With the passing of law 124(i)2/2018 titled ‘the Alternative Investments Funds Law of Cyprus’, in September 2018, the Cyprus Securities and Exchange Commission (“CySEC”) started accepting the establishment of a Registered Alternative Investment Fund (“RAIF”) as of January 2019. This publication will review the publicized information on the Cyprus RAIF.
What is a Cyprus RAIF?
The concept of the Cyprus RAIF allows for an alternative investment fund to be set-up in 30 days and enjoys the same marketing rights and security as any other alternative investment fund. Continue reading on the Cyprus RAIF in this publication.
How many Cyprus RAIFs have been registered?
The information is available from the CySEC’s website and it seems that until the 31st of September 2019 a total of 18 new RAIFs have been registered. With a review of the table below we can identify that the largest number of Cyprus RAIF have been registered in April and August of 2019. If this patent continues in Q4 then by the end of the year the authorized RAIFS will have passed 20.
| Month | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep |
| No. | 1 | 2 | 0 | 5 | 2 | 0 | 1 | 5 | 2 |
Noteworthy RAIFs
As per publications on the AGW Investment Funds website, the investment strategy is to purchase merchant ships to generate cash flows from operating activities and the generating of profits from the sale of merchant ships. It’s primary assets are commercial cargo ships operated by well established ship managers.
On it’s website it provides that the fund choose Cyprus because of it’s favorable tax regime when distributing dividends and proceeds from sale, as well as it’s cost effectiveness, high standards and shipping industry.
The website also indicates to the possibility of the investment being suitable for the Cyprus Investment Programme which is a frequent trend in new funds established in Cyprus.
What investment strategies do they follow?
With the exception of AGW Investment Funds all other Cyprus RAIFs have not published a website yet and the information is limited to the collective Cyprus Investment Funds Statistics published by the Central Bank of Cyprus available in the link.
Which Alternative Investment Fund Managers (AIFM) are responsible for the RAIFs?
The information is available from the CySEC’s website and until the 31st of September 2019 the 18 new RAIFs are managed by a handful of AIFMs. CYSEC’s websites lists a total of 28 AIFM, so seeing only 5 of them associated with RAIFS might mean that more Cyprus AIFMs will be setting up RAIFs in the near future or for new funds.
AUDE FM Limited
Licensed in 2019 by CYSEC as an AIFM, AUDE FM ranks second in respects to number of RAIFs. I was not able to find a website for this manager which means that this might be something to be available in the future.
Byron Capital Partners
Byron is a multi-year award winning firm and is a full scope AIFM and full scope UCITS Manager based in Nicosia. At the moment it appears to hold the top position in respects to number of funds it runs.
DeltaMark Fund Management
Deltamark provides fund management services and is authorized by CYSEC and in their marketing material describe themselves as ” pioneers in our approaches, and boldly old-fashioned in our values”. Deltamark runs 2 RAIFs at the moment.
Fortified Capital
Marketed under the name Forticap, it was established in 2013 and is a multi-asset class AIFM licesed by CYSEC. At the moment it runs 3 RAIFS and no further information is available as to the scope of these funds.
SCSS Fund Management
SCSS waas established in 2013 and licensed by CYSEC. it markets itself as an independent portfolio and risk manager and other peripheral services. SCSS runs 2 RAIFS at the moment with no further information available as to the scope of these funds
Overview
| Name of AIFM | AUDE | BYRON | DELTAMARK | FORTICAP | SCSS |
| No. RAIF | 4 | 7 | 2 | 3 | 2 |
Conclusion
With the above results in mind it seems that the first year of the Cyprus RAIF can only be deemed as successful. The Cyprus RAIF is not for all however it surely has proven to have a place in the local and international alternative investment world. The challenge will be to sustain and increase growth in the coming years.
In comparison to Luxembourg’s first 9 months (85 RAIFS) we still have several matters to improve on which perhaps are the subject of a different publication.
Cyprus Investment Funds Statistics – June 2019
Looking into the Cyprus Investment Funds Statistics until June 2019 provides a better understanding on where the market is going and more importantly how the market is developing for Cyprus.
