Cyprus to launch RAIF by year end

Revisions to Cyprus’ private partnership law which will closely align it with those in Guernsey and Jersey are expected to come into force by the end of the year, according to the country’s investment agency Invest Cyprus.

Under the proposals, the country’s private partnership law will include a ‘safe harbour list’, which sets out those undertakings an investor can make without jeopardizing its status as a limited liability partner. It will also allow general partners to set up a separate legal personality, as is the case in a number of other jurisdictions.

“[Cyprus] has tried to match what is today available and then take its offering a step further and ‘innovate’ in order to be able to be a credible option to the more established jurisdictions,” Marios Tannousis, deputy director general of Invest Cyprus told pfm.

A Registered Alternative Investment Fund (RAIF) and sub-threshold AIFM or “Mini Manager” regime will also be launched by the end of the year.

This means that Cyprus’ funds registered as AIFs under the AIFM directive will no longer need to be authorized by the Cyprus Securities and Exchanges Commission (CySEC).

Much like its equivalent in Luxembourg, the Cyprus RAIF will be able to market to professional investors and/or well-informed investors and will be managed by a fully authorised EU Alternative Investment Fund Manager (AIFM), based in Cyprus or elsewhere in the EU.

The changes are the latest in a line of reforms to Cyprus’ financial services laws which began in 2014. Designed to establish the country as a competitor to other fund hubs, the new regulations are already proving attractive to some private equity fund managers.

“We have observed some Europe-based funds and fund managers redomiciling to Cyprus due to the lower costs of establishing and maintaining their operations. At the same time [they are] benefiting from the EU management or marketing passport where applicable,” Tannousis said.

Among these are the Czech-Greek controlled Emma Delta Investment Fund, and the IKOS hedge fund. EFG Bank is in the process of obtaining a license for Custody Depositary.

“We are also have 50 funds in the pipeline to be licensed,” Tannousis said.