Knowledge

Guernsey’s Private Investment Fund ("PIF") regime is a quick to market, light-touch regulatory framework for funds targeting a limited number of investors in what is, for many, the jurisdiction of choice for the establishment of investment funds and other investment structures across a wide range of asset classes.

Since the regime was introduced in 2016, PIFs have been a successful addition to the Guernsey funds toolbox. Designed for smaller funds where the manager has an existing and close relationship with the investors, they offer a flexible vehicle within a proportionate regulatory framework. PIFs are popular with start-up managers, for family investments, for relatively closely held funds, as well as for co-invest, follow-on and continuation vehicles in more established fund structures.

On 19 May 2025, the Guernsey Financial Services Commission (the "GFSC") announced a more streamlined and simplified PIF regime, bringing together what were routes one and two into a single regime – the Qualifying Private Investment Fund (the "QPIF") – while retaining the Family PIF, a family wealth solution with the benefits of a collective investment scheme structure. 

Key features

The key features of a QPIF include:

• there is no numerical cap on the number of persons: (i) that the QPIF may be marketed to; or (ii) that may be admitted to as investors to the QPIF, but the QPIF may not be subject to a public offering;
• all investors with an ultimate economic interest in the QPIF must fit within the definition of a Qualifying Private Investor ("QPI"), and all marketing must be specifically targeted at investors who have been identified as QPIs;
• there is no requirement for a manager, auditor or custodian to be appointed to the QPIF, although it must have a GFSC-licensed designated administrator;
• there is no requirement to produce information particulars (e.g. a prospectus, PPM, offering memorandum etc.); and
• registration can be completed within one business day.

"Investors who have an ultimate economic interest" for the purposes of this criteria looks through any intermediate investor to the persons holding an ultimate economic interest in the QPIF, except where the investment is made through a vehicle managed or advised by a QPI, (e.g. a collective investment scheme or occupational pension scheme) in which case that vehicle be treated as the investor. A carried interest and/or co-investment vehicle established to satisfy the sponsor's commitment obligations to and/or profit sharing in a QPIF would not generally be treated as an investor for these purposes.

Where a Guernsey registered manager is appointed to the QPIF, for example, the general partner of a limited partnership QPIF, that manager would be required to be licensed by the GFSC. However, provided that person acts only as the manager of one or more QPIFs, the GFSC will typically dis-apply the Guernsey conduct of business rules and capital adequacy rules in respect of that manager, and the QPIF manager is not required to appoint an auditor.

Qualifying Private Investors

Under the QPIF rules, a QPI means an investor who:

• is able to evaluate the risks and strategy of investing in a QPIF;
• is able to bear the consequences of investment in the QPIF, including the possibility of any loss arising from the investment; and
• falls within one of the following categories of investor:
• • professional investors, including government bodies; investment businesses; affiliates of a QPIF; or individuals investing the equivalent of US$100,000 or more, representing no more than 25% of their investable assets;
  • experienced investors, including entities which have frequently entered into substantial transactions with investment funds or generally in respect of securities and derivatives;
  • knowledgeable employees, including employees, directors, shareholders etc. of professional investors or advisers to the QPIF as part of their remuneration or incentive arrangement;
  • high net worth investors, whose net worth exceeds US$1,000,000 or equivalent, excluding, in the case of individuals, their principal private residence;
  • UK professional clients;
  • EU professional clients;
  • US accredited investors; or
  • licensee admitted investors, investors who the manager and/or administrator determine are able to (i) evaluate the risks and strategy of investing in the QPIF; and (ii) bear the consequences of investment, including the possibility of total loss of their investment.

Benefits of a QPIF

There are many benefits of using a QPIF:

-      reputation and credibility

Guernsey is a highly respected and long-established international finance centre, which provides reassurance and credibility for structures established in the island. This can be particularly important for QPIF managers who are seeking to attract institutional investors or other international investors. Guernsey's reliable legal system also provides investors with a high degree of legal certainty and predictability.

-      strong but proportionate regulation

Guernsey maintains a well-established regulatory framework, which is compliant with international standards. Designed for professional or other eligible investors, QPIFs are themselves subject to relatively light-touch regulation. At the same time, each QPIF must have a designated administrator in Guernsey, which must comply with ongoing best practice requirements, meaning that investors can have confidence in the integrity of the QPIF structure and its management and administration.

-      tax neutrality

Guernsey has tax-neutral status, meaning that there are no taxes on a QPIF's income or gains. This can allow the pooling of capital without the addition of a further layer of taxation, can provide tax efficiencies for investors and can make Guernsey an attractive location for fund and other investment structures.

-      access to expertise and substance

There is a well-established financial services industry in Guernsey, with a range of service providers offering expertise in fund and corporate administration, legal and regulatory compliance, and accounting. Investment managers and investors benefit from extensive expertise and experience, facilitating the establishment and management of the QPIF structure in a cost-effective manner. Guernsey has a depth of infrastructure and resources which enables the provision of appropriate substance for structures managed in the island.

-      efficient set-up process

A significant benefit of the QPIF regime is speed to market. A new QPIF can be launched within one business day, compared to the weeks or even months it can take to establish a fund in other jurisdictions. This can reduce the time and cost involved in establishing a structure, enabling managers to focus on their core activity of investment selection and management. It can also be particularly advantageous in situations where time is of the essence, such as when a manager wants to take advantage of a specific investment opportunity, or if bespoke structures are required.

-      access to global markets and Europe

Guernsey is strategically located between the UK and Europe, providing easy access to global markets.

The QPIF regime provides access to European investors via the National Private Placement Regime (the "NPPR"). NPPR allows investment managers to market their funds to investors in the European Union (the "EU") without having to comply with the onerous requirements of the Alternative Investment Fund Managers Directive (the "AIFMD").

Compliance with the AIFMD can be time-consuming and expensive, and many managers have found it difficult to navigate the complex regulatory landscape. In contrast, under the NPPR, managers can market and sell their funds to professional investors in EU member states by complying with a simplified set of regulatory requirements, enabling access to a large pool of potential investors without having to invest significant time and resources in complying with the AIFMD.

Conclusion

The QPIF offers an efficient and cost-effective solution for investment managers and investors looking to establish a fund or other investment structure in a reputable and well-regulated jurisdiction. QPIFs are flexible, with the ability to structure matters to accommodate the preferences of managers, investors and the investment strategy of the fund. The benefits of using a QPIF include the strong but proportionate regulatory framework, the reputation and credibility of Guernsey as a financial centre, tax neutrality, access to expertise, and a fast set-up process.