CYPRUS – Fund Gateway to the European Union
History & Geography
Located in the eastern Mediterranean at the crossroads of Europe, the Middle East and Africa, Cyprus’s strategic position has played a key role in shaping its 10,000 year history and in developing the island into a convenient centre for trade and international business.
EU Membership & Infrastructure
An EU and Eurozone member for over a decade, and with one of the highest educated populations in Europe, Cyprus has built a strong service-based economy. Its low-cost business environment with a wealth of support services, a sophisticated ICT infrastructure and investor friendly tax regime – backed up by an extensive network of double taxation agreements with 64 countries – has developed Cyprus into an important financial and business services hub.
Cyprus offers a European passport to the fund management industry, providing exceptional possibilities for cross-border and global fund distribution. This should attract both EU and non-EU firms keen to gain the badge of an EU-compliant manager and access to EU investors.
Cyprus offers both EU-regulated Undertakings of Collective Investment in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs). In July 2018, Cyprus upgraded its AIF framework and introduced Registered AIFs (RAIFs) which do not need authorisation by the supervising Cyprus Securities and Exchange Commission to commence operations provided they are externally managed by an Alternative Investment Fund Manager based in Cyprus or another EU country.
Brexit and Fund Managers
UK’s Brexit referendum has led to considerable market turbulence as funds and fund managers start to implement their strategies in preparation for the UK’s departure from the EU. Brexit transformation programmes are likely to be broad with activities ranging from restructuring legal entities and designing new ways of operating. This creates several challenges for UK-based fund managers.
Brexit could lead to funds established in the UK becoming automatically “third country” funds and UK-based fund managers “third-country” managers, for the purposes of the AIFMD. This means that they may no longer be able to market funds to EU investors based on EU ‘passporting’ arrangements. Fund managers should, therefore, look at other alternatives that will enable them to continue to have access to the EU market.
Cyprus could be the domicile of choice for UK fund managers reassessing their business models. Cyprus can provide practical solutions to ensure they retain their access to the EU market whilst at the same time enabling them to take advantage of significant tax breaks and benefits available to them.
Why BAO Capital Partners?
BAO Capital Partners is an Alternative Investment Fund Manager (AIFM) regulated and licensed by the Cyprus Securities and Exchange Commission since 2017.BAO Capital Partners currently manages the BAO Fund AIF V.C.I.C. Ltd (an umbrella AIF) and a Feeder Fund LP. BAO Fund AIF VCIC invests in multiple strategies including private equity, private hybrid debt, real estate and healthcare.
BAO provides a Fund as a Service (FAAS) to third party managers and Family Offices. Within this service, the company offers white labelling for new AIFs and RAIFs. This enables quickly getting your fund up and running – via a compartment in an Umbrella Fund or as an externally managed fund.