In an increasingly sophisticated fund environment, institutional LPs have become more selective, often constrained by allocation limits or prioritising established managers. This has resulted in more first-time managers turning to deal-by-deal execution as a practical entry point into private markets. While the independent sponsor model is already well established in the US, it is now becoming more commonplace in the UK and Europe. There are an increasing number of LPs who are specifically looking to invest with independent sponsors as result of this trend.
Against this backdrop, managers are seeking structures that combine flexibility, speed and robust investor protection. The Guernsey Protected Cell Company (PCC) offers a pragmatic solution, particularly for those executing strategies on a deal-by-deal basis or managing multiple investor cohorts under one platform.
At Langham Hall, we have worked with managers across private equity, real estate and debt who are using PCCs to reduce cost and accelerate execution. Whilst most commonly adopted by UK and European sponsors, we are also seeing interest from US managers evaluating Guernsey as an alternative to Luxembourg for European deployment.
What makes the Guernsey Protected Cell Company so attractive?
A PCC is a single legal entity with segregated cells, each capable of holding distinct assets and liabilities. First implemented in Guernsey in 1997, the structure allows each cell to operate as a siloed investment vehicle, while the PCC as a whole benefits from a streamlined governance framework. For managers running multiple deals or strategies, this provides an ideal combination of efficiency and risk mitigation.
Key benefits of the Guernsey Protected Cell Company
1. Deal-by-deal flexibility with segregated liability – One of the most compelling features of the PCC is its ability to ring-fence assets and liabilities within individual cells. For private equity or real estate managers launching multiple transactions, this means investors can participate in specific deals without exposure to unrelated assets. If one cell faces difficulties, creditors have no recourse to other cells which provides crucial protection to investors. Additionally, it offers tailored investor access as different cells can be created for different investor groups or jurisdictions, allowing for bespoke offerings within a single legal entity.
2. Cost and operational efficiencies – Setting up a standalone vehicle or structure for each transaction can be administratively burdensome and costly. A PCC can eliminate much of this overhead:
- Single legal entity: Only one incorporation is needed, reducing legal and setup costs.
- Shared infrastructure: Fund administration, directors, and service providers can be appointed at the PCC level, driving economies of scale.
- Faster execution: Adding a new cell is quicker and simpler than establishing a new company, allowing managers to move swiftly on opportunities. Cells are established by resolution of the board of directors and no public filings are necessary.
- Structuring flexibility: Recent changes to the Companies Law mean non-cellular companies can be merged into a PCC (by creating a new cell) and existing cells can spin out of a PCC to become their own stand-alone company. Additionally, a PCC can be audited on a cell-by-cell basis permitting costs savings where an audit is not necessary on individual cells.
At Langham Hall, we’ve seen managers significantly reduce both setup timelines and ongoing operational costs by leveraging PCC structures.
3. Regulatory advantages – Guernsey’s robust yet pragmatic regulatory framework makes the PCC an ideal choice. Key advantages include:
- Pragmatic regulation: PCCs can be regulated as Private Investment Funds (PIF), including open-ended and closed-ended funds. Fund managers can launch new strategies or asset classes within a PCC by simply creating new cells i.e. without forming a new legal entity. Regulatory approvals for new cells can be achieved in as little as 24 hours.
- Distribution: Regulated PCCs can be marketed to international investors, including in UK/EU, via national private placement regimes which require only partial adherence to provisions of AIFMD – resulting in lower running costs and, consequently, higher investor returns.
- Alignment with international standards: Guernsey is a well-respected jurisdiction, recognised by the EU, UK, and key global regulators, ensuring investor confidence.
- Tax neutrality: The PCC’s tax-neutral status allows for efficient structuring, particularly for cross-border investments.
4. Investor-friendly structuring – Investors increasingly appreciate the transparency and simplicity of the PCC model. Each cell can have bespoke terms (e.g., fee structures, investment horizons), while still operating under a single umbrella. This makes it easier for managers to cater to different investor preferences and requirements without creating unnecessary complexity.
Real world applications of the Guernsey PCC
From private equity to real estate and debt strategies, the PCC offers a flexible, risk-segregated platform for managers executing diverse investment theses. For example:
- Private equity and venture capital: A manager can launch multiple acquisition vehicles within one PCC, with each cell representing a distinct portfolio company.
- Real estate: Asset-specific cells allow for targeted investment in properties, with no cross-contamination between holdings.
- Debt funds: Managers can segregate different loan portfolios, mitigating risk while maintaining operational simplicity.
US fund managers considering European or offshore fund structures often weigh options between Guernsey and EU jurisdictions like Luxembourg. A Guernsey PCC structure under the PIF regime is an appealing option for managers to utilise as part of their European structuring as it offers a more cost effective and faster alternative to EU-based structures.
The Guernsey PCC is more than just a structuring tool, it’s a strategic enabler for asset managers who value speed, cost efficiency, and investor protection.
Andrew Tually, Partner, Carey Olsen (Guernsey) LLP said: “The Guernsey PCC is an incredibly popular option for sponsors looking to efficiently raise and deploy capital across a range of different scenarios, whether as a regulated fund platform or for unregulated “deal-by-deal” investing. The ring-fencing of assets and liabilities between the cells is protected by law, offering a rare combination of legal certainty and commercial flexibility.”
For private equity, venture capital, real estate and debt managers, considering a deal-by-deal approach, the PCC offers a compelling blend of flexibility, security and operational ease, all within a well-regulated and reputable jurisdiction.
