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Gibraltar eyes larger hedge fund sector

GIBRALTAR is looking to grow as an international destination for hedge funds as the prospect of tighter regulation makes more exotic jurisdictions appear less attractive.

Senior figures said the British territory, which is part of the European Union, could benefit from the forthcoming Alternative Investment Fund Managers directive which will make it harder for non-EU funds to market themselves to European investors. Funds based in Gibraltar are regulated in line with those in Dublin and Luxembourg, meaning they will be automatically “passported” to customers on the continent – unlike those in locations such as the Cayman Islands.

James Tipping, Gibraltar’s finance centre director, said the territory wanted to emulate the expansion of its insurance sector, which has grown fivefold to 100 companies over the past decade. Gibraltar hosts around 70 fund managers, including Sirius.

“There is an opportunity for asset management firms to consider Gibraltar because of the overall package,” he said, citing lifestyle as well as the low taxation burden as attractions. Corporation tax falls to 10 per cent in January, while individual tax for high earners is levied as a flat sum of £27,000 annually.

Tipping said Gibraltar would “never go out there and beat a drum” to lure fund managers from other jurisdictions. “We want to see funds and asset managers grow in Gibraltar, but in a sustainable way,” he added.

Marcus Killick, head of Gibraltar’s financial watchdog, said the territory was already receiving increasing interest through local law firms.