Reader's letter - An emerging private equity hub

The Principality of Monaco regards private equity as an important contributor to wealth creation and employment. It has proven to be a valuable economic activity. It has performed well for investors and has gained wider recognition thanks to a number of stock market listings of several of its players.

Moreover, by investing in new technologies, venture capital is a significant catalyst for innovation. The Principality of Monaco supports innovation, especially in the area of clean technology. It has set up a specialised entity, the SACDE, which finances innovative companies that are active in this sector.

Monaco's legislative strategy, to date, has been focused on the individual practitioners of private equity rather than on fund establishment; fund administration and the specificities of corporate fiscal benefits. Nevertheless, Monaco has recently passed two new laws aimed at enhancing its financial industry. This legislation also addresses the needs of private equity teams seeking to be based in Monaco. These teams will enjoy the benefits of Monaco's fiscal law which does not impose any income or inheritance tax on individuals.

Private equity experts have reported an increased focus, in a number of European countries, on legislation concerning private equity and its environment with a view to imposing higher taxes. The Principality is examining these developments and will study their implications in the context of its strategy towards private equity.

But the privileged fiscal regime which concerns individuals is not the only advantage Monaco can offer. It is a safe, stable, multicultural and easily-accessible place, which allows the implementation of long-term plans and strategies.

Moreover, historically Monaco has an attractive investor community. It is home to a large number of professionals who come from and continue to be active in private equity all over the world.

The Monaco Private Equity and Venture Capital Association (MVCA), founded in 2006, has brought together more than 50 members. It acts as a catalyst to private equity and venture capital activities inside and outside the Principality. It actively contributes to the regulatory changes that affect the sector and enhances the performance of its members through increased and better dealflow, informative seminars, international alliances and the development of a strong ecosystem. But most of all, it brings together the professionals of the industry.

Due to its size and its position, Monaco does not try to attract a large numbers of newcomers. The strategy is to very carefully choose the right people in order to enhance Monaco's professionalism, fitness and soundness.

Gilles Tonelli, Government advisor for Finance and the Economy.

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