Hedge Fund, P.E. Elite Ditch U.K. For Tax-Friendly Climes

May 11 2009 | 8:06am ET

One of Britain’s top private equity managers has already moved out of the country in advance of an expected tax increase on the wealthiest Britons.

Guy Hands of Terra Firma Capital Partners, has officially moved his residence to the tax-friendly Channel Island of Guernsey, according to published reports. Hands, whose wealth is estimated to be about £200 million, is joining the exodus of rich people from the U.K., which is set to tax those who earn in excess of £150,000 at 50%.

Hedge fund billionaire Crispin Odey may also join the line at the exits to Britain. He says his Odey Asset Management, which manages £3 billion, is “seriously considering leaving” the U.K.

“This government is not interested in keeping London alive as a financial center,” he told The Times of London. “Hedge funds are not yet flying but they are fluttering. Everyone is thinking about leaving.”

Odey’s assertion is backed by Kinetic Partners, the asset management and regulatory consultancy.

“My expectation is that about 25% of the hedge fund managers in the U.K. will move overseas,” the firm’s David Butler told the Financial Times. Kinetic has estimated that implementing the European Union’s proposed hedge fund regulations will cost British hedge funds up to £3 billion. London is the world’s second-largest hedge fund center, after New York.

Odey has blasted Britain’s Labour Party government for failing to defend London’s financial industry from other EU members who want to see strict regulation of hedge funds as it seeks to rebuild its support before the country’s next election, which must be held by next year. Labour currently badly trails the opposition Conservative Party in the polls.

“We no longer have any defense against the French and the Germans,” Odey complained. “There is a great sense that the City is much less prized that it was.”


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