Living proof of how lucrative the fund industry can be and the dynamic it brings, is that at the end of 2018, the Cyprus funds industry boasted a total of approximately €6.3 billion assets under management, displaying significant growth over the past few years, says One Plus Capital Director, Pavlos Philippides.
Could you give us a brief overview of One Plus Capital?
One Plus Capital (OPC) was established in 2009 as a licensed boutique investment firm based in Nicosia. We are licensed by the Cyprus Securities and Exchange Commission (CySEC), to offer the full spectrum of investment services. Our core services include portfolio management, investment advisory, global brokerage, corporate finance as well as custody and safekeeping. OPC is also a trading member of both the Athens Stock Exchange (ASE) and Cyprus Stock Exchange (CSE).
Over the past few years, we have weighed in on our expertise and years of presence in the industry to broaden services offered to our clients. Specifically, OPC has been active in the field of fund management for a number of Cyprus licensed funds with multi-asset class strategies and compartments for retail and professional investors. Currently, we manage multi-million Alternative Investment Funds ranging from real estate (local/global) to provident funds. Our asset management department manages in excess of €100 million of AuM.
Our specialized team consists of 15 professionals with years of experience and expertise in the financial industry. Throughout the years we have managed and been entrusted to forge strong partnerships with some of the largest financial institutions globally, a vital ingredient for offering world-class service to your clients.
Who are your main clients? And from which countries do they primarily originate?
For us there are no main or more important clients. We treat each and every one of our clients equally and we always aim to deliver at the best of our abilities. To answer your question more specifically we service a wide spectrum of clients ranging from retail clients to institutional and professional clients, both local and international. The majority of our clients are High-Net-Worth Individuals (HNWIs) both local and international as well as institutional and professional clients.
How would you characterise Cyprus’ financial services sector today? How do you see the funds industry developing?
Cyprus has been established as a strong financial centre offering quality services to mainly overseas clients. During the past few years, the funds industry in Cyprus has experienced significant growth resulting in the island establishing itself as one of the major EU fund jurisdictions. Its strategic geographic position, stable political system, attractive tax system, modernised AIF Law, combined with its EU and Eurozone memberships, have served to attract global funds and fund managers alike.
Overall, Cyprus is probably the most flexible and cost-efficient fund jurisdiction in the EU, a member of the European Securities and Markets Authority (ESMA), and additionally boasts a comprehensive funds and related services workforce comprising of some 4,000 qualified lawyers and 5,000 qualified accountants, establishing Cyprus as a prominent player within the EU funds industry.
Which segments of the financial sector provide the most opportunity for growth for Cyprus and for your firm? Should Cyprus diversify further or rather focus more on certain segments to become more of a niche service centre to better compete internationally?
I believe that the whole spectrum of financial services in Cyprus continues to have immense potential that remains to be exploited. The main reasons being the same as the ones mentioned earlier and distinguish Cyprus as a robust financial center.
The fact that many multinationals and conglomerates choose to set up their headquarters on the island and coordinate their operations from here is something that can help the whole financial sector to grow and excel even more. Cyprus’ tax efficient regime, pro-business environment, less stringent and agile regulatory framework that offers a foothold to the EU can boost the amount of investment in the island or establish Cyprus as an investment services hub.
If I was to distinguish a specific segment of the financial sector though, I would choose the funds industry as having the most potential. The reasons being mainly the ability to offer and host in Cyprus all fund products (UCITS and non UCITS) and provide fund managers the platform to structure as Alternative Investment Fund Managers in line with the relevant EU Directive or a MiFID compliant Investment Firm, both EU passported.
In addition, the administration and management of funds can help develop a cluster of ancillary services benefiting the whole financial industry. Professional services that can be rendered to regulated and licensed funds include accounting services, risk management and compliance, audit services as well as legal services.
