March 25, 2023

U.K. well on its way to becoming colder, damper Cayman Islands

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By JON SHAZAR From Dealbreaker

A decade ago, the City of London was abuzz with rumors of a cross-Channel exodus. Fed up with high taxes and the threat of increased regulation, some of Britain’s most prominent hedge fund managers collected their billions and took them home—to Switzerland. Or at least threatened to. But some really did go, and boy oh boy, do they regret it.

For as a new exodus prepares its flotilla to Frankfurt, Paris, Dublinand parts even farther afield, the hedge funds are coming home. And not just the terminally ill ones, either. For the thing that has made London look a great deal less attractive to its bankers—Brexit—is precisely the thing that makes London look a great deal more attractive than, say, Geneva or Zürich. On account of the pound’s Brexit swoon, the British capital is all of a sudden a bargain-basement destination, especially compared with Switzerland, where one has to smuggle in pizza to get a reasonable price on a slice.

Leda Braga, one of the most high-profile women in the industry, is drawing up plans to relocate from Geneva to London, according to a person familiar with the situation….

A person close to the relocation talks said running operations from Geneva had become “an expensive business” and the depreciation of sterling following the Brexit vote was a contributing factor as it has made it cheaper for US dollar-denominated firms to do business in London….

“We’ve been hearing complaints from clients about not being able to get good houses near good schools in Geneva and Zurich,” Seath said. “Also from a personal perspective the tax differential is not as good as it used to be because of the individual cantons charging different rates.”

Even the Swiss are sick of Switzerland.

In June, Amplitude Capital, a $1.6bn Swiss-headquarted hedge fund, decided to reopen its London office and relocate the bulk of its management operations there….

“It’s beneficial for a hedge fund to be in a country whose currency is weaker than the one they operate in,” Zuelke said. “The Swiss Franc is very expensive so at the moment a lot of managers are worse off.”

Dominique Grandchamp, head of investment consulting for Aon in Switzerland, said the country was “not very attractive for hedge funds from a fiscal standpoint – at least not for the companies – and not passportable to Europe as a jurisdiction”, adding he “never understood why there should be an exodus of hedge funds to Geneva or Zurich”.

IMAGE: By National Library of Ireland on The Commons [No restrictions or Public domain], via Wikimedia Commons

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