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Brexit: Pharus’ Ambitions Across the Channel

ESG Challenges

Lately in April, Global Brands Magazine awarded Pharus Management Lux S.A for the year 2021 in the Investment Awards Category with 2 different awards: “Most Innovative Asset Management Brand” and “Best Independent Asset Management Brand”.  The Global Brands evaluation was performed over 7000 companies. These awards are based on the merit and achievements of the Company considering a wide range of criteria which identify and recognize the significance of high standard service delivery and reward the performance with a global recognition.

The Management Company, Pharus Management Lux S.A, based in Luxembourg and specialized in structuring, managing and distributing third parties UCITS and Alternative (Hedge Funds) Funds, is aiming to gain visibility on the British Market capitalizing on the expertise that distinguishes it from other operators.

Quid of the Brexit?

There is a life post Brexit. Pharus Management Lux SA as well as many market players must comply with new regulations while creating new business opportunities.

Since its official implementation on January 1, 2021 after 5 year-long complex negotiations between the UK and the European Union, some changes have occurred in the financial sector, favoring the establishment of new commercial partnerships between the UK and Luxembourg, with positive repercussions for the latter country. As an example, at the end of 2020, 73 companies had settled in Luxembourg as a direct result of Brexit.

If we focus on the asset management sector, there are two main changes:

  • First, the European passport for the provision of asset management services no longer exists. After Brexit, it is costly for UK asset managers to serve European-based clients and vice versa, due to country-specific rules and regulations that now must be taken in consideration by compliance teams.
  • Secondly, there are new constraints on the marketing of funds: The current agreements do not allow UK funds to be marketed in the European Economic Area (EEA) as they no longer have the European passport. Being reclassified as ex-UCITS funds, UK asset managers will now have to apply for each EEA country’s authorization to market funds or go through the National Private Placement Scheme (NPPR). On the other hand, also asset managers from EEA countries will have to apply for authorization from the UK supervisory authority (FCA) to market their EU funds on British territory.

Pharus strategic ambition overseas

As a result of Brexit, many UCITS funds have migrated from the UK to an EU member state, as, according to the regulation, UCITS funds must be domiciled with an EU management company. To do this, UK-based management companies have either opened a branch in the EU or established new partnerships with EU management companies.

Pharus Management Lux SA aims to gain visibility on the British market, capitalizing on the expertise that distinguishes it from other market operators.

The most important distinguishing characteristic of the Management Company is its independence. The Company does not belong to any financial group, and this allows to gain competitive advantage in the decision-making process, which is slender and faster. In addition, most of the key functions in the management of investment funds that are usually outsourced, such as legal, portfolio management, risk management, compliance and reporting, are internalized, allowing a complete control of the production process, maintaining high flexibility and quality of the services offered.

Pharus Group has always put the accent on its competitive advantage, which also calls for constant creativity and innovation in the wide scope of services delivered in-house. Pharus Group has today two entities, one in Switzerland and one in Luxembourg, and has just opened the first branch of the Luxembourg Management Company in Italy, in Milan, in order to provide additional services like discretionary portfolio management, Advisor and Distribution of own and third parties Funds

Luigi Vitelli, CEO and Managing Director comments: “We have seen a significant increase in AUM since 2017, with a strong commitment and a willingness to embrace our values. The year 2020 confirmed that our business model based on the insourcing of the key functions of investment funds is in great demand, allowing us to provide our clients with tailor-made services. Hence, the quality of our value chain has improved.

Being an independent group is a real competitive advantage that allows us to be faster and more efficient in terms of decision making. Working with an entrepreneurial approach, we are constantly evolving, which requires creativity and innovation in the services provided.

In this context, the two criteria of independence and innovation are closely linked in our company. Receiving these two awards, “Most Innovative Asset Management Brand” and “Best Independent Asset Management Brand” has been a great achievement for our company and motivates us to move forward in the direction we have taken.

Given the current scenario and the opportunities that the market can offer, one of the highlights of tomorrow’s business plan is the implementation of new partnerships with British asset managers who wish to market their products in Europe, or with British alternative managers who wish to have alternative products under European law, to whom Pharus Management Lux SA can provide Alternative Investment Fund Manager (AIFM) services.

Pharus Management Lux SA has just concluded a first partnership in this direction and does not intend to stop. Beyond the new commercial opportunities, Pharus seizes the opportunities of Brexit in sharing its management skills and services with British actors.

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