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Man Group (EMG.LN), the London-listed hedge fund firm that recently acquired rival GLG Partners, is offering its employees the change to relocate abroad, GLG co-founder Pierre Lagrange told a roundtable of journalists this morning.
Speaking at GLG's Curzon Street offices, Lagrange said that the firm had the flexibility to move staff because of the range of regional outposts that Man Group has in place, but added that "very few" have moved so far.
Hedge fund firms including Brevan Howard Asset Management and BlueCrest Capital Management have opened up offices in Switzerland and given employees the opportunity to move there, where there is a more favourable tax and regulatory environment. Man Group already has a substantial presence in Pfaeffikon, Switzerland.
Lagrange said he believes that Asia, rather than Switzerland, is a far bigger challenge to London's competitiveness, however he added that "long term London is still one of the best places on the planet to operate from."
He said that he hoped the authorities would move "in the right direction" to keep London attractive.
Some industry observers have had cause to describe the Man/GLG deal as a reverse takeover, with sources pointing to the way in which many senior GLG sales staffers have taken on senior roles in the merged firm, while Man Group staff have been let go.
However, Lagrange, who founded GLG with Jonathan Green and Noam Gottesman in 1995 as a division of Lehman Brothers, rejected this suggestion. He described the transition as "seamless," and added: "Man's management is in the driver's seat, running the company. In six months' time it won't make any difference who came from where. It's all about performance."
New rules don't shut out Swiss-based managers * Removal of uncertainty could trigger delayed exodus By Martin de Sa'Pinto
ZURICH, Nov 11 (Reuters) -New European Union rules on hedge funds and private equity will not shut out Swiss-based companies as previously feared and could lead to more hedge funds moving to tax-friendly Switzerland, industry insiders said.
The regulation, which the European Parliament passed on Thursday, could kick start Swiss efforts to lure financial professionals away from Britain, currently home to 75 percent of European hedge fund assets, with the promise of lower taxes. [ID:nLDE6AA15E]
"This will certainly have an impact on the larger fund managers with big risk and portfolio management departments," said Marcel Jouault, who represents the financial industry in Pfaeffikon, a town near Zurich.
Earlier this year, industry professionals and consultants said uncertainty over the pending regulation was a major factor causing London's wealthy hedge fund managers to stay put despite stiff tax increases for top British earners. [ID:nLDE64R0KT]
The new ruling removes that uncertainty and allows EU-established funds to delegate portfolio and risk management to Swiss-based managers under the supervision of FINMA, the regulator, said the Swiss Funds Association in a statement.
The EU regulation package had already been agreed in October with EU states, which have joint say with parliament on the rules. [ID:nLDE6AA15E]
Swiss asset managers will have to comply with regulations comparable to those for other EU managers. Switzerland also has to conclude double taxation treaties which meet international standards, the SFA said.
"Swiss asset managers may at a later date acquire authorization in respect of marketing in one or more EU member states, or even an EU Passport," the body added.
A European Union passport allows funds which qualify for a license to be sold in one EU country to operate across the 27-nation bloc.
"The passport was an issue, but with clearer guidelines, we'll see a lot more happening now. More large funds will move over and more firms are establishing branches in Switzerland now the uncertainty has passed," said Jouault.
Pfaeffikon, near Zurich, is in the low-tax Schwyz canton which is planning to further reduce taxes in 2011 in its drive to attract funds.
Jouault said many European managers had been gearing up for a possible move to his region of Switzerland even before the new rules were agreed.
"Since August it's like somebody turned on a switch. There have been a lot of real enquiries, real people coming to take a look, checking out apartments ... We have registered 50 new financial companies in Pfaeffikon this year," he said. (Editing by Jon Loades-Carter)
The picturesque village of Pfaffikon looks out onto Alpine mountains.
Thirty minutes from Zurich and dotted with traditional dairy farms, it might seem an unlikely location for some of Britain's biggest hedge funds.
But it is one of a number of Swiss regions competing to offer ever lower tax rates in a bid to tempt British businesses to relocate.
The village, in the area of Höfe in Schwyz is clustered around a shimmering lake which reflects the lush green, rural backdrop.
However the scenery is also now increasingly dominated by building sites as it reinvented itself as a hedge fund centre by offering low personal tax rates to attract cash-rich fund managers.
Spa hotels and up-market furniture retailers are springing up on the outskirts to cater for the new clientele.
Around the lake, glass-fronted office developments are being squeezed in-between traditional Swiss chalets. One of these is a recently opened 'hedge fund hotel'.
"It's an incubator for hedge funds," said Marcel Jouault of the business promotion department at Pfaffikon.
"We have a lot of interest from hedge funds who want to come here for the lowest tax rates in the country, they are often spin offs from banks who are used to being in a big infrastructure, so they need a back office, middle office, and secretarial support. We offer a hedge fund hotel to do all that."
The village now has over US$100bn (£62.45bn) of assets under management and can boast that one in nine of its 10,000 inhabitants is a millionaire.
Attracted from London by the low personal tax of just 18% wealthy fund managers are keen to avoid the 50% UK tax levied on earnings over £150,000 a year.
The village is already home to one of the two headquarters of the Man Group, the world's largest publicly traded hedge fund.
This combination of existing funds and low tax is expected to attract further relocations from London.'No recession'
"We are getting a lot of enquiries from the UK. Many hedge funds are in the process of establishing here, and many more are coming and looking around," said Marcel Jouault.
"I've been here six years and I've never known it so crazy."
In Switzerland the drive to attract investment has led to fierce tax competition between different Cantons. The beneficiaries include foreign companies, many from the UK, who can shop around for the best tax deal.