When listed on the GSX with an approved prospectus, the ETIs will qualify for European Union passporting, offering small- to medium-sized alternative investment funds (AIFs) from non–EU countries access to the 28 member states.
ETI’s are effectively debt securities which mirror the performance of an underlying alternative investment and pass through the returns from the collateralised assets to the end investor. The repayment value is directly linked to the value of the collateral.
Nick Cowan, managing director of the GSX said ETIs will offer non-EU alternative investment managers of any asset class, a cheap and easy way to test demand for their product across the EU.
He said the ETIs work well for an AIF manager because securitised assets listed on an EU exchange with an approved prospectus are eligible for UCITS investment.
“You’re creating the opportunity to test your investment strategy without all of the costs that come with a re-domiciling onshore. ETIs can provide a bridge to coming fully onshore.”
Securitisation growth
Securitisation of alternative assets is a fast growing business and using the asset backed securities route into the EU is not unique to Gibraltar. It is available from other major EU centres like Luxembourg, however, Cowan said Gibraltar has a number of unique selling points.
“Firstly, we are passionate about the ETI brand, which will be what you are listing on GSX – in the same way ETFs are essentially a wrapper around an index, an ETI is a wrapper around an alternative asset.
“Secondly, as with Gibraltar in general, we see ourselves as a hub for the smaller fund manager that perhaps finds the other jurisdictions a bit expensive, particularly when it comes to the legal fees and overall cost of coming to market.
“We offer a package that is as competitive as the other jurisdictions in terms of price and time, which may be particularly interesting to the smaller manager. Which is why from December we are excited to increase our offering form solely listing open-ended funds to the listing of closed-ended funds, debt, derivatives (including Insurance Linked Securities) and Exchange Traded Instruments (asset backed securities),” he said.
