RIO DE JANEIRO - Tiny Gibraltar is trying to cash in on Brazil’s rising wealth.
Gibraltar, the British self-governed territory south of Spain, is now working to lure hedge funds, private equity and other investors in Brazil and Latin America to expand to its shores.
Government officials visited Rio de Janeiro this week to promote Gibraltar’s stability, access to the European Union and low taxes. (Interest, dividends and capital gains are not taxed in Gibraltar). The officials said that they had met with approximately 20 firms on the sidelines of a major hedge fund conference here.
Gilbert Licudi, the territory’s minister of financial services, said in an interview with DealBook that Gibraltar is a natural bridge to connect European investors surging appetite for Latin America.
Gibraltar does have two funds with Brazilian investors, he said, but the territory is otherwise virtually unknown in Brazil and Latin America. Changing that appears to be a priority of the current government.
“It is part of the strategy that this government has to go beyond our traditional jurisdictions like the UK and Switzerland and to extend to emerging economies that are doing well like Brazil,†Mr. Licudi said.
In its efforts to woo Brazilian investors, Gibraltar faces competition from better known locales like Dublin and Luxembourg as well as the Caribbean. But it sees what it calls a shift toward greater transparency in the financial sector, including efforts in the United States as a factor in its favor.
“It is clear that there has been this global move toward greater openness and transparency,†Mr. Licudi said. He added that, “We pride ourselves now on being one of the jurisdictions that is open and transparent in terms of exchange of information.â€
Gibraltar is perhaps mostly famous for its rock, but it has also developed a strong financial services sector which today accounts for 20 percent of its gross domestic product. Last year it passed legislation making it easier for funds to get established. Its economy is forecast to grow to £1.65 billion by 2015.
The territory does have an uphill battle in recruiting Brazilian hedge funds. Most are focused on the domestic market here so officials are also targeting international funds that invest heavily in Brazil and Latin America in general.
Next month, Mr. Licudi will travel to New York to meet with several hedge funds that have already expressed interest.
