New partnership regime and securitisation option help Malta’s IFC rise

While Malta has long been a preferred centre for investment funds and asset management, financial innovation is crucial if its International Finance Centre (IFC) wants to retain its competitive edge, says Chris Casapinta, Managing Director of Alter Domus (Malta).

Can you give an overview of Alter Domus, your history and key markets?

Alter Domus was set up as a corporate services provider in 2003 in Luxembourg. After five years establishing itself as a leader in Luxembourg, it was time to grow internationally and offer a wider scope of services. In fact, it then started offering fund administration services throughout Europe and Asia in 2008. We currently employ 850 people worldwide, however, Luxembourg remains the more significant office with approximately 500 staff.

We always specialised in alternative asset classes. We service nine of the top ten private equity houses in the world, and seven of the ten largest real estate investors in the world. We also developed our business to service other related areas such as debt and infrastructure funds. We currently have US$74 million in assets under administration.

What is the scope of Alter Domus' business in Malta and how does it fit in your strategy?

Having spent a few years in Luxembourg working in the financial services industry, I had decided to set up the office of Alter Domus in Malta. It was my belief that the only way for the Malta office to be successful would be by ensuring that the strategy of the Malta operation was similar to that of the group. We were able to tap in the experience of the numerous senior executives in the group and translate that into a successful business in a relatively short period of five years. We ensure that all our clients, regardless of the office they use, have the same experience in terms of quality, processes and tools. Malta has quickly grown into the second largest office of the group, with 90 staff members and counting. The strategy of the Malta office is similar to that of the group, and we will continue focusing on alternative funds and related corporate services. We will also continue to focus on multinationals and private clients.

What are your future expectations for Alter Domus Malta over the coming 3 years?

I think the business will continue to grow, and we will definitely continue to be the leading service provider. I also hope we will be able to attract more clients to Malta. Alter Domus has always been a good ambassador to Malta and will never cease doing so. I am positive that more of our clients will identify additional benefits for being in Malta, whether in the form of corporates or regulated entities.  

What position does Malta have on the global asset management map, and what are the island's competitive advantages compared to other investment fund domiciles?

Malta's visibility on the global asset management map has definitely improved, however there is still more that we can do. The industry is relatively young, therefore, we need to invest more resources to increase the jurisdiction’s visibility for advisors, promoters and most importantly for investors.

Malta has significant advantages over other jurisdictions: an attractive fiscal and regulatory framework, various operational advantages, such as its time zone, language, proximity to mainland Europe, as well as good value for money for services rendered. Government and authorities are very approachable, which is a huge bonus when compared to other jurisdictions.

The number of funds as well as their net asset value in Malta hasn't changed considerably in recent years. Do you believe the sector still has growth potential and if so in what areas?

I agree. When it comes to funds, there has not been a lot of growth in terms of net asset value. However, one must point out that more recently, the industry has passed through turbulent times with the introduction of various regulations such as MIFID and AIFMD, which challenged asset managers considerably. Now that the regulatory framework has been rolled out, and I would say is stable, I expect to see more growth in the industry in Malta.

I would expect to see more growth in alternative funds such as private equity and venture capital. I am also confident that the new partnership regime and the fantastic tax treaty framework will encourage more asset managers to set up in Malta. I am also seeing an encouraging amount of asset managers, who do not necessarily set up their funds in Malta, coming to Malta. Their main interest would be the set up the management company in Malta rather than the fund itself. This is an area where I see increased momentum.

What new trends and patterns do you see emerging to attract more business to Malta?

As mentioned earlier, the reputation and ‘brand’ of the island have become stronger and that will be key for Malta to continue its growth in this sector. Malta also needs to ensure that it is innovative. We are living in times of quite significant changes in the fiscal and regulatory framework throughout the world, but especially in Europe. The best jurisdictions will be those who are proactive in implementing these changes and eventually come up with a more relevant and attractive framework.

What role do you believe securitisation will play in Malta?

Malta has an interesting securitisation regime, especially when it comes to the securitisation cell company. I believe that this business will continue to grow. Similar to the fund industry, there are other long established jurisdictions that have been used for securitisation structures, so it will take some time for investors and promoters to consider Malta, but I must say that what I have seen in the past few years is very encouraging. I think the securitisation option will help Malta become a more complete financial centre, providing investors and promoters with an alternative to structure their transactions. The capital markets are an important element for securitisation, and there again I see more traction and more choice with the recent introduction of the European Wholesale Securities Market.

How has the introduction of the AIFMD regime affected Malta's investment fund industry?

It has significantly affected all players, but smaller players in particular. This being said, Malta has retained the professional investor regime, which is quite attractive for promoters in the non-retail space. We have continued to see quite some interest in the professional investor fund regime, which is seen as a very good alternative for promoters with less than EUR 100 million of assets.

What key challenges is the industry facing at the moment?

The toughest challenge that remains is regulation and the need for operators to adapt their models and processes to reflect new requirements. Otherwise, especially in Europe, we are seeing that there is more liquidity and activity in the market with more deals being closed in the real estate and private equity markets.  

How would you compare the infrastructure for financial services in Malta to other financial centres?

We have a good base of well-trained and experienced accountants, lawyers, tax advisers and other service providers, with quite a few being well-known international brands. However, we do lack a good selection of banks and custodians. It is something that can have a significant impact on one's choice to invest in Malta or otherwise.

In terms of economic growth and development, what are your expectations for Malta in the coming years?

Malta has a very well balanced economy, with inflows coming from tourism, financial services, gaming and manufacturing.  Malta also has a track record of having a relatively stable economy. With the influx of investors and projects that are on the table at the moment, I am quite optimistic that economic growth for the coming years will remain strong. However, Malta does have to work on some matters. Our infrastructure needs to improve to cater for a larger population. There is also a shortage of staff in various areas. Malta needs to make special efforts to attract more people to come and work here. It also needs to reconsider the lengthy and bureaucratic non-EU application process for non-EU citizens to come and work in Malta.

Chris Casapinta joined Alter Domus in July 2010. Before joining Alter Domus, Chris was a senior manager at PwC. He started his career at the end of 2000 in the Malta office. He then spent a significant time of his career within the Luxembourg office where he was responsible for managing assignments in the fund industry and large multinationals. His ten year career with PwC gave him opportunities to work on various other high profile audit and advisory assignments within various offices of the PwC network including Boston (US), New York (US), London (UK) and Milan (Italy). Chris is a certified public accountant and auditor and is a member of the Malta Institute of Accountants.



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