Walkers' Craig Cordle, Zoë Hallam, Julia Keppe, and Dilmun Leach authored an article on collateralised fund obligations (CFOs), which are becoming an important tool for raising capital as sponsors are using them to give investors rated exposure to private funds while creating a more flexible source of liquidity.
The article details the appeal of the Channel Islands (Guernsey and Jersey) for CFO vehicles investing in UK and European assets, due to their practical combination of regulatory credibility, tax neutrality, structuring flexibility and market familiarity. They note that these characteristics align closely with the operational, regulatory and rating-driven requirements that define modern CFO transactions.
Key takeaways from the article include:
CFOs are becoming an increasingly important financing tool, providing investors with rated exposure to private funds while helping sponsors access new sources of institutional capital.
Guernsey and Jersey combine regulatory credibility, tax neutrality and structuring flexibility, making them well suited to CFO vehicles investing in UK and European assets.
Channel Islands structures are well understood by rating agencies, insurers and arrangers, helping to facilitate efficient execution and a more predictable ratings process.
