the company and its ethos, whether that’s through opening new offices – its sister company, Maples FS, established a fiduciary and fund services office in Delaware last year – or providing new services to its clients. Its operations extend far beyond offering just legal advice, and it prides itself on being a ‘one-stop shop’ where clients can form their fund and management vehicles, access administration services or find highly-qualified directors or company secretaries.
Dynamic and entrepreneurial
“Technical excellence and client service are at the forefront of our mantra,” according to Govier. “As a business we are very dynamic, very entrepreneurial. We try to respond to clients, but also anticipate where demand is going. We know our place, but our place is an ever-expanding remit and we have seen quite dramatic changes.”
That approach has helped Maples and Calder position itself as the benchmark provider of legal services for hedge funds in Cayman, Ireland and BVI, wherever they may seek to have a listing or whatever strategy they are undertaking. Its place as a leader is indisputable – the company advised on five of the 10 largest hedge funds launched in 2011 in North America, it counsels all of the five biggest hedge fund managers worldwide and acted on 36% of funds registered with the Cayman Islands monetary authority in 2011. And it’s not only its core business that has been gaining accolades – the company’s fund administration business won several awards last year.
The firm is also proud of being able to apply the experience it has gained working with the industry’s largest players to the benefit of the smaller and start up clients which it also actively assists. The firm makes a point of providing the very best service at a cost in line with its competitors, irrespective of the size of the client.
Services continue to improve
Constantly providing clients with new and better services is part of the company’s DNA. It’s very proud of how it’s at the forefront of technological innovation. The Maples FS fiduciary and admin-istration division has developed award-winning software called “Dashboard”, which enables large pension funds and other institutional investors to get an overview of their different investments through one medium. Govier talks of the dedication of the programmers they employ, who have built a cutting-edge e-services platform for their Cayman Islands clients. The portal offers customers a range of services, including real-time access to statutory documents and video conferencing. Board members can share documentation over the system in advance of meetings, giving them a faster and more secure method of communicating important pieces of information.
“As a concept, it’s very simple, but it has taken us a lot of the time to make it a simple product,” explains Govier. “We looked at other attempts to produce something similar, but they don’t do it as well as or as completely as we do – so we had to build it from scratch.
Meeting clients’ needs means going to those clients, wherever they may be situated. The company opened the Delaware office because managers are increasingly using Delaware and Caymans vehicles together. The office provides help in hiring directors, secretarial and accounting services.
Closer involvement with Delaware
“One of the drivers for Delaware is that 40% of master funds for Cayman feeder funds are now partnerships, and a significant number of these partnerships have Delaware LLCs,’’ says Jon Fowler, the Cayman Islands-based global head of investment funds. “It’s a natural progression for our business to have a closer involvement with Delaware and it’s going to become more important going forward.”
That desire to meet clients wherever they are doing business was the reasoning behind opening its operation in Dublin. At first, the aim was to provide its Cayman Islands customers with a familiar face and level of service when they were looking to start Irish QIFs or UCITS-compliant funds. Now, the company is challenging the Irish firms that had previously dominated business, and in the process has become one of the major providers of legal services to funds in the Irish capital. While only open since 2006, the office now employs 175 people and acted for more new investment funds established in the country than any other firm in 2011.
“The reason we moved to Ireland was we follow the work,” according to Govier. “We anticipated funds drifting towards Europe because some European investors will prefer a European product. When we went, there was no equivalent firm operating in Ireland, it was just domestic Irish law firms, but the market fitted very neatly with our bent towards Anglo-Saxon style investment funds.”
Growing in Ireland
The growth of the Irish operation has shone a spotlight on how the company makes sure it is giving the most appropriate advice to each individual client. While it has assisted many clients in establishing or even re-domiciling funds in Ireland, it has done so having stress tested with the client the rationale for the decision to set up a fund in one location or another. It didn’t simply ride the surge in demand for UCITS hedge fund listings two years ago – a period of almost ‘panic buying’ as managers thought that setting up European vehicles was the panacea to all capital-raising or regulatory challenges.
