Leading Isle of Man service provider Abacus on Tuesday officially launched its Malta operation, Abacus Fund Administration Ltd, at its new European office in Swatar.
Abacus Fund Administration will provide the group with a platform to develop its business across all markets, allowing it to provide a range of administration services to managers looking to launch funds in onshore and offshore domiciles.
The company, based at the Tower Business Centre, has been awarded Fund Administration Recognition Certificate status by the Malta Financial Services Authority.
It has appointed Mark de Marco, an accountant with 30 years’ experience in financial management, as its regional general manager. Mr De Marco recently returned to Malta after a stint in the Isle of Man and is now well vested in Abacus’ automation systems.
Spawned from Breadner Moorhouse, a firm of chartered accountants established in 1970 which became part of Coopers & Lybrand in the mid-1980s, Abacus was established in 1996 to separate the fiduciary services from the audit and accounting arm. Two years later, the shareholders decided not to participate in the merger between Coopers & Lybrand and Price Waterhouse, and Abacus became independent.
The company first joined Nexia International in 2004, then formed a strategic alliance with Merrill Lynch in 2007 to assist in structuring of non-financial assets for the latter’s clients.
Abacus Fund Administration managing director Paul Kneen told The Times Business the group was constantly studying ways to expand and improve its offering. The Isle of Man business was composed of two distinct parts: a fiduciary services company and a fund administration business.
“We expanded into Geneva about two years ago with the trust side of the business, but we were looking for an appropriate platform to expand the fund administration operation,” Mr Kneen explained. “In the Isle of Man, we are technically an offshore centre, although there are rules that differentiate the jurisdictions. In terms of funds products, there are no great differences.”
Mr Kneen pointed out that the recently realised alternative investment fund management directive sought to create a scenario which will provide for additional regulation to protect EU investors.
“That additional regulation comes at a cost, and the managers will have to comply with that cost and seek EU investment. The whole of Europe will potentially be a separate market. The regulation will require that if you have offshore investors or non-EU investors, you would probably continue with the offshore route – it is simpler and costs less. If you want to be onshore, you need an onshore fund. We wanted to ensure we could service clients in the EU and non-EU arena so we looked at the various existing fund jurisdictions: Dublin, Luxembourg, Gibraltar and Malta.”
As a small to medium-sized service provider, Abacus mainly focused its business at the bespoke end of the industry: mostly start-up managers looking for hand-holding and seeking to establish structures within the EU with new seed capital. Primarily, such managers were keen to keep the cost base in check to minimise its impact on performance in the first 12 to 24 months.
Malta, Mr Kneen explained, ticked all the right boxes and aligned with the objectives and type of clients Abacus intended to seek. Direct access to the regulator and streamlined bureaucracy helped tip the scale.
“Because Malta is an emerging jurisdiction, it is a lower cost option but it provides the service,” the managing director added.
“At international trade events, Malta is justifiably regarded as the default option after Dublin and Luxembourg.”
Mr Kneen said Abacus’ target clients would themselves opt for Malta for similar reasons.
“We are looking for start-up type managers who themselves have settled on Malta, or are looking for a viable, cost-effective place to establish their fund,” Mr Kneen explained. “They want a well-regulated jurisdiction inside the EU, which means at least one aspect of their client base will be EU investors. In Malta, they know they can appoint funds auditors and funds lawyers.”
Abacus has a wealth of experience in the establishment of a range of investment products and funds, from retail-type structures with thousands of investors, to business-to-business structures, and private funds or family holdings.
Drawing on its track record, Abacus is able to advise managers on which fund types would be most suitable for specific requirements, and other ancillary aspects like shareholder reporting, and timing of meetings.
Mr De Marco’s knowledge of the Maltese professional services network meant Abacus was also able to assist with the appointment of local lawyers and auditors most appropriate to managers’ business.
Asked about the impact on the funds business with the arrival of UCITS IV scheduled to come into force next July, Mr Kneen said the directive created further opportunities that should drive some business to Malta and which will be based on cost and expertise.
“We will seek to service that business,” he added. “Underlying the UCITS framework is a fund which still needs accounting and shareholder services, and a corporate secretarial function.
“The differences in the UCITS programmes really are the regulations applied at the highest level, the reporting standards for example, and the various functionaries and the level of the functionaries.
“It is well known that Malta is willing to bring in more custodians on the basis that the UCITS structure requires the fund have a custodian in the domicile of incorporation.”
Mr Kneen said Abacus sought to grow the Malta office into a cost-effective administrative base sharing the technological platform in the Isle of Man. The Swatar office was already ‘live’ and was able to service any immediate business.
Longer-term, Abacus Fund Administration hoped to build a team of 10 to 15 staff within three years, which would be trained by in-house expertise. Mr Kneen said Abacus was encouraged by the considerable student population creating a skilled local workforce.
Abacus was also keen to use the Malta office for cross training, giving staff more exposure to each jurisdiction.