Archive for September, 2008

South African government officials have been in the UK this week drumming up business for a nascent industry seeking outsourcing and offshoring contracts from fund management firms.

Industry insiders even predict that South Africa regulators will seek to embed the EU’s Ucits III rules into the country’s financial infrastructure in a concerted bid to attract European clients.

Speaking at South Africa House in London on Wednesday, the deputy director general of South Africa’s department of trade and industry, Iqbal Sharma, argued that the country is well placed to compete with financial jurisdictions such as Luxembourg and Dublin.

Noting that this was the country’s first effort to attract UK funds to its back-office industry, Sharma called South Africa ‘one of the most sophisticated and promising emerging markets’.

South Africa’s high commissioner, Lindiwe Mabuza, said the legacy of a long-standing and vibrant mining industry has supplied a well established and mature financial centre. She also highlighted a low-cost labour force and favourable space/cost property ratio – as well as a modest two hour time difference from GMT.

This week might have marked the first foray into the UK market, but there has already been some success in the U.S. Large international players which already outsource their financial back-office services include JPMorgan, Close Brothers and State Street, according to Dale Lippstreu, managing director at Maitland Fund Services in South Africa.

Maitland provides third party administration, accounting and offshore services for both institutions and alternatives funds from Cape Town at the southern tip of South Africa.

Lippstreu told Thomson IM News: ‘We’re seeing the combination of the drive towards outsourcing, which is now the dominant trend, increasing acceptance of offshore (operations) and South Africa being well placed to provide a very competitive product, both in terms of price and service.’

Lippstreu added South Africa is not immediately looking to compete with Luxembourg and Dublin in terms of jurisdiction domiciles; at present it is primarily aiming to undercut back-office costs.

‘Our staff cost in Luxembourg are two and a half times higher than they are in Cape Town. Accommodation costs about four and a half times higher,’ he said.

Nevertheless, the country does eventually seem to be looking to compete for fund domiciles as its regulator, the Financial Services Board (FSA), looks to Ucits III as a template for many rules being implemented at the moment, Lippstreu added.

He said: ‘All that South Africa has to do is render services that are Ucits III compliant, it doesn’t have to have adopted Ucits itself. We’re moving towards Ucits even though we don’t have to.’

The European Union’s Ucits legislation has been designed to offer a harmonised set of rules allowing funds to operate freely throughout the EU on the basis of authorisation from one member state.

By Ingrid Smith: +44 (0) 20 7422 4955; ingrid.smith@thomsonreuters.com.

Source:Thomson Investment Management News

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