London Hedge Funds Suffer Panic Attack
Hedge Fund Daily
According to some estimates, London may be hedgie free by the summer, if new tax proposals are adopted as scheduled next month. Financial Times reports that a sense of panic among the U.K. hedge fund community has set in. "We have already had one investor turn us away because they don’t know if the fund will be subject to tax in the future," one manager told FT. Corroborating the panicked mood of the industry brought on by HM Revenue & Customs, a spokesman for the Alternative Investment Management Association said in an FT interview. "Managers have left the U.K., citing withholding tax as being a factor in their decision. There is a real danger this could escalate into a significant loss of business for the U.K. as others follow suit." So, where are they heading? One lawyer, who noted that successful hedge fund managers now realize they don’t have to remain in London to make money, are contemplating moves or have moved to Channel Islands, Switzerland, Monaco and Dublin. The lawyer also says his U.S. clients that wish to have a presence in Europe are asking for advice on where to go. The number of HFs in the exodus has not been quantified, but some suggest that within four months, the industry in London could be decimated. The unnamed lawyer said the tax authority could have calmed things down by merely clarifying some of its proposals.