While registration of UCITS funds is still strong, it is now at more ‘sensible’ levels. Clients aren’t choosing to close down Cayman funds and open up UCITS vehicles, or vice versa, but are instead launching a European fund alongside a Caymans listing, with the type of vehicle determined by the investment base.
“Our message hasn’t really changed on this and we are probably less bullish than others were a couple of years ago,” Govier says. “If you’re a manager that has strong distribution capabilities in Europe, and if you have a strategy that can be adapted to the UCITS framework, then it may very well make sense for you to start a UCITS fund to raise money. Equally there may well be situations where a Cayman fund works better, and we point that out just as readily.“
European legislative changes
Changes in European hedge fund legislation are keeping the company’s lawyers very busy. The advent of the Alternative Investment Fund Managers Directive (AIFMD) is something that Maples and Calder employees have been at the forefront of framing, with company representatives darting between Brussels and Strasbourg. They’ve had to meet with government officials, European Commission staff, industry groups and MEPs.
That dedication to influencing the landscape for AIFMD, which mirrors its close involvement in the development of the Cayman Islands fund industry over the past 50 years, is something that the company believes gives its clients an edge when deciding what route to take. While the framework has yet to be finalised, the company is already advising customers on what it thinks will be the likely result of the legislation.
Govier reckons the outcomes that have been put forward by some commentators – that either the depository requirements are so onerous and expensive that they drive most managers offshore or, at the other extreme, managers flock to using the new European passport over a Cayman vehicle – are too extreme. In fact, the new framework probably won’t fundamentally alter the approach of industry to its fund structuring: Cayman funds will remain popular due to their flexibility, speed to market and cost. European funds will be popular if managers want to access a different type of investor.
“We will not know the complete outcome until the dust settles, but it looks increasingly likely for the short and medium term it will be the status quo,” Govier says.
Back to rude health
As for the hedge fund industry overall, the company thinks it’s in rude health, having overcome the challenges brought about by the global financial crisis. About 960 hedge funds were listed in the Cayman Islands last year. That’s similar to 2010, but business has yet to return to the levels of 2006/2007.
The final quarter actually saw a slowdown as managers balked at setting up funds with the European debt crisis still at the top of the global financial agenda. Fowler says he had several launches pencilled in that were pulled at the last moment because of the global uncertainty. With concern having eased in the past three months, those launches are now proceeding, and will probably feed through into a stronger first quarter of 2012.
“Europe caused a lot of managers to hold off launches, so we saw a slight drop off at the end of last year,” Fowler says. “This seems to be getting better by degrees and we’re seeing confidence return in the greater number of launches. The empirical evidence is that things are picking up pace again.”
One of the factors contributing to the growth of the hedge fund industry is the burgeoning wealth found in Asia. At present, about 50% of the company’s Cayman Islands registrations come from North America, 27% from Europe and about 15% from Asia. The Asian component has been growing slightly, with the industry there very much at the developmental stage. Fowler says the company’s Hong Kong office is increasing in importance and states “It’s something we’ll be focusing on going forward.”
And as that business grows, so the company is determined to maintain its leadership position. To do that, Govier says it’s all about maintaining its core values of melding technical excellence together with client service, while remaining dynamic enough to anticipate the changes in an ever evolving market and shifting regulatory landscape.
Partner and Global Head of the Investment Funds Group, Cayman Islands
Fowler specialises in hedge fund and private equity fund formation, representing a diverse industry client base. He has extensive knowledge of structuring and regulatory issues and is a frequent speaker at industry events. Fowler joined Maples and Calder in 1998 and was made partner in 2003.
Global Managing Partner
Smith has extensive experience in all aspects of offshore finance transactions, focusing on private equity funds, hedge funds and structured finance transactions. He joined Maples and Calder in 1994 and was made partner in 1999 after working for Freshfields in London, New York and Tokyo.
Partner and Head of Investment Funds, London
Govier specialises in the establishment and maintenance of private equity funds, hedge funds, CFOs and fund-linked products, advising a range of investment managers, intermediaries and financial institutions. He joined the firm in the Cayman Islands in 2002, moved to the London office in 2004 and was made partner in 2005.