Our company, being at the forefront of those developments, is able and ready to service the fund industry through our dedicated fund management solutions that cover a vast array of asset management ranging from financial securities to property funds. OPC welcomes the emphasis given on the fund industry expansion and has already laid strong foundations for expanding the sector through attracting a number of international clients andinvestors and managing assets with a proven track record.
A living proof of how lucrative the fund industry can be and the dynamic it brings, is that at the end of 2018, the Cyprus funds industry boasted a total of approximately €6.3 billion assets under management displaying significant growth over the past few years. Approximately 48% of these relate to private equity AIFs and 16% to real estate AIFs with the remaining 36% spread evenly in other AIFs.
To answer the second part of your question, I believe that our financial services sector is already highly specialised all round and offers world-class service. It would be of course ideal to specialise on a few niche services and develop a reputation for them such as for example Switzerland is known for its wealth management and private banking services or Luxembourg for its licensed funds. Something similar to this is definitely happening to the funds industry.
Which challenges within the local sector would you like to see tackled?
I believe that everyone involved in our line of services would say that the top challenges we face mainly have to do with regulatory challenges.
The amount of new regulations and legislations has been increasing exponentially over the past few years making it extremely difficult, counterproductive and often costly to conform with all of them at once. Especially when we anticipate further directives and regulations at least for the foreseeable future.
Although we fully appreciate and applaud stricter policies that are put in place to better protect and safeguard the interests of investors and clients sometimes over blowing the balloon can have opposite results. Onerous regulation and paperwork can discourage potential investors and can even drive out smaller-in-size service providers that cannot cope without burdening the end client. This again works against prospective investors who will have less choice and potentially facing higher fees.
Regulatory bodies and governments especially in the EU have to find the right balance to protect investors and at the same time make it less difficult for service providers to implement those changes. A measure towards the right direction could be better and closer coordination between regulatory bodies and the actual professionals to decipher what can be done to make the transition smoother and the measures more practically feasible.
How does One Plus Capital differ from your competitors? What is your strategy for growth?
What allows OPC to stand out from competition is that we are able to offer world-class investment solutions tailor made for each private or institutional client. Our niche boutique investment business model and our dedicated team gives us the right agility and flexibility to offer our clients’ holistic solutions with the personalised service that is even more difficult to be found these days. For our team of experts the ultimate goal is to deliver value to the clients at all times and be able to help them fulfill their investment objectives.
As a boutique investment firm we can easily adapt to changes in the environment and pursue different areas if deemed necessary. However, our long term strategy over the years is to expand our global reach as much as possible without sacrificing the quality of our service and the trust we built between our existing clientele over the years.
What are your expectations for Cyprus’ financial services sector in the next five years? And for One Plus Capital?
As a fundamental sector in our economy, I believe that the financial services sector in Cyprus will continue to grow in the next 5 years. The level of professionalism, the quality of service together with the pro-business environment Cyprus maintains will definitely help the industry grow and expand in the future. The demand for professional services whether those are investment services or other financial services is there to be captured and is up to us to maintain that edge and realise the potential.
Of course, it is not a one man’s job and it takes time, effort, and initiative both from the private and public sector. From our side of things, we need to maintain and develop the standard and range of services offered to international clients and at the same time expand to other markets or regions that remain untapped.
Without having our government’s support however the above can only be wishful thinking. The government must continue to promote and further establish Cyprus as a safe, stable and investor-friendly destination. It can do that by organising and sending delegates around the world to meet with potential investors and other government authorities together with representatives from the private sector. Both the public and private sector must also work together and be pro-active for the best interest of the country’s economy.
For us, complacency is not an option. We always strive to be active in the whole spectrum of investment services offered and constantly explore new business opportunities locally and abroad. Through capitalising on our years of expertise in the financial sector we are able to offer bespoke investment services to changing needs around the globe. In the next 3-5 years, we purport to expand our presence in the asset management sector as a dedicated multi asset class fund manager helping everyone from private investors to local pension and private funds to achieve their investment goals.